Spokane council approves final rules for new 12% parking tax

Final touches on Spokane’s new 12% parking tax glided through the Spokane City Council Monday night and will take effect next month.

The tax, approved late last year, has proven controversial with the city’s downtown businesses, which have argued higher costs for parking would drive away customers and hurt their employees. Proponents believe the tax would fund a safer, more vibrant city for pedestrians and bikers while encouraging the redevelopment of parking lots that directly provide little to the city’s tax base or attractiveness to residents and visitors.

“We do have revenue that we need to raise to support our public infrastructure and our public safety programs, and so this is one thing we did in a tight budget year,” said Councilwoman Kitty Klitzke, who co-sponsored the resolution with Councilman Zack Zappone.

Not everyone has to pay the tax: Qualifying carpools, government workers and drivers with disability placards would be exempt. On-street parking, which is operated by the city, would also not have to pay.

Parking in a designated area or stall provided or reserved for students, employees or residents would also be exempt. Employees or students who purchase monthly or annual parking passes – such as the annual parking permits sold by Gonzaga University – will have to pay unless they get an exclusive stall.

The tax would hit hardest for surface lots like those owned by prolific operator Diamond Parking, where customers will pay a 12% tax to park. Parking structures with at least two floors or underground lots would only have to charge customers half the tax rate, or 6%. Parking lots could also qualify for the lower rate if the owner is redeveloping the lot into a residential or commercial building.

In an average year, the city expects to bring in roughly $2 million annually with the new tax, which must be used on transportation projects according to city law. Because implementation of the tax was delayed until April, the city projects $1.2 million in revenue in 2026 – revenue baked into the city’s budget for the year.

Councilman Paul Dillon said other cities similar in Spokane’s size have a similar parking tax design. He called Spokane’s tax a “modest” increase.

“This is going to be really helpful for street paving, sidewalk construction, maintenance and a host of transportation improvements that are desperately needed,” Dillon said.

The tax wasn’t pitched as a new revenue stream, however, but as leverage to encourage redevelopment of surface parking lots, particularly when paired with a tax incentive the council approved in 2023. Parking occupies 30% of the land in the city’s core, which includes downtown, the University District, the Gonzaga University area and around the hospitals to the south.

About 85% of the parking spots are in privately owned lots or garages, leaving just 15% on the curb.

The resolution crafting the final rules for the tax passed 6-1. Councilman Michael Cathcart was the lone dissenting vote, citing inconsistencies of how the resolution was presented to the public and specifics with implementation.

Two members of the public who testified Monday night, including a downtown Spokane hair salon owner, opposed the tax.

Terra Coulter, owner of Studio One Hair and Body Salon, said she received notice last week that her monthly parking rate will already increase and Monday night’s passage will only hurt more, especially since she uses unassigned Diamond Parking spaces.

“But the larger concern is how this impacts employment downtown,” Coulter said. “Parking is now over 200 (dollars) a month just to go to work. From an employer standpoint, both renters and commissioned employees have to decide that cost is worth it.”

She said it’s difficult to find employees because the parking cost is too high already. She lost a longtime business partner and an employee to a salon in Cheney, where parking is free, because of expensive parking costs in downtown Spokane.

“When that happens, the impact isn’t just on my business, it also removes clients who would otherwise be dining, shopping and supporting other downtown businesses,” Coulter said.

She said safety, accessibility and affordability are often the deciding factor in where her clients choose services.

“If parking becomes too difficult or too expensive, they simply go elsewhere,” she said.