What is a parking program?
What are the benefits of a parking program?
Parking "cash out" program
How ATP helps
How can I encourage employee participation?
What is a parking program?
Studies show that approximately 70% of Washington area workers drive to work by themselves. Every car needs a parking space and though it's often free to employees, this can be a major expense for businesses. Parking may cost businesses between $2,000 to $20,000 per space per year.
Although many employers provide free or subsidized parking for employees, the goal is to make it economical for employees to use mass transit instead of driving, thereby reducing the need for parking spaces. That's where parking programs come in. Parking programs are strategies used to reduce the demand for costly parking spaces at your worksite. Examples of these strategies include: - Offering preferential parking (close to the building) for carpools and vanpools.
- Providing a parking "cash out" program (the exchange of a parking space for money which the employee will agree to use for transit).
- Instituting a commuting incentive program for those who carpool, vanpool, bicycle, or walk.
- Offering free or reduced-fee parking for carpools and vanpools (for employers who currently have fee-based employee parking).
- Charging a parking fee to discourage single-occupant vehicles (for employers who previously offered free parking).
What are the benefits of a parking program?
Whether paid for by the company or the employee, parking is an expensive item. For employees, parking can be a financial burden and can inhibit recruitment. Yet, making parking free for employees encourages driving alone and makes less efficient use of a costly company resource. Parking programs can lighten the burden on employers and employees by promoting more efficient commuting and lower parking demand. Every parking space you save, because an employee shares the ride, means money you can save or more people you can serve.
- "When the parking lot at our Arlington Campus was eliminated due to construction, there was a lot of apprehension from the campus and surrounding communities. Due to heavy promotion of commute alternatives, the transition went very smoothly. Our students, faculty and staff travel to campus by transit, bicycle, and other means. Alternative transportation programs work!"
Dr. Randall Edwards,
Executive Vice President,
George Mason University
Parking "cash out" program:
If you provide parking and your employees want to take advantage of public transportation and other alternatives, establishing a parking "cash out" program may be the appropriate choice. Your employees may forego parking and cash out the value of the parking benefit. The value of the parking benefit will be subject to taxes. However, if up to $195 of the value is converted to transit or eligible vanpool benefits, the amount converted will not be subject to taxes.
If employers are leasing parking spaces for employees, then the cash out program poses no real cost to the employer. They may simply transfer the cost for the parking space to a direct payment to employees. Should an employee decide to accept the cash value rather than a tax-free transit or vanpool benefit, the amount is treated as additional compensation and the employee would incur payroll and income taxes. If cash out value is greater than $195, employees could accept a tax-free transit or vanpool benefit and receive the balance in taxable salary. The employer will have to pay payroll taxes on the taxable portion of the cash out benefit provided. To offset that cost, simply lower the cash out amount by the employer's share of the payroll taxes as follows:
Cost of Parking Space: $150
Subtract Payroll Taxes: -$12
Cash Out Offer: $138
The employees could apply the additional compensation towards costs associated with commuting modes that are not considered qualified transportation fringe benefits, such as walking, bicycling, carpooling, or rollerblading to work. Cash out provides an incentive for your employees to try other commuting alternatives.
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How ATP helps:
ATP makes it easy and convenient for you to establish and administer a parking program. Ways in which ATP can help include:
- Helping to set-up pre-tax parking program and parking cash out program
- Providing information on parking programs and answering any questions
- Explaining parking choices
- Helping you design the best parking program for your needs
- Sponsoring a workshop or seminar to explain parking programs
How can I encourage employee participation?
There are numerous ways you can get the word out and encourage employee participation in a parking program, including:
- Sending out e-mail notifications and reminders
- Displaying posters and flyers in high-traffic areas of your office
- Including information packets with paychecks
- Including an article in your company newsletter
- Providing information on your company's intranet
- Including information in your new hire packets