Transportation Demand Management (TDM) professionals in the DC area and beyond are abuzz with the passing of Bill 23-148, Transportation Benefits Equity Act, an amendment to the Sustainable DC Omnibus Amendment Act of 2014. Foursquare ITP is particularly gratified by this development as a parking cash-out law was one of the key policy recommendations in 2017 DDOT TDM Strategic Plan, which our team developed under the guidance of DDOT’s TDM Planner and key staff from throughout the agency.

Signed into law by Mayor Bowser in April 2020, the bill requires employers with 20 or more employees that offer parking benefits to any employee to take steps to shift employee commuting behavior to non-drive alone modes. Employers subject to the law are asked to provide one of the three following options to comply with the law:

  1. Employers can offer all employees the opportunity to exchange their parking benefit for a “Clean Air Transportation Fringe Benefit” that is a cash amount equal to or greater than the monthly market value of the parking benefit offered to the employee; or
  2. Employers can pay a Clean Air Compliance fee of $100 per month for each employee who is offered a parking benefit; or
  3. Employers can implement a transportation demand plan for their company.

In the TDM industry, the Clean Air Transportation Fringe Benefit is often referred to as parking cash-out. Under these programs, an employer gives employees the option to give up their free or subsidized parking space at work for taxable cash income. These programs are highly successful and lauded as a win-win for employers and employees because it is cheaper for employers to pay employees not to drive than offer them a free or subsidized parking space. Employees perceive these programs as fair since nobody is forced to stop driving or give up free parking, but those who chose not to drive are given equivalent benefits to those who drive to work.

The effectiveness of parking cash-out depends on both the type of parking arrangement an organization has and the demand for parking. The requirements in the new bill only apply to employers that lease parking spots for use by their employees. It does not apply to employers who own parking spots. Employers cannot implement a parking cash-out in the middle of a lease, but they are required to comply when their lease is up for renewal.

Parking cash-out policies are becoming more popular across the United States. California enacted a statewide Parking Cash Out law in 1992 that requires employers with 50 or more employees that provide subsidized employee parking to offer them a cash allowance in lieu of a parking space. Designated carpool and vanpool spaces are not subject to the law, and it only applies to unbundled, leased parking spaces. Parking that is bundled into an office lease is not subject to the law. A case study of participating California employers found that cashing out reduced vehicle related emission from a range of 5 to 24 percent, with an expectation that typically 12 percent of eligible employees will participate in the program.

Individual employers also offer parking cash-out programs. The University of Maryland is leading the way with a parking cash-out program of their own for faculty, staff, and graduate students. The City of Boulder, through a non-profit, rolled out a large-scale cash-out program to encourage employers to pay bonuses or give other benefits to employees who commute sustainably to work. And now, Washington, DC is up next!

Compliance implementation around the Transportation Benefits Equity Act is expected to begin in late 2020/early 2021, with full implementation of the law occurring in 2023. Supporting the implementation will be goDCgo, an initiative of the District Department of Transportation that is staffed by a team lead by Foursquare ITP, and supported by Steer and Clark Concepts. The goDCgo employer services team will provide free consultations to employers on their sustainability objectives, assist with creating guidelines for implementation, offer guidance on effectively promoting parking cash-out programs, and provide ongoing support to their overall commuter benefits programs. This next year will be very exciting for transportation professionals and the community as we take the next step towards a cleaner DC.