University of California Transportation Center

In 1992, California enacted legislation (AB 2109, KATZ) that requires many employers offer employees the option to choose cash in lieu of any parking subsidy offered.

This report presents eight case studies of employers who have complied with California’s cash-out requirement. One employer is a government agency, and the other seven are private firms, including three law firms, one accounting firm, one bank, one managed-care medical provider, and one video post-production company. They range in size from 120 to 300 employees, with a combined total of 1,694 employees. The price of parking at the worksites ranged from $36 to $165 a month.

After cashing out, solo driving to work fell by 17 percent. Carpooling increased by 64 percent. Transit ridership increased by 50 percent. Walking and bicycling increased by 33 percent. Commuter parking demand fell by 11 percent.

These mode shifts reduced total vehicle miles traveled for commuting by 12 percent, with a range from 5 to 24 percent for the eight firms. To put this reduction into perspective, reducing VMT for commuting by 12 percent is equivalent to removing from the road one of every eight automobiles used for driving to work. In total, cashing out reduced 1.1 million VMT per year.

Cashing out reduced total vehicle emissions for commuting by 12 percent, with a range from 5 to 24 percent for the eight firms. To put this reduction into perspective, reducing vehicle emissions by 12 percent is equivalent to eliminating vehicle emissions for automobile commuting from January 1 to February 13 every year.

The eight employers’ average commuting subsidy per employee increased from $72 a month before complying with the cash-out requirement to $74 a month after complying with the cash-out requirement. The employer’s commuting subsidy declined by $70 per employee per month at one firm, and increased by an average of $13 per employee per month at the other seven firms, with a range from $8 to $33 more per employee per month.

Employers praised the cash option for its simplicity and fairness, and said that it helped to recruit and retain employees. In summary, these eight case studies show that cashing out employer-paid parking can benefit commuters, employers, taxpayers, and the environment.