Parking Practices A Good Parking Place is Hard to Find

Parking Practices

 In some densely-populated New Jersey cities and townships, parking is a big deal—it’s hard to find exactly the right space when you need it and when you do find it,  it’s usually very expensive. Since parking spaces are such a hot commodity,  especially in urban areas like Hoboken and Jersey City, it’s not surprising that many co-op and condo buildings operate their own parking  facilities, both as an amenity for residents and as a source of revenue. And  which of these benefits the building’s residents most value—the money earned from the facility or their own convenience—could be the deciding factor in how their board of directors or board of  managers decides to manage the garage.  

 Whether the parking structure is underneath a high-rise or mid-rise building,  adjacent to it or just a parking lot with designated spaces, there’s more to running a parking facility than just painting some stripes on the  pavement and watching the cash roll in. Supervising employees, sending out  bills and collecting fees and allocating spaces for residents are just some of  the considerations that must be taken into account when devising an appropriate  parking facility operations plan. Understanding the financial aspect of the  process, and recognizing how buildings handle the pros and cons of making money  with parking, can position board members and other residents to make the right  choice in how to deal with their parking situation.  

 Who’s In Charge?

 Many co-op and condo buildings across New Jersey own underground or adjacent  parking facilities, but how they manage those facilities differs from building  to building. The association boards of some multifamily residences take a more  hands-on approach to managing their parking facility, while others allow a  professional parking facility operator to do nearly all the work and pay the  building for the opportunity to do so. It’s all about what works best for the building. Sometimes residents get preference  for parking spaces, based upon their ownership in the building. Often, they get  a discounted rate on parking in the garage.  

 There are two ways to set up garage management—through a management contract or with a lease contract. A management structure  contract is more of a partnership between the parking facility operator and the  board, under which parking rates, hours of operation, service levels and  improvements to the facility are decided by the owner. One disadvantage of this setup is that some parking facility operators will shy  away from working under such a contract, because they prefer to set rates for  the facility on their own.  

 That means when a board is looking for a new operating contract for its garage,  the number of potential operators bidding for the job will be fewer if having  lower-than-market-rate resident parking fees is a necessity for the building’s board. Having fewer bids means less competition, which can amount to a parking  operations contract that is less than as lucrative as it could be for the  building. The end result is less financial benefit for residents of the  building.  

 “The co-ops, especially, don’t like to manage the operations. They’d rather get a stream of income from rent and let the operators do their work,” says Andrew Grossman, vice president/counsel for Manhattan-based GGMC Parking  LLC.  

 Donna Amoroso, a spokesperson for Lakewood-based Prompt Parking, which manages  over 70 facilities in New Jersey agrees. “When boards hire out a management company it takes the burden off of them,” says Amoroso.” That way someone can give 100 percent to the parking.”  

 Under both scenarios, the operator collects fees for the garage. But the more  popular type of parking facility management is a lease structure contract. Under a lease structure, the operator signs a contract to manage the facility,  usually for a term of ten years or more. And though the owner has less control  over how the facility is managed, one advantage of this type of contract is  that the building is guaranteed a steady revenue stream, regardless of how many  patrons use the facility.  

 Many residential parking garages also serve the community around them, which can  be lucrative in good times. But a downturn in the economy can mean lower  parking demand and lower revenues from a facility that’s under a management structure contract, says Steven Aiello, senior vice  president of Standard Parking Corporation in New York.  

 “If having a say in pricing is a priority, a management agreement is the best  option. If the garage doesn’t really serve the building, a lease would be the best option,” Aiello says.  

 Some boards choose a management contract partly so they can set two different  parking rates—giving a lower rate for residents of the building and a higher one to  non-residents—but such a choice can be a losing proposition. While it will benefit the  residents who park their cars in the garage, under a management contract, lower  resident parking rates means the building will get less revenue, which is a  disadvantage to all of the residents. In such a scenario, residents who are not  motorists will be subsidizing parking rates for the car owners. Some industry  pros say that method doesn’t make sense.  

 “A flat rate is fairer,” Grossman says.

 Shopping Around

 Pricing and revenues aren’t the only factors to consider when a board is mulling a new lease or  considering a new parking operator. Some operators are better than others,  which is why companies that are new to a building’s management should be properly vetted long before they are hired.  

 “When considering renewing a [parking operations] contract, look at the options  out there,” Aiello says. “It’s always good to shop around for parking operators.”  

 The search should include interviewing the would-be manager of the facility.  That individual should be customer-friendly and knowledgeable about his job and  the industry.  

 “Hire a company with a good track record. Check references and find out what  their plan is for the garage,” says Kristen Sokich, senior vice president of Propark America, a nationwide  garage management company, noting that some companies do more with eco-friendly  technology, like installing “green” lighting, which can help the building’s overall profile and attractiveness to buyers. “You could pitch your building as greener than other buildings.”  

 Some parking garage operators offer amenities that could be more attractive to  board members of buildings. With the increase in electric and hybrid car use,  some operators offer to install electric car charging stations in garages. The  cost of such installations could be shouldered by either the operator or the  building owner, depending upon the operator. Some parking garage operators are  becoming more eco-savvy, adopting new technologies far ahead of the trend and  in advance of their competitors. Parking garages will become the filling  stations of the future, Sokich predicts.  

 It may seem that there isn’t much room for considering aesthetics when poring over the details of a parking  facility operations contract, but GGMC Parking has made art installations its  trademark look. The company has its own sign and graphics department, which  focuses on improving the aesthetics of the garages it manages, as well as  increasing the place’s curb appeal. They do so by installing artwork and photos as a way to remind  people that the garage is part of the building. On the walls of a garage  facility, GGMC Parking employees place posters of artwork and also old photos  of the neighborhood in which the garage is located, to beautify the place and  give a better sense of where you are.  

 “We think it’s very important to give a good, clean impression. People really like it,” Grossman says.  

 Slower Economy, Changed Expectations

 In some cases, what works best for the building is a question of what contract  terms are most lucrative to the building. During good economic times, leasing  contracts increase, because it’s easier for operators to make lease payments when business is good. High  unemployment, though, can make the city’s parking tax and other costs related to parking less attractive to commuters,  Sokich says. Those commuters might opt to bike to work or take public  transportation in their daily commutes.  

 “In today’s environment, parking revenues are down and a managed contract can make more  sense than leasing,” Sokich says.  

 The slower economy has taken its toll on many parking operations throughout the  country, shaking up the market. When there is a decrease in commercial  activity, obviously it lowers parking demand, Aiello says. The recent economic  downturn adversely impacted parking garage operators, as well.  

 “A lot of operators have not been able to make their lease payments, so more  buildings are looking for managers,” Sokich says.  

 “The slower economy has definitely taken its’ toll on parking operations across New Jersey,” says Amoroso. “People are paying late, or not paying at all or giving up their spaces all  together because of lost income.”  

 In New Jersey, the state Department of the Treasury offers a bonus for  condominium owners, it should be noted, exempting them from the sales tax for  parking on the premises in which they live. Just make sure the garage operator keeps careful records and that you keep  receipts. The tax rules stipulate that, “For parking facilities that provide both residential and non-residential  parking, the operator and parking vendor must keep a record of the sale  including the name of the resident, the residential address of the resident,  and the amount of the sale in order to substantiate that the sale is for  residential parking.” The New Jersey tax rules also state, “Parking charges paid to a homeowners’ association are not subject to sales tax provided that the parking facility is  owned or leased and operated by the association, the association is comprised  solely of owners and residents of the residential dwelling units, and the  parking charges are paid by members of the association.”  

 Because of the high premium placed on nearby parking for co-op and condo  residents, it’s not very common for such multi-unit buildings to choose to sell their parking  facility. While there is some flipping of stand-alone, commercial garages owned  by residential buildings, it’s the exception. Part of that fact is due to the reality that the market to buy  garages under lease properties is not as attractive to would-be buyers.  

 Generally speaking, the boards of most residential buildings want their garages  to be as financially sustainable as possible. When those parking facilities are  doing well financially, there’s often no need, or desire on the part of residents, to sell them.   

 Jonathan Barnes is a freelance writer and a regular contributor to The New  Jersey Cooperator. Staff Writer Christy Smith-Sloman contributed to this  article.

 

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