Maximize Garage Income Weigh the Options and Enjoy Profits

If there's a garage in your build-ing, chances are it's not being used to its fullest potential. Security cameras and gates,

welcoming signs, and preferred treatment for residents are a few of the enhancements that can help improve your building's garage income while providing the best possible facility for building residents. By choosing a manager or operator you feel comfortable with, you're already on the right track, and by having an attorney or accountant look over the management or lease agreement, you can be assured that you'll get the most out of a valuable amenity.

There are basically two ways to operate your building's garage: Hire an in-house manager or lease the facility to a professional garage operator. Each method has its pro's and con's, and it depends on your building's circumstances which is the best method to choose.

In-House Management

One of the biggest advantages of in-house garage management is that it allows the board to keep all of the revenues generated by the parking garage as well as exert a great deal of control over how the garage is operated. According to Darleen Linch-Hager, executive manager and garage manager for the Schwab House at 11 Riverside Drive, a self-managed co-op, Our revenue increased by controlling it ourselves. I'm in the garage 50 percent of the day and I've learned the business from interacting with garage operators. I approached the board and asked if they wanted to do it in-house. They agreed. We put a lot of trust into our manager and he gave us excellent ideas about putting in lighting and gates.

Elliot Miesel, a partner with the law firm Brill and Miesel, admits that ideas can be gathered from managers about what can or can't be done, but points out that with in-house garage management, the implementation rests with the board. Installation of any equipment, for security or repairs, would be handled and paid for by the building.

Joel Stahl of Metropolitan Parking Association, a trade association of parking garage owners and operators, cautions, If they're doing it in-house, they get a percentage of the profits and pay the manager. The question is, what happens if business is slow? If it is, it will affect the income they're getting, whereas with a lease, nothing would change.

Prime candidates for in-house management are buildings that are not doing a lot of transient parking, like 11 Riverside Drive, and who have board members willing to be involved in all the particulars that go along with operating a parking garage. In-house management is not advised by attorneys to buildings that are in prime locations and doing a brisk business among non-residents. A manager is just not feasible, says Miesel, who helped write up the lease agreement between Two Fifth Avenue and Garage Management Corporation. If the building is relatively peaceful, then you may simply need a manager and attendants for security measures. If it's a larger garage and more people are parking, then you are going to need more ways to watch over things, for everyone's safety.

Outside Operators

Under a lease agreement, a monthly fee is paid by an outside operator to the building for use of the garage space. A typical lease can last anywhere from five to ten years, some even as long as 15. In the case of a lease, revenues are collected by the vendor. For board members ffb who don't want to worry about the details, but want to be assured of an income, leasing works.

We didn't hire a manager for our garage because we weren't interested in getting into the parking business, explains Elizabeth Brown, board president for The Dorchester, a co-op on East 57th Street which holds a ten-year leasing contract with Champion Parking. We like the comfort of having the vendor deal with any maintenance or security issues. They pay us as commercial tenants and that's that, she adds. Kenny Rosenblatt, president of Champion Parking, which operates 25 co-op and condo garages in Manhattan, says, We mostly see boards coming to us for leases. They don't want to deal with how to verify income coming in. Nobody sitting on the board wants to be in a position to point the finger at another guy and ask where the money is going, who's depositing and collecting the dollars, what's going on.

Elliot Brownstein, president of Mutual Parking, which manages and leases six co-op and condo garages adds, Any security measures, panic buttons installed, alarm systems for the garage, surveillance monitors, painting, fixing, whatever...we do it. We oversee it and pay for everything.

While all issues of maintenance and security are handled by the operator, the building does not share in the garage revenues, and boards aren't privy to all details of the operation. However, many operators and attorneys feel that leasing is the way to go for a building in a prime location because of the myriad of security considerations and the large staff needed to service garage customers.

Making The Right Choice

Picking a manager or operator for your building's garage is a step that should be taken carefully. Tom Marcosson, board president of Two Fifth Avenue, did his research thoroughly. We invited leading garage operators into our building, he says. We then set up a competitive bidding situation and went with GMC because we felt most comfortable with them and they bid the highest.

In Brown's case, she and The Dorchester's superintendent went to look at sites where the prospective companies were operating. We did this as a way of investigating these companies to see how they handle themselves on the job, Brown explains. As it turned out, Brown's co-op had learned from experience that it pays to look before deciding. We had a very bad experience with the people who previously ran the building's garage. The lease passed from one family member to another when the original holder died. These relatives allowed the space to deteriorate. They weren't good operators at all. The area was filthy! They wouldn't hear of putting in gates or anything. We decided to shy away from any M-family businesses' because of this experience, she says.

Another reason why pre-qualifying was important to Brown was that she wanted to avoid any kickback situations. Three companies insinuated to us that they could offer M-something in return' for the lease, she says. M-What would it take to get the contract?' they would ask.

Miesel concurs that the only way to really see how a company operates is to check them out. Make sure you're dealing with a high quality and reputable company, he says. Go down to other buildings they're working in and see what kind of job they're performing. Is the space clean? Does it look attractive?

A Favorable Contract

After choosing the right operator or manager, the next step should be insuring that your contract is working for the building. Security for residents and guests as well as keeping the area clean are important aspects of the contract that should never be overlooked. Gates and video cameras are crucial to controlling who goes in and who goes out, says Miesel. Making sure that there is exterior and interior illumination is also important.

All operators, when asked if they provide security measures as per their lease, tick off the same methods over and over: Panic buttons inside the garage with direct links to the local police department, lighting, gates, surveillance monitors, ffb and more. As part of their policy, Champion suggests boards contact their local police depart-ment's robbery division. A represent-ative from the division will come down and go through the garage, pointing out trouble spots, letting the board know where their areas of entry are weakest. From the suggestions made, like video cameras or having only those with monthly permits carry entrance keys, the vendor can follow through and bring about the changes needed to make the area safe and secure.

Rosenblatt explains that it's standard form for any leasing contract to include security measures and upkeep for the space used. As part of the lease for The Dorchester, Champion installed security gates and video cameras. Right now, our security is great, says Brown. We screen people coming in through the monitoring cameras and have gates surrounding the garage so nobody can get in when it's closed.

An Attractive Facility

Most operators say that repainting and making repairs are done on a need-to basis, although, when they first come into the building it is standard practice to repaint and fix anything that might need repair work. The simple reason behind this is that they want people to come in and use the space and if it doesn't look presentable, residents and guests will be turned off. On maintaining the garage's appearance, Miesel advises that lease agreements should be structured so that they spell out plainly when the interior or exterior will be repainted and that the space will be kept clean. Although it is considered standard policy that the garage will be cleaned and swept each night, such a clause might have helped Brown during her experiences with the family members who took over the lease for her building. Richard Siegler of Stroock and Stroock and Lavan, a law firm that works extensively with co-ops and condos, also feels that any lease should have clauses stating that attendants should be neat looking and the area should be kept clean. If any of these clauses aren't followed, there should be a provision for the agreement to be terminated.

Special consideration for residents is another way to ensure that your garage will do a brisk trade. Siegler feels that any add-ons can only improve the relationship between vendor and the building. Siegler, who helped iron out the lease between The Dorchester and Champion says, As part of the lease obligation, the garage tenant should give preference to building residents. This can include a discount, say of 15 percent, for monthly parking. Kevin Wolf, president of Rapid Park Industries, often offers discounts to patrons of local restaurants and health clubs in the garages his firm operates. We have arrangements with the Hard Rock Cafe and any athletic clubs in the vicinity of the buildings we're working at, Wolf says.

Working together with your accountant and attorney, your building can find the best way to maximize income from its garage space, while providing a welcoming, safe environment for residents.

Mr. Serken is Associate Editor of The New York Cooperator.

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