In a city as crowded and fast-paced as New York, parking is a big deal—it’s hard to find it when you need it, and when you do find it, it’s usually very expensive. Since parking spaces in the city are such a hot commodity, 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 decides to manage the garage.
Whether the facility is underneath the building or adjacent to it, there’s more to running a parking garage than just painting some stripes on the pavement and watching the cash roll in. Supervising employees, sending out bills and collecting fees, allocating spaces for residents and managing the income 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 facility.
Who’s In Charge?
How a residential board manages an underground or adjacent parking facility differs from building to building. The boards of directors of some multi-family 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. About 20 percent of the city’s co-op and condo buildings operate their parking garages in this manner. One disadvantage of this setup is that some parking facility operators will shy away from working under such a contract, preferring an arrangement in which they’re free 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.