NYC’s Rent-Stabilized Parking: A Hidden Subsidy to Drive

carrera.jpgIs this guy paying below-market rates to park? It’s possible. Photo: carspotter/Flickr.

We say it a lot here on Streetsblog: cheap parking is bad policy. Without putting the right price on the scarce space that cars take up, people have more incentive to own and drive automobiles. In New York City, thanks to everything from free or cheap on-street parking to subsidized garages and parking minimums, distortions in the parking market are all around us. They also come from some unexpected places. Like rent stabilization laws.

Rent stabilization covers fully one half of all rental units in New York City [PDF] — nearly 900,000 apartments where the government sets a firm limit on the annual increase in rent.

Many of the city’s rent-stabilized apartments, it turns out, also come with rent-stabilized parking spaces — giving some New Yorkers a publicly subsidized inducement to own and drive cars.

David King, a Columbia urban planning professor who researches parking behavior, put it simply: "The goal of rent stabilization is to make it affordable to live in New York City. Rent stabilization is a way of subsidizing the cost of housing, but by including parking with that, we’re subsidizing parking use." 

There are two different ways that a parking space can be attached to a rental unit, and rent stabilization affects both. Sometimes parking and housing are bundled together: Your rent pays for both an apartment and a parking space. In this case, rent regulation covers the cost of the parking space too. Rent stabilized apartments with parking bundled are "few and far between," said Bruce Falbo, the Bureau Chief for Rent Information at the state agency in charge of rent regulation. He says it’s much more common for rent stabilized apartments to offer residents parking through a different mechanism.

Under state law, a parking space is an "ancillary service" for rent-stabilized housing units (access to a building’s gym is another example). Residents aren’t required to sign up for ancillary services, but if they do, rent stabilization applies. "If you sign a separate lease for a spot in the parking garage in your building or next door, it’s an ancillary service that is also subject to rent regulation and subject to rent increase limitations," said Falbo.

Essentially, if you live in a rent stabilized apartment and you renew your one-year lease, the increase can’t exceed a certain percentage. So if you lease a parking space from your landlord, the price of that space can only go up by the same percentage. 

Falbo explained the rationale for including parking spaces in rent regulation as follows: "Tenants were enjoying a certain level of service at the time that the regulations were born and they wanted to maintain that level of service in the future. If you’re getting it, you should be entitled to continue to get it."

So how much is New York subsidizing car ownership and driving through rent stabilization? Well, it’s hard to say, because information is limited. Most importantly, we don’t know how many parking spaces are affected by rent regulation. Neither the state’s Division of Housing and Community Renewal nor the city’s Rent Guidelines Board, which sets the allowable yearly rent increase, tracks that number. Falbo was willing to venture only that the figure is significant. "There’s 880,000 rent regulated units in New York City," he said. "Play around, take a small percentage." Without knowing how many parking spaces are rent stabilized, it’s impossible to precisely gauge the broader impact of the policy.

We also don’t know how much the market price of these parking spaces would have increased in the absence of rent regulation. "Parking regulation is so screwed up that it’s impossible to know what the right price of parking should be," said King. "We have no sense of the real inflation of the price of parking."

What we do know is that there is some significant set of New Yorkers who can get residential parking spaces with prices capped by rent stabilization. Quite simply, King notes, that means "they’re more likely to buy a car."

  • That picture is so misleading! Upon seeing it I thought that the utrarich who can afford to buy $200,000 Porsches are somehow getting parking spaces on the cheap.

    I doubt anyone who can afford that car is in a rent stabilized apartment.

    Its a shame because this poor photo choice taints an otherwise excellent article.

  • glenn

    Not to mention NYCHA properties…

  • BicyclesOnly

    Andy B., there are some very wealthy folks living in rent stabilized and rent controlled apartments in NYC who could easily afford this set of wheels, though you’ve got a point as to the stylistic disconnect; BMW, Lexus or Mercedes are the more likely choices among that set than the flashy sportscar in the post.

  • While there are, approximately, 900,000 rent stabilized apartments in the City not all buildings with rent stabilized apartments have parking facilities for tenants. And even in those buildings where tenants can apply for parking, there’s often a long waiting list for a limited number of spaces.

    Not only does the statement “Many of the city’s rent-stabilized apartments, it turns out, also come with rent-stabilized parking spaces — giving some New Yorkers a publicly subsidized inducement to own and drive cars.” give a false impression about tenant parking, but it also implies that Rent Stabilization is a subsidy, which it is not.

  • Stacy’s right. It’s not a subsidy. And I doubt it’s a pool of permanent underpriced parking spaces either; when a new tenant moves in I would assume that the new tenant pays a fair market rate for the parking spot.

    Your mileage may vary, but I find the rationale about continuing to enjoy services that were offered at one time particularly persuasive. As for the relative cost, even without wading into the sea of rent regulations, one can find cheap parking spaces, just as one can find cheap gyms and cheap apartments and cheap bagels.

    Glenn, what about the NYCHA staff parking spaces?

  • Bystander

    This is kind of a silly piece and a little unworthy of Streetsblog.

    While subsidizing parking is a bad idea and practically a sin when it comes to rent stabilized units, this article offers no information about how frequently, or even if, this occurs. I would wager that the vast majority of rent stabilized apartments do not include parking spaces. We don’t know how Falbo defines “significant” is that 100 spaces or 1,000 spaces or is it 10,000 spaces? The US Census bureau reports over 3 million households in NYC. If it’s 10,000 rent stabilized spaces we are talking about 0.3% of NYC housing units and a little more than 1% of rent stabilized units… are those numbers significant?

    In general this society seems much more concerned with housing our cars than housing our people.

    But there’s no value in whipping the Streetsblog readers into a frenzy over a dishonest hypothetical accented by a unrelated photograph.

    Someone should ask Professor King how much Columbia subsidizes car ownership via faculty housing perqs.

  • Niccolo Machiavelli

    I disagree Bystander and I don’t feel whipped into a frenzy. It was a useful identification of market distortions in favor of automobile ownership and storage, an eclectic little piece of the parking puzzle. “a little more than 1% of rent stabilized units… are those numbers significant?” I think 1% is pretty important. “In an avalanche no snowflake feels responsible.”

  • In my observation, market-rate tenants are more affluent and more likely to drive.

  • clever-title

    The stories of building owners trying to evict rent-stabilized tenants are legion in this city. Building owners oppose rent stabilization, since they can make more money without it.

    Why would those same building owners offer rent-stabilized parking to their tenants when they could offer it to non-residents without any price controls?

    I may be missing something, but it would seem that rent-stabilized parking would be evaded if the building owners could figure a way out of it.

  • mfs

    This should be an easy question to answer for anyone who has access to NYC Vacancy & Housing Survey microdata.

  • patrick

    I’m glad people have pointed out some of the issues in this article.

    NYC has been losing Rent stabilized housing units by the thousands since the mid-1990s. Any apartment with a vacancy price of $2000+ can be taken out of rent regulation. Given this, i can’t imagine there are many “rent-stabilized” parking spaces.. as most of the neighborhoods where these parking spaces would have been built likely have median rent prices above 2000 for any given unit.

    Also, consider that most of these units will likely be in post-war buildings that have doormen and other amenities. How many apartments do you see like this in Manhattan and Brooklyn with prices below 2000?

    Finally, we should tread carefully on issues of rent-regulation.

  • Erin

    I don’t think this article is pointless. I’ve never thought about this and it’s interesting. Also, I know some really wealthy people who live in rent-stabilized apartments in the ritzy lower Upper East Side, who have multiple vacation homes and Mercedes, etc., and who pay less for their apartments than I do in Brooklyn. It’s certainly not unheard of…

  • Erin

    Also, there is plenty of other parking subsidation going on. My work subsidizes the gas and parking of the employees who drive. People who take transit don’t get a better deal than people who drive. And I doubt my employer is the only one to do this.

  • JK

    This is a great article. Streetsblog is highlighting a rarely identified, and still ill defined subsidy for car ownership and use. The writer makes no attempt to define the exact extent of this parking subsidy, other than to note that it could be very large. There is “no problem” with this article.

    Rent control is most definitely a subsidy. Anything, be it a law or direct appropriation, that keeps the price of a service or good below it’s market price, is a subsidy. So, what? Lots of things are subsidized and cross-subsidized — and Streetsblog writes about them all the time, be they free East River Bridges or subsidies for transit riders. The important thing to recognize about subsidies is that they result in higher demand for the subsidized item. The problem with subsidizing residential parking is that it leads to higher car use. This is why economists and sustainability planners of all stripes want parking costs “unbundled” from the overall cost of housing. Lastly, this article isn’t about all of the various chicanery of building owners and rich people and rent regulations.

  • JK, New York State describes its rent regulation system, of which rent stabilization and rent control are parts, in this way: “Rent regulation is intended to protect tenants in privately-owned buildings from illegal rent increases and allow owners to maintain their buildings and realize a reasonable profit.”

    There are several housing subsidy programs active in New York City, like Section 8 and Public Assistance (Jiggetts), in which the government pays landlords to house the poor. There is also the NYCHA, in which the government is the landlord.

    Using the word “subsidy” to describe every existing housing (or transportation, or food, or business, or education) regulation doesn’t add to conceptual clarity, and perpetuates the illusion that there is some kind of mythical just and fair “market price” that represents the actual true, fair, and just cost of an item, free from government intervention.

  • parker

    R/S parking spaces are ridiculous. The problem is that it ossifies the state of the world in 1971 or whenever the building fell under rent stabilization/control, and ignores changes in the occupant’s circumstances, owner’s costs, neighborhood transit access, etc..

    It imposes huge costs on everyone else in that it removes thousands of parking spots from those who would value them more, and it subsidizes car ownership for those who often don’t use it.

    Many _VERY_ wealthy people are rent controlled/stabilized. I knew a guy who made well over a million a year who paid $1200 to live in a nice apt in Manhattan.

  • The rent stabilization and control regime in NYC has its upside but is a blunt instruments indeed for delivering need-based housing subsidies. If the broad rationale for maintaining below-market rents under the regime is to “keep the middle class in NYC,” then why do we need to subsidize these people’s car ownership–to facilitate their travel to their country homes on the weekends, where they can purchase lower cost and sales tax-advantaged groceries and car insurance, and kvetch about “welfare queens” in NYC? Is that the kind of middle-class lifestyle we’re trying to promote with housing subsidies?

    Sorry for the exaggerated portrait, but it fits at least one family I know with ten rent-controlled penthouse rooms on Central Park West who pay well under $1,000 a month. Back in my student days, I used to dog-sit for them when they summered in Europe.

    Of course, the #1 subsidy for auto use in NYC, which surely dwarfs any subsidy for rent-stabilized garage-parking tenants who at least have to pay something, is the free curbside parking offered on thousands of NYC streets.

  • Larry Littlefield

    “This should be an easy question to answer for anyone who has access to NYC Vacancy & Housing Survey microdata.”

    I don’t recall ever seeing data on parking in the survey. It would probably require a field survey. But here is some information.

    Rent control was imposed during WWII, and extended thereafter with a promise that new buildings would become exempt. That promise was broken in 1974, when rent stabilization was retroactively imposed on all buildings built in the interim.

    Until some time in the 1950s, it was illegal to have structured parking within a residential building, due to fear of fire. So buildings constructed some time between then and 1974 is where you have RS buildings with parking. Think “white brick” and “diving board balconies.”

    There was an enormous multi-family building boom in the early 1960s as developers tried to beat a citywide rezoning, which led to a crash that put lots of developers out of business.

    On the other hand, are those spaces really rent stabilized? Virtually all buildings of the era seem to function as public parking garages. Theoretically, if the parking was required/permitted as “accessory parking” this is illegal under zoning, but it is completely unenforced.

  • BicyclesOnly, thanks for pointing out the real enemy. But one quibble: where do you shop in New York City that collects sales tax on groceries?

  • While there may still be some wealthy families living in rent regulated apartments many of these apartments have been phased out since the 80s as a result of luxury and vacancy decontrol. One can only imagine why a landlord would allow wealthy tenants to remain in a rent regulated apartment when he’s well within his rights to apply for luxury decontrol if he suspects the household grossed more than $175,000 a year for more than two years in a row.

    I also suspect that many rent stabilized apartments that had parking spaces included in the lease have also been phased out. Those that remain are probably located in housing developments like Starret City, or Parkchester in the Bronx. Obviously the value of parking space in Spring Creek is considerably less than the same size space in Manhattan.

  • Larry Littlefield

    “One can only imagine why a landlord would allow wealthy tenants to remain in a rent regulated apartment when he’s well within his rights to apply for luxury decontrol if he suspects the household grossed more than $175,000 a year for more than two years in a row.”

    Even if the income is $1 million per year, units cannot be decontrolled unless the rent stabilized rent reached $2,000 per month. That’s what nailed Tishman at Stuytown. They get a vacancy, but the market won’t support that much rent, and if they lease for less — rent stabilization forever!

  • Not only are you making a problem whose scope is unknown appear huge, but also there’s evidence to suggest it’s a small issue. Most rent-stabilized and rent-controlled housing in New York is in the older inner urban neighborhoods, where few people own cars. The highest rate of rent-controlled and rent-stabilized apartments is in Manhattan, which has 150 vehicles per 1,000 people.

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