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."