Illegal parking lots mean lost tax revenue for the city.
Three men dance in the street at Eighth and Willow in the club district Friday night. They shout out unintelligible syllables at passing cars and wave their orange flags wildly. At least half the cars driving by the men stop, make an inquiry and follow directions down the block. The surrounding streets are mostly dark, filled with sprawling, fenced-in parking lots that serve office buildings closed for the weekend.
A few lots are still open, and that’s where the men direct the vehicles. For $5 or $10 per car, visitors to the neighborhood can park and walk to the Electric Factory, where the New Deal is performing. Before they head in to the show, groups of kids stand around the lots, drinking, playing with hula hoops and discretely passing pipes and huff bags back and forth.
There’s a disclaimer on the Electric Factory’s website: “Electric Factory does not own, operate, control or receive any consideration for surrounding parking lots. All parking lots are privately owned and operated.” The disclaimer is there for good reason: According to records on the Board of Revision of Taxes’ website, the lots in the vicinity of the club neighborhood just south of Spring Garden are not zoned as public parking lots, the necessary designation to charge customers for parking. That means, as far as the city is concerned, there is no commercial parking in the lots in question, leaving fly-by-night or “gypsy” operators free to profit unconstrained by onerous city requirements like proper licenses, taxes and insurance.
Legitimate parking-lot operators, who say they are drowning under the highest tax rates in the city, are frustrated by what they perceive as unfair competition and the city’s indifference to enforcing its own laws. So they’re fighting back, launching an investigation into illegal lots and presenting their findings to City Hall. The companies are hesitant to directly criticize the Department of Licenses & Inspections, the agency in charge of regulation, but the message is clear: If Philadelphia won’t or can’t follow its own rulebook, someone else has to step in and fill the void.
“Our city is great at taxing businesses that audit themselves,” says Robert Zuritsky, president of Parkway, Philly’s largest parking company, which operates about 50 lots around the city. Zuritsky is also the president of the Philadelphia Parking Association, a group of 16 parking operators who estimate that they account for about 90 percent of the legal private lots in the city. “They’re so good at taxing us, they’re taxing us out of business.”
Two years ago, the city upped parking taxes from 15 to 20 percent of receipts, and companies are annoyed that they shoulder such a heavy burden while other parking lots get away with paying nothing.
Members of the association say they reported illegal lots via the city’s 311 line but saw no results, so they decided to compile a book of 51 addresses they investigated and found improperly zoned, according to information publicly available on city websites. The book includes maps, satellite pictures of the lots and photos of signs and other indications that the lots are in fact operated as for-profit parking areas. They presented the book to the city last month, and have since compiled a new folio with additional addresses, with more still to come.
The alleged illegal lots don’t just operate at night in the club district. Some are full-time, out in the open and in very prominent areas: Several down by the sports stadiums; a lot on Ninth Street, right outside Traffic Court; a Park America lot at 31st and Market streets, directly outside the Parking Authority headquarters; and there’s a whole strip of un-zoned lots on the fringes of Manayunk’s Main Street, also operated by Park America.
Park America says it pays parking taxes and that its lots are licensed. “If we weren’t paying parking taxes we’d have a big problem,” says Brian Lipkin, vice president of operations. “You want to talk about rogue parking lots, there’s a number of them in the city but these are not them.” He says the city verified a valid license on one of the Main Street lots, and the lot on Market Street is owned by Drexel. “I couldn’t tell you what kind of zoning is on it. They handle all the licensing and the zoning.”
But L&I says it has no parking license on file for the Market Street property, nor for several other Main Street lots.
Zuritsky estimates gypsy lots cost the city at least $1 million to $3 million annually in unpaid parking taxes alone, to say nothing of business taxes, payroll taxes, real-estate taxes, use and occupancy taxes and “special district” taxes charged in Center City and other neighborhoods. Stretched out over several years of noncompliance, the city could be looking at tens of millions in uncollected revenue.
L&I says it’s working on it. “We are currently reviewing the list and are investigating the validity its claims,” says Director of Operations Michael Maenner. “We then take the list and perform field checks to discount or verify its claims.” When L&I finds a violation, it gives the owner 35 days to comply by getting proper zoning and fixing other problems. If the issues are not resolved, L&I can order the owner to cease operations at the lot.
Maenner says L&I found many of the lots listed to be properly zoned, but the Parking Association says verifying compliance might be more complicated than the city understands. Some of the addresses are zoned as private parking lots, which don’t allow operators to charge customers. Other areas are properly zoned for valet parking, but the lots where the cars are parked aren’t zoned. Some of the addresses belong to schools and churches, which are classified as nonprofit and do not pay real-estate taxes, and therefore aren’t allowed to charge, either.
Bob Spear, co-owner of Old City-based EZ-Park, a Parking Association member, says before the recession, L&I inspectors used to visit his lots all the time and go into detail looking for violations. “They’d check the clock, the lighting, the drainage,” he says. “The parking booth to keep the man out of the weather. Even uniforms. If men don’t have uniforms, violation.”
When the struggling economy forced the city to cut back on its resources, L&I stopped coming around. It sounds like a load off the shoulders of operators, but in fact the relaxing of regulations had allowed these illegal parking lots to flourish.
To address the problems, Councilman Jim Kenney introduced a bill last Thursday that would turn private-lot enforcement over to the Philadelphia Parking Authority. “It authorizes the PPA to go in and make sure the business is in compliance and has proper licenses,” says Sarah Sachdev, Kenney’s director of legislative affairs. “It also requires parking businesses to display their business privilege license number on their signs and to accept credit cards.”
If enforcement does increase, more tax dollars should start rolling in to the city, but the Parking Association isn’t putting in all this work—an estimated 200 to 300 hours to compile the reports—just for the Revenue Department’s benefit. They’re hoping that if the city sees increased revenues, the 20 percent parking tax can be relaxed a point or two so they can erase some red ink from their own accounting books.
“We’ve been losing money the last two years,” Zuritsky says. “It’s not impossible for parking companies to go out of business.”