/ THE BUSINESS OF PARKING /LEGAL
Parking Spot or Four-top? By Michael J. Ash, Esq., CRE
W
E ARE NOW ALMOST TWO YEARS into the COVID-19 pandemic and can glimpse the future to un-
derstand the changes throughout our society. Parking facilities hosted some of the most important COVID-19 facilities. I’ve personally drafted license agreements to convert surface parking lots to field hospitals, testing facilities, vaccine clinics, and drive-through movies. While some of these uses were temporary and no longer necessary, others will persist and may end up as permanent features. The parking lot as restaurant is here to stay and change requires an understanding of legal implications. Taking Inside Outside Social distance requirements forced the acts of drinking and dining to move from indoors to outdoors. Tents popped up with tables below. Restaurants that could pivot to utilize their outdoor space for hospitality were able to endure. For restaurants and shops without outdoor space, the closest outdoor spaces were annexed for commercial purposes resulting in the prevalence of “streeteries.” Evolved from the “parklet” or “pop-up” park concept, the streetery is a new part of the landscape in downtowns. Generally, the streetery is defined as an outdoor dining establishment, frequently under a tent or canopy structure and sometimes equipped with heaters. In New York City, I’ve witnessed streeteries with high-end finishes, intricate lighting, and built-in point of sale systems demonstrating significant investment in what would otherwise be a temporary improvement. The temporary streetery is now becoming a permanent fixture in the public space. In many downtowns, the streetery has been annexed to the sidewalk, on-street parking spaces, or off-street parking lots. What are the legal implications?
Legal Implications First of all, who gave permission to build the streetery? If the use of the space is meant to be temporary or seasonal, a recommended approach is to grant a license. A “license” is defined as a personal privi-
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lege to do some act on the land of another. A license is the legal term for the grant of permission to enter, occupy, or use real estate subject to specific terms. The license agreement provides the most flexibility in the duration and terms for the use of public facilities for other purposes. A license will often require a “license fee” for the specified use by the licensee. If the licensee is using the public facilities for the benefit of the public, e.g., COVID-19 testing facility, the license fee can be nominal or waived entirely. If the public facilities are being used for private profit, the license fee should reflect that use. If a restaurant is taking up on-street parking spaces, the restaurant is generating revenue derived
PARKING & MOBILITY / FEBRUARY 2022 / PARKING-MOBILITY.ORG
from the real estate, while the municipality is losing money from lost parking revenue. Any negotiation for a license fee should take this balance into account. Moreover, a license can be non-exclusive, so multiple parties have entitlement to use the same space.
Considering the Use If the appropriated parking space is not seasonal, will be used long-term with significant investment in fixtures, and will be for the exclusive use of one party, a more robust agreement may be necessary. Rather than a license, a lease can often imitate fee simple ownership if the acquisition of title is to be avoided.
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