A 2013 study, Millennials & Mobility, produced for the American Public Transportation Association, found that Millennials—those aged 18 to 34—are the first generation to use multiple forms of transportation. Previous generations habitually travelled by public transport, private car, bicycle or foot—but not all four. Millennials, however, regularly walk, ride their bikes, use public transportation and, when the necessity arises, participate in a car co-op.

In particular, occupants of residential units that are located close to public transportation no longer rely on cars as their primary source of transportation. Consequently, local governments no longer demand that residential complexes have at least one parking stall for each residential unit. So how does a developer market and manage a residential development’s parkade with fewer stalls than units?

In a strata development, the parkade might remain common property with parking stalls licensed or leased to those owners of residential units requiring a parking stall. The licence or lease would expire when a residential unit is sold and the unit’s purchaser would likely have a right of first refusal to acquire the same parking stall under the same terms. If a purchaser did not want the parking stall, it would be available for licence or lease to other owners in the building pursuant to a waiting list which would be maintained by the strata corporation.

This scenario does contain a couple of legal hurdles. A strata corporation should be aware that Section 253 of the Strata Property Act states that the term of a lease of common property cannot exceed three years; otherwise, the lease of the common property is deemed to be a subdivision of land and the leased property ceases to be common property. Additionally, Section 76 of the Act limits short-term exclusive use of common property granted by a strata corporation to a period of not more than one year. The strata corporation may, however, repeatedly renew the use if each renewal term is no longer than one year. If the short-term exclusive use significantly changes the original use or appearance of the common property, the strata corporation cannot grant this use without the approval of all owners by a three-quarters vote.

From a developer’s perspective, the difficulty is that, by licensing or leasing parking stalls, their value, in the form of fees, accrues to the strata corporation and not the developer. To avoid this a developer can incorporate a captive company, which enters into a prepaid lease of the parkade before the strata plan is filed. This avoids the problems created by Section 253 of the Act since the parkade becomes common property subject to the lease, as opposed to common property that has been leased. The parking company partially assigns or subleases its interest in the parking stalls to owners. But such long-term lease arrangements do not provide a strata corporation with the lasting flexibility to manage the parking stalls as it sees fit.

In addition to leasing or licensing common property parking stalls for the use of individual owners, a parkade (or a portion of it) should be wired and metered to accommodate the recharging of electric cars. A certain number of parking stalls should also be set aside for a car co-op. A developer could consider entering into a contract with a car co-op and provide a year’s free membership for purchasers of residential units.

Alternatively, depending on the number of residents in the building, it could create a car co-op for the exclusive use of the building’s residents. However, it may be administratively difficult to purchase, maintain and insure cars.  If the car co-op is not exclusively for the use of the building’s residents and is available to the general public, this would require parking stalls and vehicles to be in an unsecured portion of the parkade to allow for public access.

Given the travel propensities of Millennials, developers should start to be mindful of providing owners with more parking options. The standard practice of designating a parking stall as limited common property for the benefit of a particular strata lot may be a surefire way to add value to a residential unit. However, a well thought out plan to manage a different kind of parkade that is common property can still result in added value for all residential units.

For more information on the allocation of parking stalls in residential condominium developments and the Strata Property Act, please contact John or Susan.