One evening more than 30 years ago, Harry Malakoff was cruising the streets around his West Side apartment looking for a place to park when a car with Utah license plates swerved in front of him and nabbed a vacant space.
“I got over it,” the 70-year-old Malakoff recalled. “But I didn’t forget.”
These days the retired commercial real estate broker is a man on a mission: bringing to light the large number of New York City residents who drive cars registered in other states. Newcomers are required to register their cars with New York authorities within 30 days of moving to the state, but many don’t bother. As a result, they cheat the state and city out of millions of dollars in revenue while making use of precious free parking spaces.
article continues below advertisement Data points There are an estimated 25% of NYC drivers with cars registered out of state
The reported cost to the city in unpaid parking tickets by those drivers is $73 million
“I pay a lot to register and insure my Ford Fusion in New York,” Malakoff said. “When someone else takes advantage of benefits, like free street parking, but doesn’t help pay for them, I get mad.”
Neither the city nor the state could provide an exact number of improperly registered cars on the road, but a 2011 state Senate report found that nearly 25% of all accidents in the state involving cars with Pennsylvania license plates occurred in Brooklyn—a number that suggests many of those cars’ owners were New York residents, not visitors.
The report also found that motorists who live in New York but drive cars registered out of state cost the city $73 million in unpaid parking tickets and deprive the state of $1 million annually in fees for license plates, titles and vehicle registrations.
But those unpaid tickets and uncollected fees still take a back seat to the loss of potential sales tax revenue. A New Yorker who pays the average price for a new car—$33,560, according to Kelley Blue Book—must fork over about $3,000 in sales tax. Approximately 125,000 new cars were added to state Department of Motor Vehicles registration rolls in 2015. If up to 25% of residents’ vehicles were purchased out of state, as the Brooklyn accident number suggests, New York could have lost out on more than $93 million in tax revenue.
Insurance savings are tempting
The reason for the rampant tax evasion is simple: Registering a vehicle in New York means paying hefty insurance rates. New Yorkers statewide on average spend $1,182 annually insuring their cars, the third-most in the nation (behind New Jersey and the District of Columbia), according to the National Association of Insurance Commissioners, in part because fender benders are so common on the city’s packed streets. In Pennsylvania, the average rate is about 30% less.
New Yorkers who drive out-of-state cars aren’t driving just Malakoff crazy. The insurance industry for years has lobbied Albany to crack down. The state Department of Financial Services estimates that people who live in New York but register their car out of state cost insurers $19 million each year in underpriced premiums.
“Registration fraud and rate evasion continue to be serious problems in New York because there are no substantial consequences for individuals who lie about where their car is garaged,” said Ellen Melchionni, president of the New York Insurance Association. “Real repercussions need to be put in place to discourage individuals from engaging in fraudulent behavior.”
There has been talk of “real repercussions” for a long time, but little action. In 1987 New York state and city officials searched streets and garages at night and found that about 10% of cars were registered out of state. They estimated that the city was losing $20 million per year in sales tax, The New York Times reported, but nothing was done.
Photo: Buck Ennis Malakoff inspects cars with out-of-state plates near his home on the West Side.
Three years ago, the issue returned to the fore when the state Senate approved a bill that would have made listing a false address on a car insurance or vehicle registration form a felony.
“This is no little white lie,” said one of the bill’s sponsors, Sen. Diane Savino, D-Staten Island. “If you live here but register your car out of state, you’re not only committing fraud; you’re also making things more expensive for your neighbors.”
Nonetheless, the state Assembly never took up the issue. Several spokespeople for the bill’s sponsors declined to comment on whether the measure will be resurrected this year.
No easy fix
It’s easy to recognize the problem, but coming up with remedies is hard. It’s the New York Police Department’s job to ensure cars are registered properly, but state officials privately say such checks are not a high priority. (An NYPD spokesman didn’t reply to requests for comment.) In addition, although some prosperous New Yorkers register their cars using a weekend-home address and could afford higher insurance bills, other drivers would struggle to pay rising premiums if forced to register their cars here. “Cracking down on out-of-state cars means higher costs for people,” a state official said.
Even so, Malakoff questioned why the Legislature wouldn’t approve a plan that would raise revenue without increasing taxes or fees already on the books. He reckons that lawmakers are reluctant to act because so many of their constituents drive cars that are registered in other states.
Malakoff has for the past 30 years urged the city to introduce parking permits reserved for locals, as a way to reward New Yorkers who register here. The idea was last rejected in 2012, after the city’s transportation commissioner said parking permits would be costly to administer and contribute to a “sense of exclusion” in adjacent neighborhoods.
There’s little for the exasperated Malakoff to do but walk the streets of his Chelsea neighborhood and count the out-of-state cars.
On a recent weekday morning, he discovered that nearly 30% of parked cars had out-of-state plates. It isn’t always easy to determine which cars belong to visitors and which to residents, so Malakoff looked closely for clues. The windshield of a car with Texas plates displayed a tag from a university there that expired more than a year ago.
“This driver maybe doesn’t live in Texas anymore,” Malakoff said.
On West 21st Street, he found a silver Lexus with Wisconsin plates. It was a car he had seen during previous examinations.
“The driver doesn’t live in Wisconsin; she lives in a building on this street,” Malakoff declared. “I’ve seen her with her keys.”
One evening more than 30 years ago, Harry Malakoff was cruising the streets around his West Side apartment looking for a place to park when a car with Utah license plates swerved in front of him and nabbed a vacant space.
“I got over it,” the 70-year-old Malakoff recalled. “But I didn’t forget.”
These days the retired commercial real estate broker is a man on a mission: bringing to light the large number of New York City residents who drive cars registered in other states. Newcomers are required to register their cars with New York authorities within 30 days of moving to the state, but many don’t bother. As a result, they cheat the state and city out of millions of dollars in revenue while making use of precious free parking spaces.
“I pay a lot to register and insure my Ford Fusion in New York,” Malakoff said. “When someone else takes advantage of benefits, like free street parking, but doesn’t help pay for them, I get mad.”
Neither the city nor the state could provide an exact number of improperly registered cars on the road, but a 2011 state Senate report found that nearly 25% of all accidents in the state involving cars with Pennsylvania license plates occurred in Brooklyn—a number that suggests many of those cars’ owners were New York residents, not visitors.
The report also found that motorists who live in New York but drive cars registered out of state cost the city $73 million in unpaid parking tickets and deprive the state of $1 million annually in fees for license plates, titles and vehicle registrations.
But those unpaid tickets and uncollected fees still take a back seat to the loss of potential sales tax revenue. A New Yorker who pays the average price for a new car—$33,560, according to Kelley Blue Book—must fork over about $3,000 in sales tax. Approximately 125,000 new cars were added to state Department of Motor Vehicles registration rolls in 2015. If up to 25% of residents’ vehicles were purchased out of state, as the Brooklyn accident number suggests, New York could have lost out on more than $93 million in tax revenue.
The reason for the rampant tax evasion is simple: Registering a vehicle in New York means paying hefty insurance rates. New Yorkers statewide on average spend $1,182 annually insuring their cars, the third-most in the nation (behind New Jersey and the District of Columbia), according to the National Association of Insurance Commissioners, in part because fender benders are so common on the city’s packed streets. In Pennsylvania, the average rate is about 30% less.
New Yorkers who drive out-of-state cars aren’t driving just Malakoff crazy. The insurance industry for years has lobbied Albany to crack down. The state Department of Financial Services estimates that people who live in New York but register their car out of state cost insurers $19 million each year in underpriced premiums.
“Registration fraud and rate evasion continue to be serious problems in New York because there are no substantial consequences for individuals who lie about where their car is garaged,” said Ellen Melchionni, president of the New York Insurance Association. “Real repercussions need to be put in place to discourage individuals from engaging in fraudulent behavior.”
There has been talk of “real repercussions” for a long time, but little action. In 1987 New York state and city officials searched streets and garages at night and found that about 10% of cars were registered out of state. They estimated that the city was losing $20 million per year in sales tax, The New York Times reported, but nothing was done.
Three years ago, the issue returned to the fore when the state Senate approved a bill that would have made listing a false address on a car insurance or vehicle registration form a felony.
“This is no little white lie,” said one of the bill’s sponsors, Sen. Diane Savino, D-Staten Island. “If you live here but register your car out of state, you’re not only committing fraud; you’re also making things more expensive for your neighbors.”
Nonetheless, the state Assembly never took up the issue. Several spokespeople for the bill’s sponsors declined to comment on whether the measure will be resurrected this year.
It’s easy to recognize the problem, but coming up with remedies is hard. It’s the New York Police Department’s job to ensure cars are registered properly, but state officials privately say such checks are not a high priority. (An NYPD spokesman didn’t reply to requests for comment.) In addition, although some prosperous New Yorkers register their cars using a weekend-home address and could afford higher insurance bills, other drivers would struggle to pay rising premiums if forced to register their cars here. “Cracking down on out-of-state cars means higher costs for people,” a state official said.
Even so, Malakoff questioned why the Legislature wouldn’t approve a plan that would raise revenue without increasing taxes or fees already on the books. He reckons that lawmakers are reluctant to act because so many of their constituents drive cars that are registered in other states.
Malakoff has for the past 30 years urged the city to introduce parking permits reserved for locals, as a way to reward New Yorkers who register here. The idea was last rejected in 2012, after the city’s transportation commissioner said parking permits would be costly to administer and contribute to a “sense of exclusion” in adjacent neighborhoods.
There’s little for the exasperated Malakoff to do but walk the streets of his Chelsea neighborhood and count the out-of-state cars.
On a recent weekday morning, he discovered that nearly 30% of parked cars had out-of-state plates. It isn’t always easy to determine which cars belong to visitors and which to residents, so Malakoff looked closely for clues. The windshield of a car with Texas plates displayed a tag from a university there that expired more than a year ago.
“This driver maybe doesn’t live in Texas anymore,” Malakoff said.
On West 21st Street, he found a silver Lexus with Wisconsin plates. It was a car he had seen during previous examinations.
“The driver doesn’t live in Wisconsin; she lives in a building on this street,” Malakoff declared. “I’ve seen her with her keys.”
A version of this article appears in the February 6, 2017, print issue of Crain’s New York Business as “Car wars”.
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