Authority open to renegotiating B.P.C. condo hikes.
BPC is Battery Park City, a choice neighborhood in downtown Manhattan, where high-rise condominiums were built on leased land. The condo owners knew when they bought their condos that their special deal on land rent was only temporary, and that land rents would rise to market levels. They may have told themselves that it wouldn't happen, but their self-delusion is no reason for the world to bend to continue to subsidize them.
Now they're crying foul. They're paying $30 a month in land rent, and are unhappy with the prospect of land rent rising to $300 per month.
All good things must come to an end, and this subsidy, which has grown to 97%, is one of them. It does not come out of thin air. To finance this subsidy, the wages of NYC workers are being taxed. The purchases of NYC residents and tourists are being taxed.
I'm glad to see that the city is at last going to be collecting the ground rent from these well-situated condo dwellers. If it brings the selling price of these condos down and makes them affordable for some people who otherwise could not afford them, that seems to me to be a good thing. The current group of tenants has been receiving a fabulous deal from their fellow New Yorkers, and it is time for it to end. They need to get ready to pay their ground rent.
BPC is Battery Park City, a choice neighborhood in downtown Manhattan, where high-rise condominiums were built on leased land. The condo owners knew when they bought their condos that their special deal on land rent was only temporary, and that land rents would rise to market levels. They may have told themselves that it wouldn't happen, but their self-delusion is no reason for the world to bend to continue to subsidize them.
Now they're crying foul. They're paying $30 a month in land rent, and are unhappy with the prospect of land rent rising to $300 per month.
The ground rents, a fee residents pay in addition to the equivalent of
property taxes, were set decades ago based on negotiations between
developers and the authority. The ground rents vary widely from
building to building, but all have built-in increases after 25 and 40
years. Many buildings are about to hit the 25-year mark, and some
residents who are paying only $30 a month will soon pay $300, while
others who are paying about $200 a month will soon pay $450.
Then, in another 15 years, all of the ground rents will go up to 6 percent of market value, which would be well over $1,000 a month for many homeowners based on today’s values.
“Some of the increases are absolutely staggering,” said Anthony Notaro, one of the residents leading the negotiations. “It would literally destroy this neighborhood.”
Notaro and other residents worked with Assembly Speaker Sheldon Silver on their plan, and Silver recently presented it to the B.P.C. Authority on their behalf. The deal under discussion would spread the imminent rent spikes over 15 years rather than having them hit residents all at once, Cavanaugh and Silver said. The plan would also mitigate the next wave of increases that will start around 2026. ....
This week, though, Cavanaugh sounded much more amenable to mitigating the increases at the 11 buildings, especially the increases that are scheduled for 2026 and 2027. Those 40-year rent resents will bring ground rents at all the buildings to 6 percent of market value, which “will be very significant,” Cavanaugh said. ...
Although all condo owners should have known about the planned ground rent increases when they bought their condos — and they likely got a better price to make up for the ground rent — many people were surprised by how quickly property values have risen, with the ground rents following behind, Notaro said.
Notaro lives in Liberty Terrace, where the average ground rent would go from $34 a month to $310 a month in 2012 on top of the real estate taxes. In another 15 years, the rent would jump to $1,500 a month based on today’s values.
So Notaro is currently receiving a subsidy of $1,466 per month -- that's $17,592 per year, or a 97% subsidy -- from his fellow New Yorkers, and thinks that it is reasonable for them to be asked to continue to subsidize them, perhaps at a slightly lower percentage, for some continuing period of time to avoid some sort of "shock." Then, in another 15 years, all of the ground rents will go up to 6 percent of market value, which would be well over $1,000 a month for many homeowners based on today’s values.
“Some of the increases are absolutely staggering,” said Anthony Notaro, one of the residents leading the negotiations. “It would literally destroy this neighborhood.”
Notaro and other residents worked with Assembly Speaker Sheldon Silver on their plan, and Silver recently presented it to the B.P.C. Authority on their behalf. The deal under discussion would spread the imminent rent spikes over 15 years rather than having them hit residents all at once, Cavanaugh and Silver said. The plan would also mitigate the next wave of increases that will start around 2026. ....
This week, though, Cavanaugh sounded much more amenable to mitigating the increases at the 11 buildings, especially the increases that are scheduled for 2026 and 2027. Those 40-year rent resents will bring ground rents at all the buildings to 6 percent of market value, which “will be very significant,” Cavanaugh said. ...
Although all condo owners should have known about the planned ground rent increases when they bought their condos — and they likely got a better price to make up for the ground rent — many people were surprised by how quickly property values have risen, with the ground rents following behind, Notaro said.
Notaro lives in Liberty Terrace, where the average ground rent would go from $34 a month to $310 a month in 2012 on top of the real estate taxes. In another 15 years, the rent would jump to $1,500 a month based on today’s values.
All good things must come to an end, and this subsidy, which has grown to 97%, is one of them. It does not come out of thin air. To finance this subsidy, the wages of NYC workers are being taxed. The purchases of NYC residents and tourists are being taxed.
I'm glad to see that the city is at last going to be collecting the ground rent from these well-situated condo dwellers. If it brings the selling price of these condos down and makes them affordable for some people who otherwise could not afford them, that seems to me to be a good thing. The current group of tenants has been receiving a fabulous deal from their fellow New Yorkers, and it is time for it to end. They need to get ready to pay their ground rent.
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