This table shows the pending ground rent hike for the buildings without ground rent caps and those with the caps, both before and after the rent resets that will happen in the next several years if there is not a new deal. The numbers for the Liberty View, Regatta and Cove Club after the reset bring the ground rent to 6 percent of market value. The Battery Park City Authority is proposing to give those buildings a 25 percent increase over 15 years instead, which would be a lower and more gradual increase.
Authority releases report on proposed condo deal
By Julie Shapiro
The Battery Park City Authority is weighing a proposal that would reduce the amount of money the authority contributes to the city for affordable housing.
The city would receive $56.1 million less over 15 years, according to the proposal, which the authority released to Downtown Express this week.
The reduction would allow the authority to limit an otherwise-drastic increase in ground rent slated for three Battery Park City condo buildings. Ground rent is a fee all B.P.C. property owners pay to the authority, which varies from building to building. The money goes into the authoritys coffers, and each year the authority transfers its surplus to a city affordable housing fund.
Most of Battery Park Citys buildings have caps on how much the ground rent can increase, but three buildings the Regatta,
Liberty View and Cove Club have no caps.
Without the authoritys new proposal, the ground rent at those three buildings would soon jump to 6 percent of market value, which is much higher than what the buildings currently are paying. At the Regatta, for example, that would mean the monthly ground rent per apartment would increase from $841 now to $2,157 next year.
The residents met with the authority, concerned about such a steep increase, and they proposed an alternative: Increase the ground rent 25 percent over 15 years, which comes out to 3.144 percent a year including interest. That increase would be much more reasonable, said Gene Glazer, president of the Regattas condo board.
The authority was scheduled to vote on the proposal at its board meeting last week, but they put off the vote after board member Charles Urstadt raised an objection. Urstadt was concerned about the city losing money for affordable housing.
Glazer said he had no objection to paying for affordable housing, but he did not think it was fair for the Regatta, Liberty View and Cove Club to pay more than neighboring buildings.
Everyone would agree [affordable housing] is a worthwhile use of money, but it is a question of a fair share, Glazer said. It would be like singling out these three buildings to pay an extraordinary amount compared to everyone else.
Even before the upcoming increase, the Regatta, Liberty View and Cove Club are already paying far more than 10 other residential buildings in Battery Park City. At the Liberty Court, for example, monthly ground rent is currently only $30 a month per apartment. It is slated to go up to $307 a month in 2012, but it will still be only a fraction of what the Regatta, Liberty View and Cove Club are paying.
Jim Cavanaugh, president of the Battery Park City Authority, said the reason such disparities he did not know. The authority negotiated separate agreements with each buildings developer based on a variety of factors, including the economy. Cavanaugh did not know why the Regatta, Liberty View and Cove Club were the only buildings without caps.
Cavanaugh agreed with Glazer that there should not be such a wide disparity between the ground rents different buildings pay, and he said the authoritys proposal would help. Cavanaugh also acknowledged Urstadts concern about the city losing money for affordable housing, but Cavanaugh said the $56.1 million represents only 1.6 percent of the authoritys expected contribution to the city over the next 15 years.
Even a large number, you have to look at it in perspective, and its not a huge percentage, Cavanaugh said.
Urstadt, who was out of the office this week, did not respond to requests for comment.
The governors office supports the ground rent proposal, and the city does not have to approve it, Cavanaugh said. He submitted the proposal to the city last week and said he had not received a response. The mayors office declined to comment Wednesday.
Under the proposal, the three buildings would not pay the 25 percent increase upfront but would phase it in over 15 years, through a formula calculated using a 6 percent interest rate. The residents prefer a steady increase, and the proposal states that the city may appreciate it as well: Operating expenses tend to grow with inflation, and revenue streams that likewise increase regularly tend to enhance fiscal stability.
The Battery Park City Authority will discuss the proposal at its next board meeting in January. The issue is particularly timely for residents of the Regatta, where the steep market-value increase is slated to go into effect in April 2009, unless the authority intervenes. The Liberty View and Cove Club have more time, as their increases are not scheduled until 2011.
The board appears anxious to resolve this at the next meeting, Cavanaugh said, and I hope that takes place. Its important for residents to have some certainty about what the new year will bring.
The authority also has another reason to resolve the matter quickly, as stated in the proposal: Management has concluded that reaching an agreement with the first buildings scheduled for rent resets would be preferable to a contested process that would inevitably draw the other buildings into a general posture of resistance.
The Regatta and Liberty View both support the proposal, but the Cove Club withdrew from discussions earlier this year, saying the proposal was inadequate. Cove Club residents are currently paying $950 in ground rent per month per apartment, the highest ground rent in the neighborhood. They were lobbying the authority for a ground rent reduction, not the tempered increase that the proposal offers, Glazer said.
A Cove Club representative could not be reached for comment.
The authoritys proposal acknowledges that Cove Club residents may complain that the plan does not go far enough, but it offers no remedy.
This is whats on table, Cavanaugh said. I dont anticipate changing it.
The proposal also notes that 10 other buildings may come to the authority asking for relief from their ground rent increases. Those 10 buildings all face increases over the next several years, some of them by very high percentages. For example, the Liberty Courts ground rent will go up by more than 90 percent, from $30 to $307.
But since ground rents in those buildings started out so low and have caps, the authority has no intention of softening the increase for them.
Our view is that this will not be a precedent, Cavanaugh said of the proposal for the Regatta, Liberty View and Cove Club. The whole basis of this proposal is the fact that these three buildings pay so much more than any other buildings here, and that raises the issue of fairness and equity.