Steep rent hikes as grants near end
By Elizabeth OBrien
Battery Park City is bracing for change as the bulk of 9/11 rental assistance winds down and residents evaluate whether they can afford to remain in the area without the monthly government subsidy.
Officials at the Lower Manhattan Development Corporation, which administers the residential grant program, estimate the majority of participants will stop receiving their monthly $500 checks some time between February and June. In addition, two-year leases signed in early 2002when rents were reduced after the Sept. 11, 2001 terror attackare coming up for renewal.
So residents receiving the L.M.D.C. grants must weigh the cost of rental increases along with the loss of their monthly checks.
Now youre going to hear a lot of buzz, because people have to make a decision, said Anthony Notaro, a member of Community Board 1 and a Battery Park City resident.
The Lower Manhattan Development Corporation, a state-city agency, designed its $281-million residential grant program to attract new residents Downtown after the terror attack and to entice existing residents to stay. Two-year commitment grants provide residents in eligible areas up to $12,000 if they signed two-year leases or bought homes with the intention of remaining in the area for two years.
The grants are widely credited with helping to repopulate Lower Manhattan after 9/11, especially in areas like Battery Park City, where occupancy rates plunged after the terror attack. It took months for a supermarket and a bank to return to the southern part of Battery Park City, and along with the lack of amenities, the nearby recovery efforts at ground zero added to the difficult living conditions.
Without a monetary incentive, why would people move here? asked Linda Belfer, president of the tenants association at Gateway Plaza in Battery Park City and a member of C.B. 1.
But as much as they appreciate the grants, some longtime tenants like Belfer said they worried the money would weaken the stability of the neighborhood by attracting a transient population. While it remains to be seen whether there will be a mass exodus as many grants expire, it seems certain there will be movement.
Tim Carey, president and C.E.O. of the Battery Park City Authority, predicted a slight dip in occupancy rates once all grants expire, from the current 97 percent down to Battery Park Citys usual rate of 95 percent.
We dont perceive system-wide having a big drop, because our numbers are very good, Carey said.
Anecdotal evidence suggests the number of residents relying on grant payments might be higher than Careys estimate. Battery Park City is within the zone receiving the highest residential grant payments.
Charles Singer, direct of market research at Rockrose Development Corp., which manages three buildings in Battery Park City, estimated that five to 10 percent of the tenants in the three properties absolutely needed the grants to pay their rent.
Trish Franckowiak is one of them. A trader, Franckowiak, 34, lives in a two-bedroom apartment at 333 Rector Place with her 20-month-old daughter. Her grant payments and her lease both expire on March 1. Franckowiak said Rockrose would raise her rent, currently $3,067, about $400 if she renews her lease, which, coupled with the loss of $500 from the L.M.D.C., means an extra $900 a month.
I have to moveI cant afford a $900 increase, Franckowiak said.
Francowiak said she hopes to remain in Battery Park City and plans to look for a cheaper apartment in another building. Some Battery Park City buildings, including the Rockrose properties and Gateway Plaza, have recently offered one months free rent to new tenants, but not to renewing tenants.
In last Sundays New York Times, a Rockrose advertisement offered two months free rent to new renters at 22 River Terrace, 41 River Terrace, and 333 Rector Place. Singer said that was a special clearance sale to fill vacant apartments, which have since been filled. The promotion will not likely be repeated, he added.
The rental market is soft citywide, brokers say, which generally gives tenants more room to negotiate.
The rental prices have been down for a while, said Maria Kossek, a broker with D.J. Knight realtors in Battery Park City.
But some current and former Rockrose tenants told Downtown Express that management does not respond to requests for smaller rent hikes.
We hoped that this building would be more flexible on rents, and theres been little flexibility, which is disappointing, said a 32-year-old resident of 333 Rector Pl. who requested anonymity. She said the L.M.D.C. grants were a big incentive when she and her husband moved to Battery Park City from the Upper West Side in March of 2002.
Singer said its difficult to generalize about rents because every tenants situation is different. Those who moved in during the winter, when Battery Park City is less attractive and new leases offer lower rents, may face higher hikes than those who moved during the spring. In addition, some rents will jump more than usual because people who signed leases soon after the terror attack were paying well below pre-9/11 rates, getting deals such as a two-bedroom apartment for less than $3,000 a month, and now the market can support much more, Singer said. An apartments location within the building also affects the rental price.
Ken Baron, a resident of 22 River Terrace, said he and his girlfriend found a good deal on a three-bedroom apartment after Sept. 11 partly because their 11th-floor unit overlooked the construction site of the Solaire, a now-occupied tower, and not the river. With the L.M.D.C. grant, they pay $3,700 a month.
The couples lease and their monthly L.M.D.C. payments wont expire until September, but they are already worried they wont be able to afford the loss of the grant and whatever the rent increase will be.
We dont know what were going to do, Baron said.
The full impact of the residential grants on Lower Manhattan will not be clear until next year. The Lower Manhattan Development Corporation stopped accepting applications for the program in May, 2003, and those who registered then will continue to receive checks until May, 2005.
Some residential grants expired as early as last May, as payments went retroactive to June, 2001 for those who signed leases in the months before Sept. 11. Amy Peterson, vice president for development programs and economics at the Lower Manhattan Development Corporation, said that the corporation does not formally track the movement of those whose grants have already expired.
But Peterson noted that the last grant payment is sent after participants leases have already expired, and very few people have requested that the check be sent to another address. More than 25,500 people are receiving the two-year commitment grant in the two eligible areas defined by the L.M.D.C. Of the people in Zone I, which is closest to ground zero, more than half are new residents who moved to the area after Sept. 11, 2001, Peterson said.
While the residential grants undoubtedly prompted many new residents to move to the area, not all made the grants their deciding factor.
Charles Profit, who moved to Gateway after 9/11, said he and his partner chose an apartment they could afford even without the grant.
When I chose to move in, the residential grant payments hadnt startedthey were promised but they hadnt materialized, said Profit, 44. I wasnt going to base my decision on a promise.
Profit said he hopes to remain in the neighborhood after his grant expires in July, 2004, but that he would shop around for the best deals.
And then there are the longtime residents who never considered going anywhere else after the terror attack.
The L.M.D.C. grant, grateful though I am, is not what made me stay, said Belfer, a 21-year resident of Gateway.
Just as some residents will stay put, others will have to go. And they know they are not alone.
Trish Franckowiak said that she knows of at least three other tenants on her floor who will be moving out in the coming months.
Said Franckowiak, Theyre going to lose a lot of people.