Quaestor for the Community

Authority Hires New CFO with Background in Affordability and Diverse, Mixed-Income Development

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Janet Ozarchu

Janet Ozarchu

The Battery Park City Authority (BPCA) has found a replacement for outgoing chief financial officer Robert Serpico, who retired in November, after 30 years of service. Janet Ozarchuk brings to the job three decades of experience in the financial services industry (where she worked extensively with government clients) and the nonprofit sector, where she helped manage the finances of multiple organizations focused on community development and the cultivation of small businesses among disadvantaged populations and in low-income communities. She was educated at Fordham University (where she studied economics) and holds an MBA degree from Harvard University.

BPCA president and chief operating officer Shari Hyman said, “with her extensive background in real estate, municipal debt, and non-profit finance, Janet comes to the position ready to advise on, lead, and develop sound, innovative financial management practices that are rigorous and add value to the Authority and for its stakeholders.”

Ms. Ozarchuk called the Authority, “one of the great public-private partnerships in urban development,” adding that, “this role presents an especially exciting opportunity to bring my private and non-profit sector experience to bear in the public service.”

Ms. Ozarchuk is taking charge of the BPCA’s finances at a pivotal time. Her office will likely oversee negotiations with multiple buildings to reschedule the ground rent payments that provide hundreds of millions dollars to the Authority in annual income. This stems from the exotic nature of property ownership in Battery Park City, where homeowners, landlords, and developers do not own outright the land they occupy, but instead lease the space (through the year 2069), in exchange for yearly payments of ground rent, as well as so-called “payments in lieu of taxes.”

Concerns about this arrangement have grown acute in recent years, as more residents have come to realize that, under the current terms of the ground lease, their homes will disappear in the 52 years, when ownership of all the real estate in Battery Park City reverts to the Authority. For condominium owners, this will mean that their property is effectively confiscated, while renters will face the prospect of eviction. Both owners and tenants will be rendered homeless under this scenario. And although the year 2069 may seem like a distant milestone, mortgage bankers are already becoming skittish about loans collateralized by Battery Park City apartments, while real estate appraisers believe that the risks posed by the ground lease are already causing local property values to soften.

Battery Park City’s largest residential complex, Gateway Plaza, is believed to be in the process of renegotiating its ground rent, in exchange for preserving (and perhaps expanding) affordability protections for its tenants. These negotiations may speak to a central aspect of Ms. Ozarchuk’s experience. She has worked for a range of nonprofit organizations, such as the Local Initiatives Support Corporation, that develop affordable housing around the nation. At Capital Impact Partners, Ms. Ozarchuk was part of a team that counts among its missions developing affordable housing in order to, “build diverse, mixed-income communities.” At TruFund Financial Services, a subsidiary of Seedco, she helped finance a mission to, “provide affordable financing to… real estate projects in low-to-moderate income and economically distressed communities.”

This part of Ms. Ozarchuk’s background may prove relevant in coming years (well in advance of 2069), as multiple residential buildings in Battery Park City that were built with public subsidies (such as tax abatements and low-interest loans) in exchange for some affordability provisions now — or soon will — face the expiration of these safeguards. Among them are Riverwatch (70 Battery Place), the Solaire (20 River Terrace), Tribeca Green (325 North End Avenue), Tribeca Park (400 Chambers Street), Tribeca Pointe (41 River Terrace), and the Verdesian (211 North End Avenue).

Tribeca Pointe is an illustrative case. One-fifth of the building’s 340 apartments are set aside for residents who cannot afford to pay market-rate rents. But those provisions are set to expire in 2020, and the company that owns the building now plans to convert it into condominium apartments. This will likely mean that all of the building’s tenants, both those in market-rate apartments and affordable units, will face eviction.

Any negotiation to extend or expand the affordability provisions in these six buildings, and others like them (assuming the community summons the political will necessary even to begin such a dialog) will necessarily be — as has proved to be the case at Gateway Plaza — complex and protracted.

But the opportunity is significant. The BPCA collects large ground rent payments from the owners of each of these buildings, and could (with the consent of elected officials, who oversee the Authority) offer concessions on future lease payments in exchange for renewed affordability protections. (This is the model that the BPCA has followed three times in the past in negotiations with the owners of Gateway Plaza.) In this respect, the Authority actually has more leverage over the residential buildings within the community than City or State government do over apartments buildings elsewhere in New York, which are owned outright, rather than being subject to a government leasehold.

A second rationale for pursuing this course would be to address the perverse incentive created by the ground lease, which motivates building owners to deflect the uncertainty and financial hazards associated with the 2069 deadline (and the large increases in ground-rent payments that most of these buildings will face much sooner, in the 2020s) by transferring that risk to others, through condominium conversions. In this scenario, people who buy — rather than rent — the apartments in converted buildings will be the ones to face inflated costs in the short term and the possible outright loss of their property in the long term, rather than the developers who sell the buildings by converting them to condominiums. This dynamic appears to have catalyzed in recent years a wave of conversions of former rental buildings into condominiums, which has tipped the demographic balance in Battery Park City — a onetime majority-renter community — toward one in which most people own the apartments they inhabit.

Ultimately at stake is whether Battery Park City can remain the middle-class enclave that first established it as a desirable, successful community — or if it will become an exclusive sanctuary for immensely affluent residents.

On all of these issues, Ms. Ozarchuk’s demonstrated financial acumen will likely be useful. But her familiarity with issues related to affordability may prove to be crucial.

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