Tonight (Wednesday, April 7) the Battery Park City Committee of Community Board 1 (CB1) will host a review of the finances of the Battery Park City Authority (BPCA). To participate in this online meeting, which starts at 6:00 pm, please browse: https://live.mcb1.nyc.
The BPCA’s finances are of particular interest to condominium owners, for whom the cost of owning a home in the neighborhood is becoming increasingly prohibitive. These themes are closely linked because of the exotic nature of property ownership in Battery Park City, where homeowners, landlords, and developers do not own outright the acreage they occupy, but instead lease the space (through the year 2069) from a government agency—the BPCA—in exchange for yearly remittances of “ground rent,” as well as so-called “payments in lieu of taxes” (PILOT).
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 and absent any change, their homes will disappear in 48 years, as 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.
But condominium owners have an even more pressing concern in the short term: Ground leases for several of these buildings contain “reset” clauses, slated for the near future, under which their payments will jump to six percent of the fair market value of the land on which these buildings sit. For most buildings, this amount is likely to be appraised as running into many tens of millions of dollars—in some cases more than $100 million. Unless modified, this codicil will cause ground rents at some buildings to jump by several million dollars per year, which (in turn) will cause common charges to rise by thousands of dollars per month for each apartment in such buildings. This will inevitably cause the resale value of those units to plunge.
In the meantime, even for condominiums that are not facing a near-term reset, costs are spiraling. A 2011 deal negotiated by the Battery Park City Homeowner’s Coalition (representing 11 condominiums) limited ground rent increases through 2042 to three percent per year. But this means that a hypothetical condominium owner now paying $24,000 in annual ground rent (which is billed monthly, as a component of common charges) will be paying $32,254 per year a decade from now, and $44,647 per year in 2042. And after 2042, the “protected” condominium owners will face costs that could increase by orders of magnitude, as their leases once again revert to the original terms of fair-market-value resets. Even if such a unit-owner were to retain the three-percent cap on ground rent increases after 2042, by the time of the lease expiration in 2069, he or she would be paying $99,175 per year, just in ground rent. All of these amounts will be in addition to taxes, mortgage payments, and other costs.
“We share the desire to preserve and extend the economic stability that many homeowners in Battery Park City enjoy,” says Authority spokesman Nick Sbordone. “As enumerated in the BPCA’s Strategic Plan, increasing certainty and allowing residents to remain in their homes is one of the Authority’s primary goals. While the Authority has no control over the amount of property taxes passed through as PILOT to all buildings in Battery Park City, or operating expenses and capital costs incurred by individual buildings, the Authority’s goal in negotiating with members of the Battery Park City Homeowners Coalition is to create stability and predictability in ground rent — comprising, on average, less than 20% of total common charges — for many decades to come. We look forward to continued discussions with members of the Coalition about their future ground rent resets.”
Another perspective on this dilemma was recently shared by apartment owner Daniel Akkerman, a resident of Hudson View West, where he serves on that condo’s board. Mr. Akkerman, who is a co-founder of the Battery Alliance (a new grassroots organization that seeks to organize residents to lobby for a reform of the financial relationship between the Authority and condominium owners), says, “I moved here eight years ago, and since then I have become very concerned, as my common charges have increased by 50 percent. We need to go to elected officials, because they not only represent us as citizens, but are also our landlord.”
John Dellaportas, also a co-founder of the Battery Alliance (which can be found online at SaveBPC.org, and contacted via email at Info@savebpc.org), adds that, “we are already at a point where common charges for condominiums are exceeding what those apartments would fetch on the rental market. This effectively reduces that value of that ownership interest to zero.”
“What has begun happening,” Mr. Dellaportas continues, “is that working families are selling for whatever they can get and walking away, because they can’t afford to live here anymore. And they are being replaced by foreign investors looking to park cash.”
A further illustration of how these forces are converging to squeeze homeowners was provided by Bob Zack, a leader of the Homeowners Coalition, at a 2020 meeting of CB1’s Battery Park City Committee. Mr. Zack announced the result of financial projections he had tabulated, showing that, “if present trends continue, and I am still alive in the 2060s, the common charges on my apartment come to more than $100,000 per month. And that doesn’t include a mortgage payment. These numbers assume that I own my unit free and clear.”
Mr. Zack adds that long before such developments, “condominium prices will drop and it will become impossible to obtain loans to finance purchases and refinance existing mortgages. Another risk posed by rising ground rents and increased common charges is a rise in owner bankruptcies.” He also notes that the fair-market-value formula for resets is, if anything, worse than it sounds, because, “it calls for the higher of the prior year’s rent or the fair market value of the land, without considering the value of improvements, such as a building. So the latter is likely to be the number used, because unimproved land is worth far more than land with a building on it.”
These relentlessly escalating costs come against the backdrop of ever-rising revenues for the BPCA, which collects hundreds of millions of dollars annually, and categorizes the majority of this cash stream as “excess revenue,” which is remitted to City Hall. For the fiscal year ended October 31, 2019 (the most recent for which details are available), the BPCA collected a total of $324.6 million, representing an increase of $17.3 million or 5.6 percent over the prior year. By 2023, the Authority expects that its total receipts will grow to $366 million. For 2019, the BPCA describes $197 million of its revenue as “excess funds.” By 2023, this amount is expected to swell to slightly more than $246 million.
Justine Cuccia, chair of CB1’s Battery Park City Committee, has a straightforward take on BPCA revenues and the path toward affordability relief for homeowners. “Before the pandemic, I was saying $300 million is enough,” she reflects. “Fast forward 14 months, and I now say $300 million is too much. Ground rent, payments in lieu of taxes, and civic fees must be rolled back to a maximum of $200 million, which would cover the BPCA’s operating expenses and debt service, while still leaving well over $100 million a year in ‘excess funds’ to be paid to the City — money that can be earmarked for the New York City Housing Authority, education, and other worthy uses. But $200 million from Battery Park City residents is more than enough. We need legislation that both allows and requires the BPCA to roll back the amount of money they collect from the condominium owners in this neighborhood, so that residents can remain in the community they helped to build.”
How to avoid driving residents from their homes is a complicated question, but the prospect of any meaningful reform does appear to require agreement from the BPCA to collect less revenue in the future, through freezing (rather than merely limiting) increases to ground rent, and then rolling it back.
One possible template for such an agreement is furnished by the recent precedent of the BPCA’s willingness to renegotiate its lease with the operators of the bar and restaurant at Pier A, which encountered severe financial distress in recent years, before shutting down last October. In 2019, the Authority agreed to reduce the rent paid by operators of that facility from a total minimum rent of $39.125 million through the lease’s end (in 2038) to a total of $25 million. This represented neither a limit on increases in future rent, or even a freeze, but instead offered a 36 percent reduction in minimum rent over the duration of that lease.
The Authority’s decision was based on the rationale that, “this is an important part of our community and our primary goal is to have a successful business there and make sure that it continues to contribute to the thriving nature of the neighborhood,” in the words of BPCA general counsel Abby Goldenberg, who added that the change was justified because, “the current lease structure is proving, in actuality, to be unfeasible. And, in fact, they have fallen behind in their rent payments as a result of the lack of feasibility from an economic perspective.”
In contrast, Battery Park City condominium owners, who arguably also constitute “an important part of our community,” and whose leases appear to be similarly unfeasible, have thus far remained current on their financial obligations to the Authority, and have not been offered a one-third reduction in these obligations.
Another relevant paradigm for relief to condominium owners is furnished by last year’s negotiations between the BPCA and the LeFrak Organization over affordability for Gateway Plaza tenants. The deal that emerged from that process will save the LeFrak organization more than $228 million in future ground rent, in exchange for preserving affordability protections on approximately 600 apartments within Gateway, for ten years. This comes to a subsidy of approximately $480,000 per household. Applying the same formula to condominiums in Battery Park City would result (for the hypothetical unit-owner described above, now paying $24,000 in annual ground rent) in 20 years of free ground rent, or (if the subsidy were spread out) decades of drastically reduced costs and increased affordability.
“The only way this intolerable situation will be resolved is for State Senator Brian Kavanagh and other elected officials to get involved, as they did in the successful 2009-11 negotiations, and convince the BPCA to enter direct good-faith negotiations with the Homeowners Coalition,” says Pat Smith, president of the Battery Pointe condominium board, and a member of the Homeowner’s Coalition.
Mr. Dellaportas concludes that, “the obligations contained in the original leases between condominium owners and the BPCA are never going to be paid, under any circumstances. Not because residents will refuse to do so, but because it is financially impossible. The only choice facing the Authority is whether they want to force thousands of homeowners into default, and then evict them through foreclosure. Or whether they want to renegotiate those leases under more realistic terms.”
Harboring Good Will
Highly Regarded Maritime School on Governors Island to Expand
A years-long campaign by Lower Manhattan community leaders, elected officials, and parents came to fruition on Monday when an agreement to expand the Urban Assembly New York Harbor School on Governors Island was released.
The Trust for Governors Island and the School Construction Authority (SCA) announced that several long-standing priorities will be addressed in one package of funding: the Harbor School will grow into a building adjacent to its current home, where it will have room for an additional 18 classrooms, a pool and a gymnasium. To read more…
Webinar. What exactly is a SPAC, or special purpose acquisition company? What would make some companies pick a SPAC over an IPO? And why are investors lining up to jump on the trend? Join us for an evening panel conversation explaining one of Wall Street’s hottest trends. Free
1) BPCA Annual Budget Highlights – Presentation by B.J. Jones, President & CEO, Battery Park City Authority and Pamela Frederick, Chief Financial Officer, Battery Park City Authority
2) Tribeca Film Festival Installation – Presentation by Peter Downing, Arnold Sitruk, and Michael Scarna
3) IGY Marina Schedule for the 2021 Season – Presentation by Maureen Corrado, IGY Marinas
4) Public Seating at the Winter Garden – Update
5) BPCA Report – Nicholas Sbordone, Vice President of Communications & Public Affairs, Battery Park City Authority
6) BPC Security Update – Patrick Murphy, Director of Security, Allied Universal
The Plots Thicken
Liberty Community Gardens Wait Listers Will Finally Get Their Hands Dirty
Mounded with dark soil, teeming with earthworms, 26 new community garden plots are ready for action at the corner of Albany and West Streets. Thanks to the deconstruction of the Rector Street Bridge and ramp in 2019, and the support of the Battery Park City Authority, the New York State Department of the Transportation and the New York City Department of Transportation, Liberty Community Gardens (LCG), a cherished part of the neighborhood, has expanded by about a third.
Liberty Community Gardens were founded in 1987 by local residents with the guidance of Battery Park City Parks. Initially, there were 24 plots on the north and south sides of Rector lawn.
State’s Highest Court Blocks Suit by Brewer, Chin Opposing Two Bridges Plan
On Tuesday, the New York State Court of Appeals effectively ended a lawsuit begun in 2018, in which Manhattan Borough President Gale Brewer and City Council member Margaret Chin sought to compel the administration of Mayor Bill de Blasio to subject several massive residential developments planned for the Lower East Side to the highest-possible degree of legal scrutiny. New York’s highest judicial review panel upheld an August ruling by the Appellate Division of the New York State Supreme Court, which itself had overturned a 2019 lower-court decision favoring Ms. Brewer and Ms. Chin. To read more…
Getting Squeezed Coming and Going
Washington Okays Congestion Pricing Program that Local Leaders Fear will Penalize Lower Manhattan Residents
The prospect of Lower Manhattan residents being penalized for the privilege of driving to or from their homes moved a step closer to reality on Tuesday, when the Federal Highway Administration (FHWA) sent word to City and State officials that they would allow the congestion pricing plan, devised by Mayor Bill de Blasio and Governor Andrew Cuomo, to move forward under the less rigorous of two possible environmental oversight standards.
The FHWA, an arm of the federal Department of Transportation, decided to allow New York to move ahead under the looser benchmark of an environmental assessment, rather than a full environmental impact statement. “An Environmental Assessment generally requires less time to complete than an Environmental Impact Statement, should no significant impacts be identified,” the agency said in a statement. To read more…
Governor Opens Hurricane Maria Memorial
On Friday, Governor Andrew M. Cuomo announced the opening of the Hurricane Maria Memorial in Battery Park City, located at the corner of Chambers Street and River Terrace. Mr. Cuomo made this announcement at an unrelated event in the Bronx, which was closed to the press, as has become the embattled Governor’s custom in recent weeks, while he faces multiple accusations of sexual misconduct, along with allegations that his handling of the COVID-19 pandemic led to thousands of deaths in New York that might otherwise have been prevented. To read more…
Pearl of Wisdom
Brewer Pushes for FiDi Thoroughfare to Be Made Pedestrian-Friendly in Perpetuity
Manhattan Borough President Gale Brewer is pushing the administration of Mayor Bill de Blasio to expand and make permanent a trial implementation of the Open Street program in Lower Manhattan. Since last summer, the City’s Department of Transportation (DOT) has each day restricted vehicular access to Pearl Street, between Broad Street and Hanover Square, from 11:00 am to 3:00 pm and again from 5:00 pm to 11:00 pm To read more…
Alliance For Downtown New York Hosts 2021 Shred-A-Thon
And Clothing Drop-Off
After a year like the one we all just endured and the promise of a brighter day emerging, the idea of “spring cleaning” takes on new energy and meaning.
Now is the time to round up all the old clothes and unwanted documents that have been piling up and bring them over to Fulton Street (between Cliff and Gold Streets) for the Downtown Alliance’s annual dual shred-a-thon and clothing drop-off Saturday, April 17 from 9 a.m. to 1 p.m.
A shredding truck parked on Fulton Street will securely dispose of and recycle all your sensitive documents, tax receipts, junk mail and old bills.
The Alliance is also partnering with NYC clothing recycler Wearable Collections, which is providing a bin to collect all dry, used clean clothing including shoes, sneakers, belts and hats, as well as household items such as linens, towels and handbags.
Rain or shine, the Alliance will be there to dispose of your much-loved old outfits and no-longer-needed memories, minus a few items (e.g., carpeting, rugs, bath mats, comforters, pillows, large luggage). This spring will be even sweeter when you’ve got some extra space.
Local Leaders Get Irredentist to Reclaim Park Space Dispossessed for a Decade
Community Board 1 (CB1) wants the administration of Mayor Bill de Blasio to give back park space beneath the Brooklyn Bridge that was “temporarily” closed more than a decade ago. The area, informally known as “Brooklyn Banks,” is an iconic destination for skateboarders, because the streetscape provides an undulating terrain of ramps, rails, ledges, and jumps. Long before any of these stunts were legal in New York, boarders from around the United States would come to the City to compete there, and connect with one another. To read more…
CLASSIFIEDS & PERSONALS
Swaps & Trades, Respectable Employment, Lost and Found
Matt Keating is a singer/songwriter who lives in Lower Manhattan with his wife Emily. In a recent post on Facebook, he described his friendship with a man who took shelter outside his building, and how he helped this man receive his federal stimulus check.
This is my neighbor Jamal. We became friends about a month ago when I met him taking shelter outside of my building under the construction scaffolding that’s been put up for a while now. He is currently without a home and asks politely for any help from me whenever I walk by so I started giving him something every once in a while whenever I had it. He was very grateful and we struck up a conversation about politics and the current situation of inequality in this country.
About two weeks ago, as Emily and I were leaving to do our weekly visit to the Union Square Farmers Market, he came up to us and showed us that his shoes were falling apart. His soles were flapping and it was wet out. To read more…
9/11 Victim Compensation Fund Report
More Survivors than Responders Now are Submitting Claims
The September 11th Victim Compensation Fund (VCF) has released its annual report for 2020, which documents some significant developments.
Over the course of its ten years of operation thus far, the VCF has awarded $7.76 billion to more than 34,400 individuals who have suffered death or personal injury as a result of the terrorist attacks of September 11, 2001 and their aftermath. The vast majority of these injuries take the form of illness caused by exposure to toxic materials that were released by the destruction of the World Trade Center.
529 – First draft of Corpus Juris Civilis (“Body of Civil Law”) is issued by order of Justinian I, Eastern Roman Emperor
451 – Attila’s Huns plunder Metz
529 – First draft of Corpus Juris Civilis (“Body of Civil Law”) is issued by order of Justinian I, Eastern Roman Emperor.
1712 – Slave revolt in New York City. The New York Slave Revolt of 1712 was an uprising by 23 enslaved Africans who killed nine whites and injured another six. Seventy blacks were arrested and twenty-one of whom were convicted and sentenced to death. Twenty were burned at the stake and one was executed on a breaking wheel. The Wheel was a device providing a painful slow death used in the Middle Ages into the 18th century The severity of punishment was in reaction to white slaveowners’ fear of insurrection by slaves.
1827 – English chemist John Walker invents wooden matches
1923 – First brain tumor operation under local anesthetic performed (Beth Israel Hospital in NYC) by Dr K Winfield Ney
1953 – First west-to-east jet transatlantic nonstop flight
1959 – Radar first bounced off the Sun, Stanford University in California
1966 – US recovers lost H-bomb from Mediterranean floor
1969 – Supreme Court strikes down laws prohibiting private possession of obscene material
1978 – Guttenberg bible sold for $2,000,000 in New York City
1983 – Oldest human skeleton, aged 80,000 years, discovered in Egypt
1988 – Russia announced it would withdraw its troops from Afghanistan
1990 – John Poindexter, National Security Advisor, found guilty on Iran-Contra scandal
1994 – Vatican acknowledges Holocaust for first time
2003 – U.S. troops capture Baghdad; Saddam Hussein’s regime falls two days later.
1968 – Jim Clark, two-time F1 World Champion and winner of the Indianapolis 500, dies in a racing accident during a Formula 2 race at Hockenheim, Germany at age 32.
Born in 1936 his racing record attests to his skills ~
2 World Championships in 73 races, 25 wins, 32 podiums, 33 pole positions, 28 fastest laps. (wiki)
1770 – William Wordsworth, England, poet laureate (Prelude)
1893 – Allen Dulles, American Central Intelligence Agency director (d. 1969)
1897 – Walter Winchell, Harlem NYC, newscaster/columnist (Untouchables)
1915 – Billie Holiday, Philadelphia Pennsylvania, jazz singer (Lady Sings the Blues)
1920 – Ravi Shankar, Varanasi, British India, musician, (d. 2012)
1931 – Daniel Ellsberg, whistleblower (Pentagon Papers)/patriot
1938 – Jerry Brown, ex-California governor
1939 – David Frost, Tenterdon England, TV host, (d. 2013)
1939 – Francis Ford Coppola, Detroit, director (Godfather, Apocalypse Now)
1663 – Francis Cooke, Mayflower pilgrim (b. c. 1583)
1891 – Phineas T Barnum, US circus promoter (B & Bailey), dies at 88
1968 – Jim Clark, two-time F1 World Champion and winner of the Indianapolis 500, dies in a racing accident during a Formula 2 race at Hockenheim, Germany at age 32. Born in 1936 his racing record
attests to his skills ~ 2 World Championships in 73 races, 25 wins, 32 podiums, 33 pole positions, 28 fastest laps.
1972 – “Crazy” Joe Gallo, mobster, killed at his 43rd birthday party