A new bill proposed by state lawmakers is targeting the escalating rental costs faced by around 25,000 co-op apartment residents residing in buildings with ground leases, notably in Manhattan's affluent neighborhoods.
Typically, co-op buildings own both the building and the land beneath it. However, approximately 100 co-op properties across the city operate under ground leases, where a separate entity owns the land beneath the building. This includes notable buildings like the 324-unit Carnegie House on "Billionaire's Row" at 100 West 57th Street and the Excelsior at 303 East 57th Street. When the lease on such buildings is set to expire, the land's value is assessed by an appraiser, serving as the basis for negotiations between the landowner and the co-op board for rental increases or land purchase terms.
Concerns arise when new landowners demand significant rent hikes upon lease expiration, which could strain the finances of existing tenants and hamper property sales. The proposed legislation, introduced by Sen. Liz Krueger and Assemblywoman Linda Rosenthal, seeks to curb these abrupt spikes in lease payments, akin to regulations on rent-stabilized apartments.
Krueger and Rosenthal emphasize that while apartments in ground lease buildings may seem affordable initially, residents often face higher-than-average maintenance fees and steep rent hikes post-lease expiry. The bill aims to protect homeowners from foreclosure and bankruptcy risks associated with unmanageable cost increases.
However, the proposed legislation faces opposition from groups like the Real Estate Board of New York, who argue that it unfairly benefits affluent co-op owners. Nevertheless, proponents of the bill, including the Ground Lease Coop Coalition, assert that it primarily safeguards middle-class and working-class apartment owners.
The bill's absence from recent affordable housing discussions has raised questions among critics, highlighting ongoing debates over legislative solutions to New York City's housing challenges.