The New York City Battery Park City Authority (BPCA) announced an agreement allowing the ground lease agreement of condominium building River & Warren into alignment with 12 other buildings in the neighborhood.
This agreement will see the 166-unit condominium tower in Battery Park City eliminate contractual spikes in ground rent payments up to 2036 while also codifying commitments to environmental sustainability in support of the BPCA Climate Action Plan to become carbon neutral by 2050.
These efforts will help BPCA preserve and expand housing affordability efforts as well as increase certainty for existing residential buildings through ground lease agreements.
Ground lease – or ground rent – agreements are when homeowners pay for the land they live rather than purchasing it outright.
At River & Warren, homeowners rent the land the building is located on which makes the elimination of the lease’s significant ground rent increase a crucial step to ensure greater certainty with regards to housing costs.
“This agreement removes future uncertainty regarding ground lease payments through 2036. River & Warren is fully aligned with the responsible and predictable tone of prior settlements and very pleased to support BPCA’s sustainability efforts by continuing the condominium’s extensive commitment to green initiatives,” said a spokesperson for the River & Warren Board of Managers.
While BPCA has successfully developed and maintained a high-quality living environment for residents in the neighborhood, the cost of living and housing affordability is a significant concern for stakeholders.
With upcoming rental resets in residential ground leases expected to trigger significant increases in rental amounts, BPCA’s agreement with River & Warren eliminates the lease’s immediate significant ground rent increase while also ensuring the unit owners within River & Warren are paying a fair and appropriate ground rent.
“For renting the land, they have a lease and the lease is with the Battery Park City Authority because we developed this neighborhood and we own the land,” said BPCA President and CEO B.J Jones in an interview with amNew York Aug 9. “These leases are for many decades and there’s a ground rent schedule that existed at the time when these leases were created. For most of these buildings, every 15 years there was this baked-in formula. It was clear that this would result in a significant increase in ground rent because over the years land has become really valuable in New York City.”
Ensuring affordability with ground rent allows for neighborhoods and communities in income-tested areas to continue to maintain housing stability.
“Doing this is important because in the case of rental units – rental companies also pay ground rent – and addressing this uncertainty can provide us a lever to shore up affordability elsewhere,” Jones said. “What’s so exciting about this [agreement] is that we have come up with a fiscally responsible alternative that’s providing certainty to homeowners at River & Warren, but it also continues to provide us funding that drives funding for important public services and this designation has been for affordable housing elsewhere in NYC. For the last 10 years we’ve provided over $400 million for affordable housing elsewhere and that has been driven by the amount of ground rent revenue we collect.”
In addition to the elimination of ground rent increase at River & Warren, the agreement also codifies commitments to sustainability, including solar panel replacements and and a recycling program for level four plastics.
“We are big on zero waste at Battery Park City and they have a program that they’re creating to be able to recycle materials for the building,” said Jones. “Being able to codify those projects to help ensure that they are seen through to completion is important to us, as River & Warren seeks to significantly reduce its consumption and energy use.”
Last updated 8/9/2022 5:51 PM