| Mr. Surana cited the example of a two-bedroom apartment in southern Battery Park City that is paying $644 per month for ground rent and $70 per month for civic facilities: “This person is paying $8,400 per year that no other New York City resident is paying. That is $700 per month on top of taxes and mortgage. So when people say that Battery Park City is not paying its fair share, the case to be made is that an extra $8,400 per year is significant.”About PILOT, he noted that, “when New York City calculates our PILOT, they base it on our assessed value. They factor in what they say is the fair market value of rent. So when City tax assessors look at our buildings, for which we’re already paying a ground rent, we’re getting taxed on a tax. As a result, we paying a higher tax than a New York City resident outside of Battery Park City would. And that gives rise to the question: Is this equitable?”“As a result,” Mr. Surana said, “Battery Park City properties are undervalued, pay disproportionately higher taxes and have higher fixed common costs.” He illustrated this point with metrics retrieved from online real estate databases StreetEasy and Zillow. “In Tribeca, the average price per square foot is $1,672,” he noted. “In Battery Park City, the average is $1,185. So the market is telling you that Battery Park City buildings are valued at 29 percent less, or $487 per square foot less. This means that if a Tribeca or FiDi property goes up 10 percent, that owner is going to accrue $167 per square foot in gain, while a Battery Park City owner gets only $118. And that gap in value is going to continue to expand. That’s a cause for great concern if you’re an owner in Battery Park City.”“But for purposes of City property taxes,” he continued, “we are given higher valuations. In Tribeca, buildings average around $13.56 per square foot in tax assessments. In Battery Park City, however, buildings average $19.40 per square foot. So the tax valuations are roughly 44 percent, or $6.00 per square foot, higher. This means we are paying higher taxes than our neighbors on properties that the market says are worth much less than those of our neighbors.”“But ground rent results in an average home owner paying 34 percent more in common charges and fixed costs than a similar unit owners in nearby communities,” Mr. Surana elaborated. “These add up to more $10 per square foot, with $5.84 for PILOT and $4.43 for ground rent and other common charges. And the result is that increases in PILOT and ground rent are pricing people out from being able to afford to rent or buy an apartment in Battery Park City. Continuing to raise ground rents is contradictory to the goal of improving affordability.”Looking to the future, Mr. Surana predicted that, “upcoming ground rent increases are likely to be approximately $1.50 per square foot per year, per unit. That means if you have a thousand-square-foot unit that you rent or own, you’re looking at increases of $1,500 per year, or $125 per month, on top of everything else we’ve talked about. This is in addition to the current $6,000 to $12,000 per year that unit owners are already paying, all of which further increases New York City’s PILOT assessments. And these trends converge to devalue Battery Park City properties by an amount between $200,000 and $400,000, below other comparable buildings in New York City.”“Is this separate and unequal?” he asked rhetorically. “Why should renters and owners in this community be taxed more than the rest of New York City? This raises a really important philosophical question,” he concluded. “We often hear that Battery Park City residents ‘can afford it.’ But why should affordability in Battery Park City be defined differently than anywhere else?”Turning to possible strategies to remedy this dilemma, Mr. Surana said, “because this has become unsustainable, the community’s proposal is to freeze ground rents for ten years, then increase them by one percent per year thereafter.”BPCA spokesman Nick Sbordone responded, “given that Battery Park City is one of the wealthiest neighborhoods in New York City, with high-end, luxury waterfront real estate enveloped within world-class parks with low crime, great schools, and robust public transportation options, it stands to reason that the cost of living would be higher than in some other neighborhoods.”“Regarding ground rent specifically,” Mr. Sbordone continued, “it simply is not an additional charge for services, as some claim. Rather, BPCA owns the underlying land, and so building and condominium owners pay rent for their use of it over time. This ground rent—along with PILOT, as solely established by the City of New York—funds the needs of Battery Park City residents first, before any of it is passed through to fund important public services, including affordable housing throughout the City. Nevertheless, as we have said publicly, it is incumbent upon BPCA to develop responsible solutions for those who need help, and we’re exploring options to protect lower-income homeowners from ground rent increases they cannot afford.”The Battery Park City Neighborhood Association is moving to build support for its strategy on several fronts. In addition to the ground rent proposal described above, the group is pushing for greater representation for residents on the BPCA board.As Mr. McGowan explained at the February 6 meeting, “what we’re working on is what we call the ‘BPCA Governance Law,’ which is a measure we want our State legislators to enact. It’s a fair-representation law. The proposal is for a majority of BPCA board members to have their primary residence in Battery Park City.” (This effort is being spearheaded with an online petition, which has already garnered more than 1,000 signatures.)Currently, State law sets aside only two seats on the BPCA’s seven-member board for residents. Although its board members are accountable only to the governor (who appoints them, and thus controls the Authority), the BPCA wields multiple forms of power within Battery Park City, through which it acts as the de facto (but unelected) government for the 15,000-plus people who live on the 92 acres of landfill between West Street and the Hudson River. Within the confines of Battery Park City, the Authority performs many of the functions of government, among them enacting rules, enforcing the law (through private security officers, who have peace officer-status), collecting taxes, regulating real estate development, building infrastructure, cleaning the streets, maintaining parks, and building schools. The BPCA collects hundreds of millions of dollars per year in revenue—derived in significant measure from the charges paid by people who live in the neighborhood. It carries a debt load of more than $1 billion, and has the capacity to borrow hundreds of millions of dollars more. It also gives out contracts worth more than $10 million each year.“Quite frankly,” Mr. McGowan continued, “one of the things demonstrated by the Pause the Saws effort”—the protest movement that halted the planned Essential Workers Monument last summer—“is that there’s a large, incredibly well-qualified pool of candidates in our community who not only understand the values and the priorities, but also have an incredibly deep, rich level of experience, expertise, and passion for the neighborhood. We want to leverage that passion, experience, and knowledge base.”Matthew Fenton |
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