The BroadsheetDAILY – 1/25/22 – Segregated and unequal neighborhood association provides analysis of community’s future
Surana cited the example of a two-bedroom apartment in south Battery Park City that pays $644 a month for land rent and $70 a month for municipal facilities: “This person pays $8,400 per year that no other New York resident pays. paying. That’s $700 a month plus taxes and mortgage. So when people say that Battery Park City isn’t paying its fair share, it has to be argued that an extra $8,400 a year is significant.
About PILOT, he noted that “when New York City calculates our PILOT, they base it on our assessed value. They take into account what they say is the fair market value of the rent. So when municipal tax assessors look at our buildings, for which we already pay ground rent, we are charged a tax. As a result, we pay a higher tax than a New York resident outside of Battery Park City. And that begs the question: is it fair?
“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 taken 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 tells you that buildings in Battery Park City are valued 29% less, or $487 less per square foot. This means that if a Tribeca or FiDi property increases by 10%, that owner will earn $167 per square foot, while a Battery Park City owner will only receive $118. And this value gap will continue to widen. This is a source of great concern if you are a landlord in Battery Park City.
“But for city property tax purposes,” he continued, “we receive higher assessments. In Tribeca, buildings average about $13.56 per square foot in tax assessments. In Battery Park City, however, buildings average $19.40 per square foot, so tax assessments are about 44%, or $6.00 per square foot, higher. higher taxes than our neighbors on properties that, according to the market, are worth much less than those of our neighbors.
“But land rent makes an average homeowner pay 34% more in common charges and fixed costs than a similar unit owner in neighboring communities,” Surana explained. “These add up to over $10 per square foot, with $5.84 for PILOT and $4.43 for ground rent and other common charges. And the result is that PILOT and land rent increases make it harder for people to afford to rent or buy an apartment in Battery Park City. Continuing to increase land rents is at odds with the goal of improving affordability.
Looking to the future, Surana predicted that “future ground rent increases will likely be around $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 we’ve talked about. This is in addition to the current $6,000 to $12,000 per year that unit owners are already paying, further increasing New York City’s PILOT ratings. And these trends are converging to devalue Battery Park City properties by between $200,000 and $400,000, below other comparable buildings in New York.
“Is it separate and unequal? he asked rhetorically. “Why should tenants and landlords 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 the people of Battery Park City ‘can afford it.’ But why should affordability in Battery Park City be defined any differently than anywhere else? »
Turning to possible strategies to address this dilemma, Mr Surana said: “Because this has become unsustainable, the community’s proposal is to freeze land rents for ten years and then increase them by one percent per year. afterwards”.
BPCA spokesman Nick Sbordone responded, “Given that Battery Park City is one of New York’s most affluent neighborhoods, with high-end and luxury waterfront real estate , surrounded by world-class parks with low crime, great schools, and solid public transit options. , it goes without saying that the cost of living would be higher than in some other neighborhoods.
“Specifically with regard to ground rent,” Mr. Sbordone continued, “it is simply not an additional charge for services, as some claim. Rather, BPCA owns the underlying land and, therefore, landlords of buildings and condominiums pay rent for their use over time. the needs of the residents of Battery Park City first, before it is transferred to fund important public services, including affordable housing throughout the city.Nevertheless, as we have said publicly, it is the responsibility of BPCA to developing responsible solutions for those who need help, and exploring options to protect low-income landlords from ground rent increases they cannot afford.
The Battery Park City Neighborhood Association is working to build support for its strategy on multiple fronts. In addition to the ground rent proposal outlined above, the group is pushing for greater resident representation on the BPCA board.
As Mr. McGowan explained at the February 6 meeting, “What we are working on is what we call the ‘BPCA Governance Act’, which is something we want lawmakers in our States adopt. It is a fair representation act. The proposal is that the majority of BPCA board members have their primary residence in Battery Park City. (This effort is spearheaded by an online petition, which has already garnered more than 1,000 signatures.)
Currently, state law reserves only two seats on the BPCA’s seven-member board of directors for residents. Although the members of its Board of Directors are answerable only to the Governor (who appoints them and thus controls the Authority), the BPCA exercises multiple forms of power within Battery Park City, through which it operates 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 boundaries of Battery Park City, the Authority performs many governmental functions, including rule making, law enforcement (through private security guards, who have peace), collecting taxes, regulating real estate development, building infrastructure, cleaning streets, maintaining parks, and building schools. The BPCA collects hundreds of millions of dollars a year in revenue, largely from fees paid by people who live in the neighborhood. It carries more than a billion dollars in debt and has the capacity to borrow hundreds of millions of dollars more. It also awards 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 essential worker monument project last summer — “is that there is a large, incredibly qualified pool of candidates in our community who not only understand the values and priorities, but also have an incredibly deep and rich level of experience, expertise and passion for the neighborhood. built on that passion, that experience and that knowledge base.”