A proposed bill aims to prevent significant rent increases for 25,000 co-op apartment residents in New York City, particularly in buildings with ground leases, such as the 324-unit Carnegie House on “Billionaire’s Row”. In these cases, the land underneath the property is owned by someone else, leading to negotiations between the landowner and co-op residents when the lease expires. The bill introduced by Sen. Liz Krueger and Assemblywoman Linda Rosenthal seeks to limit sudden spikes in annual lease payments for shareholders in co-op buildings, similar to the regulations in place for rent-stabilized apartments. This is in response to concerns over affordability and the financial implications of ground leases expiring.
Old-time co-op tenants have expressed their inability to afford the steep price increases that may result from the expiration of ground leases, making it challenging to sell their apartments. The legislation would help prevent foreclosure and bankruptcy by limiting rent hikes and ensuring fair negotiation processes when the lease expires. The bill is supported by Krueger and Rosenthal, who highlight the higher than average monthly maintenance fees and the riskiness associated with purchasing an apartment with an expiring ground lease. They emphasize the importance of protecting residents from exorbitant increases and providing a fair deal for negotiating rent.
On the other hand, the Real Estate Board of New York and landowners are lobbying against the bill, arguing that it unfairly benefits well-to-do co-op owners and constitutes bad public policy. The bill’s opponents believe that it is unnecessary and unconstitutional, claiming that it offers a legislative handout to millionaire co-op owners who have known about the ground lease arrangements when purchasing their homes. However, Krueger refutes these claims, stating that legal memos support the constitutionality of the bill and noting that most co-op owners are not millionaires.
The Ground Lease Coop Coalition (GLCC) is advocating for the legislation, emphasizing that it will protect middle and working-class apartment owners in co-op buildings, such as the Sheepshead Terrace in Brooklyn and the Murray Hill Coop and Shoreview in Queens. These buildings are facing ground lease expirations in the coming years, and the bill would provide relief for residents by limiting sudden rent increases. Critics question why the co-op land lease issues were not included in the recent affordable housing package deal that was part of the state budget approved last month. The debate surrounding the bill highlights the complex dynamics and financial challenges faced by co-op residents in buildings with ground leases.
