THE CITY: Manhattan Co-op in Crisis Spearheads Push to Cap Land Rent Hikes

  • May 13, 2024
  • Media Coverage

As seen in THE CITY on Monday, May 13, 2024. Click here to read the full story online.

BY GABRIEL POBLETE, MAY 13, 2024, 4:59 A.M.

A throng of city co-op apartment owners traveled to Albany last week to plead their case for bills that would shield them from rent increases on the land their buildings sit on. Calling themselves the Ground Lease Co-op Coalition, they are demanding protections even stricter than those recently passed for tenants under the Good Cause law Gov. Kathy Hochul signed earlier this month.

Assemblymember Linda Rosenthal (D-Manhattan) and Sen. Liz Krueger (D-Manhattan) are the lead sponsors of bills that would cap any annual rent increase for co-op buildings on ground leases by 3% or the consumer price index, whichever is greater. It would also allow for the co-op to take on a mortgage or other forms of debt for repairs, maintenance and capital improvements.

“Every situation you could think of about housing is at a crisis point, and this would create another one for the people who live in as many of the 100 ground lease buildings that we’ve uncovered so far,” Rosenthal said to THE CITY.

She stood with Bronx, Brooklyn and Queens shareholders whose co-ops lease their land, worried that one day in the future the landowner could make remaining in their homes unaffordable. But it’s Manhattan co-op owners — mired in a big-money legal battle with their landowners — who are bankrolling the campaign, state records show.

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Louis Grumet and his wife, both 80, moved to Carnegie House back in 2011. At the time, Grumet was paralyzed from the waist down, so they wanted to move to a building that was accessible and close to their hospitals. Grumet said that he understood there was some risk associated with the apartment but only realized the gravity of the situation when banks stopped issuing mortgages for buyers.

“I keep hoping that we somehow can either win this, either legislation or we can come up with a reasonable rent,” Grumet said. “Because I don’t know what our other options are.”

Grumet fears losing the nearly $780,000 they paid for the two-bedroom apartment. As things stand, prices have plummeted; the apartment above his is currently on the market for $450,000.

“As near as I understand, if we can’t match their rents next March,” Grumet said, “we lose everything we have in this place. We are suddenly tenants again.”

Banks Wary
According to the lobbyists Carnegie House hired, 4,700 apartments in Queens are part of co-ops or condos with ground leases, more than any other borough. Manhattan has 4,000 ground lease units, whereas 900 are in Brooklyn and 500 in The Bronx, with an additional 1,700 in Westchester County.

Rosenthal, chair of the Assembly’s housing committee, said that many of those living in the co-ops are seniors. When asked about Carnegie House’s role, she pointed to many of the co-op owners being in the outer boroughs, with the most in Queens.

Said Krueger in an interview with THE CITY: “We’re very concerned if we don’t act at a time in history where the sky’s the limit on land values in the five boroughs and Westchester, that we’re just gonna see mass changes in ownership, and people thrown out of their homes and buildings torn down.”

Zachary Steinberg, vice president of policy at the Real Estate Board of New York, a trade group representing property owners, said in a statement to THE CITY that his organization opposed the proposed legislation, calling it a giveaway to well-off people.

“This bill is an unconstitutional solution in search of a problem,” Steinberg said. “It is simply bad public policy to give a legislative handout to the millionaire co-op owners who bought their homes at cut prices years ago with full knowledge of these ground lease arrangements.”

Shareholders in ground lease co-ops outside Manhattan say the legislation is urgent for them, too.

Jennifer Wagner is currently the co-op president of Sheepshead Terrace, a 169-unit co-op in Sheepshead Bay, Brooklyn, built in the 1950s under a century-long ground lease.

Now fewer than 30 years are left on that lease — and that’s making some banks refuse to lend in the building, leading prospective apartment buyers to walk away.

Wagner said she bought her co-op apartment over 20 years ago, with the promise of a stable home for her and her two children, one of whom has autism. At the time of purchase, she said she didn’t know that the co-op was on leased land. Now she’s concerned the equity she’s put in her unit was all for nothing, a sentiment many others at her co-op share.

The landowner for her property, according to city records, is Land & Leases Corp., which THE CITY could not reach for comment.

“This is the only neighborhood my children know,” said Wagner.

“My children haven’t lived anyplace else,” she said. “So this is our home. This is supposed to be my safe place.”

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