Condo Embargo BPCA Puts the Brakes on Conversions of Rental Buildings within Community

BPCA Puts the Brakes on Conversions of Rental Buildings within Community

“Where conversions would require our consent because of ground-lease requirements or law, we will not support any such moves in that regard,” he continued. “And although some buildings have done initial filings, there haven’t been any buildings that have stopped being a rental in that time.” This was a reference to a package of New York State housing law reforms that went into effect in June, which include provisions that erect new barriers to condominium conversions, including a requirement that 51 percent of a building’s tenants agree to buy their apartments before the process can move forward. (Conversion of rental apartments to cooperatives is still technically easier, but there have very few of these in Lower Manhattan in recent years.)

This appears to have been a reference to multiple buildings in the community, such as RiverWatch (70 Battery Place), the Solaire (20 River Terrace), and Tribeca Pointe (41 River Terrace), where landlords have in recent years take some of the preliminary steps required to convert a rental building to owner-occupied apartments.

Mr. Jones added that, “the law is such that buildings can’t convert to condo if there’s less than 50 years on the ground lease, and we passed that hurdle in June.” This was a reference to exotic nature of property ownership in Battery Park City, where homeowners, landlords, and developers do not own outright the land they occupy, but instead lease the space (through June, 2069), in exchange for yearly payments of ground rent, as well as so-called “payments in lieu of taxes.” Concerns about this arrangement have grown acute in recent years, as more residents have come to realize that, under the current terms of the ground lease, their homes may disappear in 50 years, as ownership of all the real estate in Battery Park City reverts to the Authority. Unless the terms of this lease are modified or extended, for condominium owners, it may mean that their property is effectively confiscated, while renters might face the prospect of eviction. Both owners and tenants could be rendered homeless under this scenario. Neither of these outcomes is a foregone conclusion, but would be subject to the BPCA’s decision about how to move forward.

“So we have made some headway there,” Mr. Jones noted. While a commitment by the BPCA to oppose condo conversions in the name of protecting affordability appears to signal a bellwether shift in policy, and is likely to offer some assurance to current residents, the move follows more than 20 years of such schemes by developers, which forced hundreds of the community’s one-time residents from their homes. Three buildings, in particular — 225 Rector Place, 333 Rector Place, and 212 Warren Street (formerly known as 22 River Terrace) — were the focus of widespread fury on the part of displaced residents. In each case, developers claimed they were converting the buildings under so-called “non-eviction” plans, but ended up forcing all (or in the case of 225 Rector Place, nearly all) of the legacy rental tenants out before selling their apartments to new owners. All of those homes would have been saved if the new law that came into force in June had been on the books when these buildings were converted.

This policy change comes as Battery Park City is poised at a demographic turning point. In recent years, it has shifted to a nearly even split between rental and condominium apartments. As 2013 drew to a close, there was still a substantial majority for rented units, which totaled 4,773 apartments (or 56 percent of households), as opposed to 3,707 condo units (about 44 percent of the total).

Gateway Plaza

But that margin was nearly halved when the rental building at 22 River Terrace (now known as 212 Warren Street) was converted into condominiums by its new owner. This tower has 324 units, which represented about four percent of the apartment inventory in Battery Park City, meaning that once the conversion was completed, the balance shifted to approximately 48 percent for condos and roughly 52 percent for rental units.

This is a striking about-face for a community that was once composed exclusively of rental buildings. Gateway Plaza, with more than 1700 apartments was the first development to open in Battery Park City, and remained the only place to live in the neighborhood for more than a decade. Even today, the giant complex encompasses more than 20 percent of all households in Battery Park City.

But it also represents a shift of another kind. Battery Park City was originally — asmuch by default as by design — an affordable place to live. Decades before Lower Manhattan had established itself as a fashionable residential enclave, developers needed to create an incentive for people to move to what was then perceived as a frontier. That incentive took the form of lower costs: For many years, a square foot of living space in this neighborhood cost less than equivalent footage in other Manhattan neighborhoods with access to the waterfront and plentiful park space. For middle class families, this became a place to live that was both desirable and economical.

But communities that are comprised of more owners than renters are different. They are less welcoming to people with limited financial resources. They tilt more to upper-, rather than middle-class residents. And for better or worse, they necessarily have fewer of the striving young families whose improvised campaigns of community-building helped build the district where so many more affluent people now wish to live.