There are approximately 100 ground lease co-ops in the city. Condos are not allowed on land leases by state law, except in Battery Park City, Roosevelt Island, and Brooklyn Bridge Park, which are specifically allowed in the condo law. The land in these locations is owned by quasi state/city agencies such as The Battery Park City Authority or the Roosevelt Island Operating Corporation.
|Battery Park City|
Battery Park City is unique because it is on a portion of land created by land reclamation from the Hudson River. Battery Park is owned and managed by the The Battery Park City Authority. Parcels of land are leased to developers who build in accordance with the Authority's guidelines and mandates. BPC is the largest "green" neighborhood in the world.
Instead of paying real estate taxes, condo owners in Battery Park City pay "PILOT" payment in lieu of taxes. The common charges and "PILOT" varies from building to building depending when the building was built and the time frame of the land lease.
Most buildings in NYC with land leases are coops or condops. A condop is a residential building or portion that includes cooperative and condominium ownership structure. The condominium has a residential cooperative unit separate from the commercial units. Coops unlike condos usually have underlying mortgages.
|One Carnegie Hill|
Apartments in land lease buildings sell at discounts compared to non land-lease comparable coops because of the higher maintenance usually associated with land-lease buildings. How much an apartment costs to live in monthly determines it's affordability not it's sale price.
While shareholders of all coops have less control over their homes than owners of real property such as condos and townhouses coop shareholders in land leased buildings have less control over their building's destiny. The owner of the land the building is on has more control.
Where there is risk, there may also be opportunity. It is important to have a real estate attorney with land lease experience conduct due diligence when considering purchasing a unit in a land leased building. There are many variables and degrees of risk, pros and cons. The land lease may be for 100+ years. There may be an option for the coop to buy the land outright. There may be clauses with automatic renewals with specified amounts of rent increase. There may be tax benefits.
The ground below Trump Plaza, a coop at 167 E. 61st St., is currently up for sale. The co-op board has offered to buy the property. The residents would be hit with assessments that would be more than $1 million for some shareholders. Two Fifth Avenue a coop in Greenwich Village, opted out of it's ground lease in 2005 by buying the land directly from the sponsor developer, Rudin Management when the board’s 20 year ground lease was about to expire.
The Cathedral of St John the Divine in Morningside Heights is building apartments on its Upper West Side property. The church signed an agreement with Brodsky Organization, to lease the parcel. Brodsky will pay rent for the land.
Carnegie House at 100 W. 57th St., 995 Fifth Avenue, The Marais at 520 West 23rd Street, The Azure at 333 E 91st St, Excelsior at 303 East 57th,, The Sovereign at 420 East 59th Street, One Carnegie Hill at 215 East 95th Street, 101 West 23rd Street and 88 Morninside Avenue are some coop and condop buildings in Manhattan with land leases.