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Two Bills Seek to Limit Rent Spikes in the City's 100 Land-Lease Co-ops

New York City

Land-lease co-ops, rent spikes, legislation in Albany, Carnegie House, REBNY.

The ground lease at the Carnegie House co-op on Billionaires' Row expires in March 2025.

May 6, 2024

The 25,000 shareholders in New York City's 100 land-lease co-ops exist under a cloud. Since the corporations don't own the land their buildings sit on, they face sharp spikes in rent charged by the landowners when the long-term ground leases come due. Additionally, as the expiration date approaches, the uncertainty over future monthly maintenance costs makes it devilishly difficult to sell apartments.

Help may be on the way. A bill has been introduced in the state Legislature that would limit mass spikes in ground leases, much like the limits on rent spikes in rent-stabilized apartments, The New York Post reports. The two bills are sponsored by Sen. Liz Krueger and Assemblywoman Linda Rosenthal, both Manhattan Democrats.

“Apartments in ground lease buildings are generally priced 20-30% below market value, leading some to believe that they are buying an affordable home," Krueger and Rosenthal say in a memo supporting their bills. "However, residents in buildings with ground leases pay higher than average monthly maintenance fees, and often face steep rent hikes once the ground lease expires. Some residents have difficulty selling their home, especially near the end of a ground lease term, since purchasing an apartment with an expiring ground lease is too risky for potential homebuyers. This legislation will protect residents from exorbitant increases and ensure they receive a fair deal when negotiating rent increases once the ground lease expires."

Predictably, some people think this is a terrible idea. The Real Estate Board of New York (REBNY) and landowners are fighting to block it, claiming its limitations on increases in leases is a handout to well-to-do co-op apartment owners. Their opposition centers on the 324-unit Carnegie House co-op at 100 W. 57th St. — on Billionaires' Row — where the land lease is set to expire in March 2025.

“This bill is an unconstitutional solution in search of a problem," says Zachary Steinberg, REBNY's senior vice president of policy. "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."

Low blow, counters Sen. Krueger. “Very few of these co-ops are owned by millionaires," she says. "Legal memos show this bill is constitutional.”

Kruger's claim is backed by the Ground Lease Co-op Coalition (GLCC), which will hold a press conference and advocacy rally in Albany on Tuesday, arguing that the legislation will protect mostly middle-class and working-class co-op apartment owners.

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