Battery Park City Terminology
by John Bandler
Battery Park City (BPC) has some unique aspects, which I touch upon within my main article on Battery Park City (BPC).
Some of the words and terms are complex, so this glossary gets you started with a basic foundation on what those terms mean, to better understand the financial conditions under which we live.
Of course, this does not pretend to be the authoritative source of definitions, some people may disagree, so see the conclusion and disclaimers later.
Battery Park City (BPC): The 92-acre area within New York City largely formed with landfill during the construction of the World Trade Center. BPC is governed by the Battery Park City Authority, a New York State agency.
Battery Park City Authority (BPCA): A government corporation with a seven-member board appointed by the governor. As of October, 2023, the chair position is vacant. The other six members all were appointed for former Gov. Andrew Cuomo and all their terms have expired. Under New York State law, however, an authority board member remains in office until replaced by the Governor. This Board appoints a president, a full-time position overseeing a large staff. The president’s position is vacant as of October, 2023 (when former president BJ Jones resigned).
Battery Park City Homeowners Coalition (BPCHC, "Coalition", "Homeowners Coalition"): The Battery Park City Homeowners Coalition (BPCHC) is made up of elected board presidents (or other selected representative) from each of the 18 residential condominiums in BPC. The BPCHC seeks to negotiate fair and reasonable ground rents for the more than 5,000 homeowners who live in the 18 residential condos here in BPC. BPCHC is a non-profit, the only organization authorized to negotiate with BPCA on behalf of all the condos. The elected presidents of the 18 condos elect a BPCHC board of 5 members. The BPCHC Board elects a president The Coalition President is Pat Smith. You can find Pat Smith and BPCHC on LinkedIn.
Payments in lieu of taxes (PILOT): Payments that go to BPCA and are forwarded to New York City as taxes. PILOT could be 50% of a condo's budget.
Ground rent: Payments from a condo/building to BPCA for renting the land on which the building sits. BPCA owns the land, the condo owns the building. The ground rent is set by a ground lease. Ground rent could be about 15% of a condo's budget. Ground rents pay the BPCA operating budget, capital expenses and debt service.
Ground lease: As indicated within ground rent, the ground lease is the document (contract) that governs the rental of the building’s land from the BPCA. It will lay out the rent each year, with small annual increases and sometimes large annual increases, or step-ups. Then there will be an expiration date.
Facilities fees: An additional fee paid by BPC property owners to BPCA to help maintain the public spaces in BPC, such as the parks and the riverfront promenade. This is typically less than $1,000 per year per unit, arrived at by a complex formula unique to each building and dependent on the building’s proximity to the Promenade or parks.
Government: A broad term covering multiple levels of government entities, such as New York City (including Mayor and City Council), New York State, (including Governor, State Assembly, State Senate) and BPCA, headed by a seven-member board nominated by the Governor and confirmed by the State Senate. (In the main article, there are details on who fills some of these important government positions).
Developer's discount: The common practice whereby a new BPC condo has very low ground rent for the first period of years. This benefits the developers, enabling them to more quickly sell apartments at higher prices since buyers look at the current monthly payments, with less focus on future annual increases or even a large increase in a particular year ("step-up"). As the increases or step-ups get closer, homeowners become more aware of them (even though they were already fixed into the ground lease contract).
Step-ups: A large increase in ground rent in a particular year, which may be built into a particular existing ground lease. Unit owners can review their ground lease and see the ground rent increases each year, and if there are any larger increases in a particular year (step-up) and which year that will occur in.
Resets: The new ground rent formula which will take effect when the existing ground lease expires, usually around 2042. This new lease is subject to negotiation between the BPCA and each condominium board individually, or between BPCA and the BPCHC acting on behalf of the individual condo boards. The contract indicates the reset will be based on a formula for Fair Market Value (FMV).
Fair Market Value (FMV): All BPC condo buildings currently have ground leases which stipulate that when current ground leases expire, the new ground rent (“reset”) will be six percent of the unencumbered value of the land. “Unencumbered” means the assessed value of the land if there were no building on it. Real estate experts have warned for years that this FMV formula would be several million dollars for each building and would be unaffordable for unit owners. The BPCA has acknowledged this and has stated for the record that it will seek some alternative formula.
Bargaining power: A vague term used to express the relative ability of parties in a negotiation or argumentative situation to exert influence over each other. BPCA prefers to negotiate individually with each building/condo (arguably because that gives BPCA greater bargaining power). BPCHC prefers to negotiate with BPCA on behalf of all buildings. BPCHC also realizes many government officials and entities play important roles in this negotiation, as do the residents and citizens of BPC.
Similarly situated: A vague and highly subjective term used to express that certain individuals, buildings, or parties may be in a similar situation, at least with respect to a particular factor. That factor might be geography, current ground rent, future ground rent (and step-ups) within the contract, age of the building, expiration of the lease, or any other factor. In theory, similarly situated people/buildings should be treated similarly. But see the next term.
Differently situated: A vague and highly subjective term used to express that certain individuals, buildings, or parties may be in different situations, at least with respect to a particular factor.
Reasonable people may disagree but can come to a consensus: OK, maybe it is stretching it to call this a term, but it is a concept I want to convey, so hear me out.
Even reasonable people will disagree about a definition or even the path forward. (Side note: in any large group of people there are destined to be a few who are less-than-reasonable, or who inordinately weight their personal interests above the greater good). So a primary goal should be to agree on some basic facts and principles, form reasonable and logical opinions based upon facts, and then work to move forward in a productive, reasonable manner. Each person and each building will not be able to get exactly what they want. But if we can agree upon some basic principles we have a starting point and a path forward. E.g., BPC condos are stronger together than separately. Achieving a result is always easier said than done. But fairness, reason, and common-sense can prevail. BPCHC can work with BPCA and all government entities to craft a just, fair, practical, common-sense, and collegial result.
Conclusion and disclaimers
Any glossary or definition of a term is (by definition) a brief summary and with many simplifications.
This is for your initial information and to get you started. I don't warranty accuracy, I don't promise to update it, and I don't promise that I am an impartial person on this issue (though I tried to write this impartially).
This is a draft and work-in-progress, please report any suggestions or corrections (including references and citations). Do your own research and consult reliable sources and then form your own opinion and take your own appropriate action based on facts, logic, and reason. This is about the issues, laws, and facts, and no endorsement or criticism of any individual, official, candidate, or advocacy group is implied.
Some very knowledgeable people helped me learn much of this information and some have corrected and improved my initial rough draft -- so they get a good amount of credit for what is right. If anything is not accurate that falls on me (not them) but also remember I have disclaimed liability anyway and you need to do your own research.
Remember that even reasonable people will disagree about the definitions above, but realize it is merely a brief summary and with many simplifications. Remember also that opinions and negotiation positions can be hard to pin down, and can change over time.
This article is hosted at https://johnbandler.com/battery-park-city/bpc-terminology. Copyright John Bandler. This is a work-in-progress, please report any suggestions or corrections, and do your own research. Thank you to those who assisted with this.
This article will not be made available on Medium.com.
Originally posted 10/05/2023, updated 10/20/2023.