One Brooklyn Bridge Park

Actually, I have no idea what that means, but maybe if I were a buyer I'd be motivated to find out.

So are you going to tell me what it means?

is it really ?

with the rest of the problems, who cares about 99 yr land lease.

yeah but the land lease makes the bulding a nonstarter--which makes very funny that there has been vigorous discussion

to much supply of real real estate to ever consider a land lease

The building is on a 99 year land lease. RAL purchased the building and the land; the land was transferred to NYS and the building and the owners pays no taxes on the land, rather Payments in Lieu of Taxes ("PILOT"), to support the park, are made. The developer has secured a letter from the IRS that allows owners to deduct PILOT in the same manner that property taxes would be deducted.

The building pays $1.5 million/year for the first three years of the lease, then pays 3% increases per year for the next 96 years. At the end of this lease, the building has the right to purchase the land for $1 from the State.

This is VERY different from a typical land lease situation on a Manhattan apartment building, wherein the building sits on land owned by a third party, and is forced to negotiate a lease every ten to 20 years. Further, there is no PILOT, which means that there is no tax deductibility for owners.

btw, this is featured prominently in the special risks section of the offering plan for the building, and prospective owners and their attorneys should be well familiar with this..

Thanks for the info juuceman. A friend of mine has gotten THIS close to a purchase there until his attorney caught the land lease thing. He was advised by both his attorney & accountant that this would not be a sound investment.

nonae - It's pretty straightforward, and in fact the land lease is a matter of public record and can be pulled off of ACRIS. There's nothing to 'catch' as the developer plainly discloses this within the first three pages of the offering plan. If your friend is wants to purchase in the building, he or she should speak with their attorney and accountant further to understand their objections. Given that the lease is fully negotiated for 99 years and that the building has the sole right to purchase the land for $1 after the 99 years, there's no legal issue involved. The accountant might be concerned with the relatively high carrying costs as they are covering the cost of the lease, however, there is no tax deductibility difference between this and any other condo that owns its land.

Agree with juuceman. This is a non-issue.

btw, isn't 3% a year for 96 years a 17x increase? It might only be a hair over inflation, but that adds up in 100 years