Gov. Kathy Hochul celebrated victory in her two-year fight to secure a housing deal back in May, when she signed into law a series of measures baked into her $239 billion state budget package.

But there’s one housing issue she left out, according to tenants living in what are known as “ground lease co-op” apartments in dozens of buildings.

Thousands of New Yorkers live in apartment buildings where, although they may own their unit and pay maintenance fees for its upkeep, a separate landowner owns the real estate underneath their building.  

“People want to buy a co-op because houses are so expensive. It’s part of the American dream,” said Nicole Calabrese. She has owned her two-bedroom co-op in Sheepshead Bay, Brooklyn, for 15 years.

“People need to have renovations done and they can’t borrow. So we just want the right to have the ability to either purchase or extend our leases, but not at exorbitant prices,” she added.

The co-op, Sheepshead Terrace, is like several hundred other buildings across the city and in Westchester. It’s operating on a 100-year lease dating back to the mid-1900s.

But now, Calabrese is worried about what will happen when the building’s lease is up in 2053.

“There’s a lot of local laws that have to be followed that are directions that we need to upgrade certain things within the buildings, and a lot of the buildings, they can’t get mortgages,” she said. “The banks are afraid to lend because they don’t know what’s going to happen.”

State Assemblywoman Linda Rosenthal (D-Manhattan) sponsors a bill along with state Sen. Liz Krueger (D-Manhattan) that would limit what building owners can do once the lease is up. One provision in the legislation would cap increases in rent and building expenses.

“They are subject to all sorts of rules and contracts often signed decades ago,” Rosenthal explained in a Zoom interview with NY1.

“The reason to introduce this bill is to protect them in their homes, because at this time, if a landowner decides when their lease expires to raise the rent by a million dollars a month, let’s say, or not renew their lease and tear down the building, that’s allowed,” she added.

Calabrese is part of the group supporting the bill, called the Ground Lease Co-Op Coalition. It estimates around 25,000 residents live in roughly 100 multi-unit buildings.

Tenants worry owners could sell or redevelop the property, eyeing predicted massive increases in value.  

But Michael Tang in Flushing, Queens, worries his family could lose his entire financial stake.

“It’s a horrible situation for us,” he said. “The co-op tried to raise capital, borrow money for repair of the roof, for the elevator, but we couldn’t.”

Shareholders can negotiate new lease agreements or even pool money to buy the building.

“There is every incentive for the owners to do that, because there’s no owner that owns a fee, that wants his building to become rent stabilized,” said Anita Laremont, a partner at Fried, Frank, Harris, Shriver & Jacobson LLP.

She’s also the former New York City Planning Commission chair and director of the Department of City Planning.

“The problems are, this is actually unconstitutional,” she said. “These people have entered into contracts. Legitimately disclosing what that arrangement was. This would be an intervening piece of legislation.”

The powerful Real Estate Board of New York echoed the concern in a statement provided to NY1.

“This bill is an unconstitutional solution in search of a problem that has never existed. It is simply bad public policy to create anarchy in our state’s contract law for the sake of providing 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,” said Zachary Steinberg, REBNY’s senior vice president of policy.

But time is running out.

“Absolutely we’re talking about different scenarios and different ways to tweak the language to counter some of the fears we’ve heard from the other side,” Rosenthal said.

The end of the legislative session is scheduled for Thursday, June 6, so its passage is uncertain.