City continues push to raise fee for Theater District air rights transfers
In November, the City Planning Commission voted to raise the cost of air rights transfers in the Theater District, allowing the city to take a 20 percent cut of any sales and establishing a minimum floor price of $346, a roughly 400 percent increase over the current $17.60 flat fee that they feel will be more in line with current property values. Despite vocal opposition from the Real Estate Board of New York, who back Theater District landlords and believe the increase is “is onerous, excessive and unfair,” this month the Commission is hoping to have the proposal approved by the City Council, reports Crain’s.
Currently, as 6sqft previously explained, “when developers purchase air rights from theaters between West 40th and West 57th Streets from Sixth to Eighth Avenues, they pay $17.60 per square foot to the Theater Subdistrict Fund. Transferable development rights can usually only be used for adjacent properties, but the city created the special district in 1998 to help the theater industry thrive amid sharply rising real estate prices; within the district, air rights can be moved more freely in a larger area outside the usual ‘arms length’ restrictions.” In turn, the Fund uses the money to support emerging companies, subsidize smaller productions, and help make expensive tickets more accessible.
Since the zoning change, the city has collected about $9.6 million from 37 transactions. The Fund just finished spending $2.2 million on diversity initiatives throughout the theater district, and $1.5 million remains, which may be used to address the number of small theaters that have been closing throughout the city (80 in the past 15 years, to be exact). But according to a REBNY study, had the city been collecting the 20 percent all along it would have more than $20 million in additional funds from the $165 million+ of air rights that Broadway theaters sold between 2006 and 2016.
Councilman Corey Johnson, whose district includes most Broadway theaters and who must approve the plan, has suggested that the city proposed the increased to keep things even with the Midtown East Rezoning. Similar to the Theater Subdistrict plan, this proposal would allow owners of landmarked buildings (in this case namely religious institutions) to sell their air rights across the district, rather than just to adjacent properties. After the city found that there are about 3.6 million square feet of unused development rights that could be sold over the next 20 years, they proposed taking a 20 percent cut here, too, and using that money for infrastructure improvements.
But Carl Weisbrod, the outgoing commissioner of the Department of City Planning who is spearheading the Theater District effort, said, “Times Square was the first area where there was a plan to float air rights across a district, and I think it takes time and some trial and error to figure out the best way to do it,” adding, “I don’t think there’s any disagreement anywhere that the current rate of $17.60 is an insufficient amount.”
[Via Crain’s]
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