Issue of the Week

Air Rights

DISPATCHES: Clinton/Hell's Kitchen

Using the Wrong Tools

by John Fisher

"Use the right tool for the job" is an axiom applicable not only to woodworking, but also to zoning. The recent complex Eighth Avenue/Theater Subdistrict Rezoning -- essentially a square peg being pounded into a round hole -- showed that expanded Air Rights was the wrong tool for good urban planning. Mayor Giuliani and City Planning Commissioner Joe Rose used a politically unsophisticated industry as a smokescreen for development and City Council freely handed-up its charter rights of land use review to the Mayor. A year later, even if the zoning plan survives, it's doubtful if anything useful has been accomplished.

Air Rights (more precisely known as Transfer of Development Rights or "TDR") allow a property owner to transfer its right to further develop a property to another nearby property.

Zoning Lot Mergers, one form of TDR, occur when two adjacent properties combine zoning lots, allowing developers to build larger buildings than the underlying zoning limitations would allow (this requires available development rights in a property next-door or within a continuity of ownership.) Using this mechanism, a low-rise church may shift its undeveloped bulk to an adjacent or nearby property. A deed covenant prohibits the church from using those development rights as long as the adjacent development stands.

Donald Trump used this method to amass development rights for his Trump World Towers on Manhattan's East Side (community groups have objected because those development rights were transferred across zoning district borders).

To get around this limitation, developers and politicians created "floating air rights" where the TDR can literally jump to the next block or further. In New York City, this mechanism has been limited to closely defined areas such as the Grand Central District or the South Street Seaport District. In urban planning parlance, there is a nexus between the sending and receiving sites, i.e., a shared burden and benefit. Used as a preservationist tool, owners are compensated by allowing a greater use of development rights, and society benefits in the preservation of landmarked or historical buildings.

But if misused, these tools can cause more harm than good.

In December 1997, Mayor Giuliani announced the Eighth Avenue/ Theater Subdistrict Zoning Proposal, where Air Rights would be transferable from landmarked Broadway Theaters to anywhere within a fifty-block swath of Midtown, but targeted towards Eighth Avenue. The underlying reason to "save the theater" was quickly discounted. A citywide coalition of community, civic, historic preservation and housing organizations saw it as a plan impacting a valuable neighborhood and as a question as to how development would occur in New York City.

The Manhattan Clinton/Hell's Kitchen neighborhood west of Eighth Avenue from 34th to 59th Streets, is a low-rise and low-to-moderate income community with a strong social fabric and identity. Developers have long thirsted to expand the Midtown Business District to the Hudson River. Previous city administrations have seen the wisdom of preserving such neighborhoods. In 1973 the Special Clinton District was created to ward off development pressures. But with Times Square bursting at its seams, the thought was that this might be the way to cross Eighth Avenue and get in a foothold for further expansion in future real estate cycles.

If developers were able to transfer 2.3 million square feet of development rights anywhere within Midtown, as the plan suggested, targeted towards Eighth Avenue and Clinton, the impact would be devastating. A low-rise residential neighborhood would suddenly be impacted with major increases in traffic, noise, building bulk, and many low-income residents would be forced out by accelerated gentrification.

The proposal also raised citywide concerns in that it would allow such development to proceed without the benefit of community and City Council Review, as set forth in the Uniform Land Use Review Procedure (ULURP) and the State Environmental Quality Review Act (SEQRA). Such reviews allow limited community control over the type of development that occurs in the City and is an important safeguard.

Organizations in all five boroughs stepped forward to oppose the plan, fearing it would create a precedent and the potential for inappropriate development elsewhere. If the Mayor could announce -- unsupported by evidence -- that the Broadway Theaters were suddenly in danger of being destroyed to advance a thinly-disguised development plan, what would stop a similar scenario elsewhere in the City?

This is a broader issue of limitations on development. City Planning Commissioner Joe Rose's recent proposal allowing height/bulk exceptions for developments of "exceptional nature" raises questions of by whom will such decisions be made and in whose interests? Is it a disingenuous way to avoid community and environmental review? This summer's proposals by the Mastro Charter Revision Commission to remove City Council from major land-use decision-making also raises such questions.

Theater as a Justification

The zoning plan called for a not-for-profit organization, ostensibly the newly-created Broadway Initiative, to be the receiver and administrator of $10 for every square foot of Air Rights sold. The fund would support the creation of new plays. Proponents argued the proposal was for economic development, i.e., jobs. But opponents claimed that using zoning for economic development would undermine the integrity of the zoning resolution as a rational guide for planning and development.

Although the commercial Broadway theater was enjoying record attendance and profits, several elected officials opposed to the plan suggested that any real need for government subsidy for the commercial theater could come from the city budget.

Theater owners rejected this generous offer, claiming it wouldn't preserve their theaters. But Broadway theaters were landmarked in the 1980's and had already been granted -- and had used -- substantial development rights. Gerald Schoenfeld of the Shubert Organization (with assets approaching $150 million) had previously made a stink when Disney obtained state financial assistance to renovate the New Amsterdam Theater on 42nd Street. Industry insiders opined the zoning proposal was merely an extension of Shubert jealousy.

The other major Broadway theater owner, the Nederlander Organization, purchased several Eighth Avenue parcels shortly before the plan was announced, and had enough left over to give Mayor Giuliani a $40,000 donation for his 1997 re-election campaign.

A financial analysis showed that even if all the available Air Rights were sold over twenty years, the available proceeds would amount only to 5-10% of the needed funding for the Broadway Initiative. Where was the rest to come from to accomplish the stated goals? The producers and theater owners said the professional theater unions would make up the rest. The unions disputed making such commitments.

Opponents from the Clinton community (many of whom work in the professional theater) were irate that the Mayor would use the American Theater as a smokescreen for the zoning plan. As expected, many in City Council were bedazzled when the theatre owners trotted out the Broadway stars at the City Council hearings. How could development opponents attack this beloved institution? But the reality was embarassing. Respected actors such as Tony Randall and Eli Wallach spoke of the importance of the American Theater, but had no idea what the proposal entailed and tripped over the scripts pressed into their hands by the Shubert lobbyists. Others supporters (many of whom were astounded by the depth of community opposition) were beneficiaries of Shubert Foundation largess, sought better bargaining power at future union contract negotiations, or even privately admitted there was the ever-present implied threat of industry blackmail.

Calling the plan the "Hokey Pokey," City Council Zoning Subcommittee Chair Walter McCaffrey stated, "Épeople have put their right foot in and then they have taken their right foot out, so É we have folks who have made a commitment, but not to put any money inÉ" The plan was a scam.

To add fuel the fire, City Planning Commissioner Joe Rose used development trends for the period 1983-1993 in order to claim the transfer of 2.3 million square feet of development rights (about the size of the Empire State Building) would have no significant impact. Based on out-of-date data, ignoring the changes in Times Square and real estate market demand that occurred after 1993, City Planning failed to prepare the required Environmental Impact Statement.

Showtime

In a highly-charged political atmosphere, the proposal proceeded though ULURP. Community Boards 4 and 5 soundly rejected it as did the Manhattan Borough Board. Manhattan Borough President C. Virginia Fields, in breaking a campaign promise and in an apparent effort to curry favor with the Mayor, approved the plan. All but two City Planning Commissioners rubber-stamped the proposal. City Council Speaker Peter Vallone - who reportedly accepted gubernatorial campaign donations from theater lobbyists -- pushed the plan through City Council.

A few months later, the Clinton Special District Coalition filed suit against the City claiming it failed to properly examine the environmental impact of the zoning change on the Clinton neighborhood and provide for necessary mitigation.

To the surprise of almost everyone, Manhattan Supreme Court Justice William P. McCooe agreed with community residents in his June 30th decision annulling the City's action. He stated the City's conclusion of no significant impact "strains credibility" and "ignores the current state of the midtown real estate market..." He cited Mayor Giuliani's own observation, "I see the potential for a lot more development [on Eighth Avenue]."

Although the City plans to appeal the court's decision and the story is far from over, lessons and perspectives of the entire exercise are emerging.

No development rights have been sold or transferred. Broadway is still thriving. Theatrical unions are not funding the Broadway Initiative and what money it did have was spent on political lobbyists. City Council's handing over its power of land-use review to the Mayor has forced many community and civic groups throughout the city to be even more guarded to potential threats to community review. The debate has even shifted to whether the policy of tourism-at-any-cost is in the City's best interests. The Clinton community is still reeling over its ongoing trauma and Broadway is tainted for so easily disregarding the community that supported it for so many years.

The Mayor and Commissioner Joe Rose attempted to use Development Rights for economic development and social engineering, at the expense of city neighborhoods. It was the wrong tool. When the final chapter is written, it will be hard to judge if there were any winners.

John Fisher is a member of Manhattan Community Board 4 and President of the Clinton Special District Coalition. Additional information is available on Hell's Kitchen Online.