Mayor scraps Theater District air rights plan

The de Blasio administration abruptly pulled its proposal to take a bigger cut of air-rights sales in the Theater District Monday after a rift with City Council members, who altered a key part of the proposed legislation. The move ended a months-long effort...

Mayor scraps Theater District air rights plan

The de Blasio administration abruptly pulled its proposal to take a bigger cut of air-rights sales in the Theater District Monday after a rift with City Council members, who altered a key part of the proposed legislation. The move ended a months-long effort...

27 February 2017 Monday 14:52
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Mayor scraps Theater District air rights plan

The de Blasio administration abruptly pulled its proposal to take a bigger cut of air-rights sales in the Theater District Monday after a rift with City Council members, who altered a key part of the proposed legislation.

The move ended a months-long effort to compel theater owners to pony up more cash for a fund used to support smaller organizations and broaden interest in productions, and could threaten a similar policy that is central to the administration's Midtown East rezoning.

Because many Broadway theaters are landmarked, the sites can't be developed to their full potential. That is why, in 1998, the city created a special district allowing them to sell those unused development rights to other properties in the area and then use the cash for maintenance and upkeep. In exchange for this leeway, which is not available in most areas of the city, theater owners had to contribute a portion of any sale to the Theater Subdistrict Fund.

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The de Blasio administration argued that theater owners had been paying too little into the kitty for too long, and introduced a proposal that would capture a 20% cut of any air rights sales and establish a minimum price per square foot of $346. But on Monday, the Department of City Planning abruptly pulled that application just before a council subcommittee was scheduled to vote on it because of a disagreement with legislators.

The administration's proposal had included a floor price, which officials argued was needed to deter fraud. For example, a theater owner might strike a deal to sell air rights to a developer at a small face value, which would be subject to the 20% tax, and then figure out other financial agreements that would not be subject to the levy.

"We were willing to enable easier transfers of air rights sought by the private sector, but only with a guaranteed return for the public," a City Hall spokeswoman said. "Without that minimum contribution, the process could easily be subverted by owners to evade their obligations to the public."

The council opposed the floor price—which organizations such as the Real Estate Board of New York argued could hamstring theaters during downturns in the market—and according to City Hall removed it from the proposal, replacing it with a provision that Department of Finance conduct audits of the transactions instead.

"The City Council shares the administration's goal of fully protecting the public," a council spokeswoman said in a statement that accused the de Blasio administration of "depriving nonprofit theater groups of additional resources to support their mission."

The city has proposed a similar air rights mechanism in its Midtown East rezoning, though it is unclear if the failure of the Theater District proposal will imperil that effort. REBNY, along with a number of churches have already lined up against a floor price there.

"The use of a floor price on the transfer of air rights is ill-conceived," REBNY President John Banks said in a statement. "For example, in a down market, the floor price would lead to less transactions, less revenue for the city, and, in the case of the [Theater] District, less money to preserve and maintain landmark theaters."

The de Blasio administration abruptly pulled its proposal to take a bigger cut of air-rights sales in the Theater District Monday after a rift with City Council members, who altered a key part of the proposed legislation.

The move ended a months-long effort to compel theater owners to pony up more cash for a fund used to support smaller organizations and broaden interest in productions, and could threaten a similar policy that is central to the administration's Midtown East rezoning.

Because many Broadway theaters are landmarked, the sites can't be developed to their full potential. That is why, in 1998, the city created a special district allowing them to sell those unused development rights to other properties in the area and then use the cash for maintenance and upkeep. In exchange for this leeway, which is not available in most areas of the city, theater owners had to contribute a portion of any sale to the Theater Subdistrict Fund.

The de Blasio administration argued that theater owners had been paying too little into the kitty for too long, and introduced a proposal that would capture a 20% cut of any air rights sales and establish a minimum price per square foot of $346. But on Monday, the Department of City Planning abruptly pulled that application just before a council subcommittee was scheduled to vote on it because of a disagreement with legislators.

The administration's proposal had included a floor price, which officials argued was needed to deter fraud. For example, a theater owner might strike a deal to sell air rights to a developer at a small face value, which would be subject to the 20% tax, and then figure out other financial agreements that would not be subject to the levy.

"We were willing to enable easier transfers of air rights sought by the private sector, but only with a guaranteed return for the public," a City Hall spokeswoman said. "Without that minimum contribution, the process could easily be subverted by owners to evade their obligations to the public."

The council opposed the floor price—which organizations such as the Real Estate Board of New York argued could hamstring theaters during downturns in the market—and according to City Hall removed it from the proposal, replacing it with a provision that Department of Finance conduct audits of the transactions instead.

"The City Council shares the administration's goal of fully protecting the public," a council spokeswoman said in a statement that accused the de Blasio administration of "depriving nonprofit theater groups of additional resources to support their mission."

The city has proposed a similar air rights mechanism in its Midtown East rezoning, though it is unclear if the failure of the Theater District proposal will imperil that effort. REBNY, along with a number of churches have already lined up against a floor price there.

"The use of a floor price on the transfer of air rights is ill-conceived," REBNY President John Banks said in a statement. "For example, in a down market, the floor price would lead to less transactions, less revenue for the city, and, in the case of the [Theater] District, less money to preserve and maintain landmark theaters."

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