The Real Deal New York

Grand Central Terminal landowner hints at suing to undo Midtown East rezoning

October 24, 2013 04:07PM

87 East 42nd Street

87 East 42nd Street

Midtown Trackage Ventures, the Delaware-based limited liability company that owns the land beneath Grand Central Terminal and the air rights above it, has hinted at a possible lawsuit should the City Council approve the Bloomberg administration’s Midtown East rezoning plan. “Midtown Trackage doesn’t believe that it makes sense to pass a law that’s this vulnerable to legal challenge,” Philip Bowman, an attorney and partner with Boies, Schiller who is representing the firm, told Capital New York. The Bloomberg administration’s plan to have landlords pay $250 per square foot into a fund that would be used to back public improvements in the 73-block Midtown East district has some arguing that the price tag is too low — a point of view with which Midtown Trackage agrees. “The City’s proposal thus would force our client to bear the cost of incentivizing development,” Bowman said in his testimony before a City Council committee this week. “The United States Supreme Court has stated that requiring one citizen to bear the cost of public improvement that in all fairness should be borne by the public at large is the quintessential wrong prohibited by the Takings Clause. We respectfully urge the City Council not to pass this unconstitutional proposal, and to take the time to develop a new proposal that can meet the Council’s public policy goals and pass muster in the courts.” The city’s Department of City Planning had no immediate comment to Capital New York. [Capital New York]Julie Strickland

4 Responses to “Grand Central Terminal landowner hints at suing to undo Midtown East rezoning”

  1. October 24, 2013 at 5:34 pm, DanM said:

    If Midtown Trackage thought the $250 a foot was too low, they would be happy to pay it. The serious argument is that requiring them to pay anything could be an unconstitutional taking – an argument that may or may not be offset by the city trading the money for additional air rights. Is selling zoning changes legal? Does it make a difference if the seller is the City or a corrupt pol? Should the City be satisfied to simply increase the zoning density for all and then reap the increased taxes as property is sold and developed? What is the difference between selling a zoning change for air rights and selling a zoning change for a public amenity (a public plaza, for example, or a low income housing requirement). Whether it is in this case or others, these are all questions that will probably be before the Supreme Court eventually.

  2. October 24, 2013 at 9:23 pm, a said:

    guys, don’t forget the real issue here: their main opposition to the rezoning is the extremely low valuation put on their air rights due to additional incentives available to developers. Their investment strategy for GC hinges on valuations that are multiples higher than this. Kind of amusing.

    From Bowman’s statement (not included in article above):
    “Specifically, the Proposal would substantially diminish the value of development rights—our client’s property rights—by allowing developers to essentially purchase the equivalent development rights from the City either in the form of district improvement bonuses (“DIBs”) or “in kind” infrastructure improvements at $250/sq. foot, a level substantially below the market rate”

    • October 25, 2013 at 10:34 am, DanM said:

      Hmmm. Tell me that new rights have been created above my building and can be purchased at a discount. Do I buy them and build myself, or do I increase the price of my building when I sell it to the air rights purchaser? Decisions, decisions. At least I can’t lose.

  3. October 28, 2013 at 10:43 am, iceberg said:

    As I posted on CNY-

    “The City’s Proposal thus would force our client to bear the cost of incentivizing development,” he continued. “The United States Supreme Court has stated that requiring one citizen to bear the cost of a public improvement that in all fairness should be borne by the public at large is the quintessential wrong prohibited by the Takings Clause.”

    So when NYC’s 1961′s zoning resolutions restricted owners from maximizing the value of their land in a multitude of ways (FAR restrictions, usage type and building envelope restrictions, et al.) this isn’t a taking, but when the city wants to loosen those “non-takings”, it becomes a “taking” from present-beneficiaries of those “non-takings”. LOL.

    This is also wrong because there is no “one citizen” bearing the cost here, he is one among hundreds or thousands of owners who have unused FAR in that district.

    http://en.wikipedia.org/wiki/Regulatory_taking#Regulatory_Restriction_on_Use_of_Property

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