Theater owners and developers lock horns with city over air rights

City wants to raise the fee on transfers in the Theater District by at least 20%

Carl Weisbrod
Carl Weisbrod

A backstage drama is brewing between the city, developers and theater owners.

The de Blasio administration wants to hike the fees broadway owners pay when they sell their development rights, a move that’s opposed by developers and theaters alike. Broadway theater owners currently pay $17.60 per square foot into the Theater Subdistrict Fund when they make a deal.

The city wants to raise the fee to 20 percent of the sale or a floor price of $347 per square foot, whichever figure is higher. The proposal, which would see the $347 figure adjusted every three to five years, was debated at a City Planning Commission meeting last week, Politico reported.

The city set the fund up in 1998 when it made the rules around air rights more flexible for theatre owners, a strategy designed help the industry keep afloat in a time of rising real estate prices. The fee the theatre owners pay into the fund has gone up just $10 per square foot in 18 years.

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Real estate and theatre representatives spoke against the idea at the meeting, with Paimann Lodhi, a vice president with the Real Estate Board of New York [TRDataCustom], describing the increase as “onerous, excessive and unfair.” He told the commission the board understands the contribution the theatre owners pay should be changed every year, but it “firmly opposes both the floor price and this drastic increase.”

A land use lawyer for Broadway theatre owners Robin Kramer, of Duval and Stachenfeld, said the floor price of $347 is a major problem. “Most shows do not even repay their costs,” she said, “Theaters must continue to be maintained and pay taxes even when shows fail and theaters are empty.”

But the city’s planning director, Carl Weisbrod, argued the theatre district had reaped significant benefit for nearly two decades by paying a reduced rate to the fund. [Politco] —  Miriam Hall