The Real Estate Board of New York is happy with the Midtown East rezoning proposal, with a few caveats.
One is the floor price proposed for the 3.6 million square feet of landmarked air rights in the district: $393 per square foot ($78.60 of which will go to the city). Paul Selver, a co-chair of Kramer Levin’s land-use department who is working with REBNY, said the city’s reasoning for the floor price — to create more transparency in the process — doesn’t make sense because developers already need to file transfer tax returns that spell out the specifics of the deal. In other words, the justification behind the requirement, he said, is bunk.
“I have never seen a transaction where anyone misstated the consideration in order to avoid a tax. People just don’t do that,” he said. “They have to be honest in paying their transfer property tax.”
During a public hearing in January, REBNY testified that the floor price was “onerous, excessive and unfair.” A spokesperson with the Department of City Planning disagreed, saying that the minimum contribution is a “straightforward way” to support the public improvement fund.
“The minimum contribution simply enables us to establish a reasonable floor regardless of how a development rights transaction is structured legally, since the market value of such a transaction won’t always be reflected separately on a transfer tax return,” a spokesperson for DCP said.
Midtown East is just one of a few key land-use issues on the mind of attorneys with Kramer Levin’s real estate, land use and environmental group, who gathered at the Museum of the City of New York on Wednesday night. The cocktail reception was held, in part, to celebrate an exhibit at the museum about zoning in the city. The law firm was one of the exhibit’s sponsors.
Another co-chair with the land-use department, Michael Sillerman, said one of the biggest issues the city needs to address is the abundance of industrial land. He said the city’s zoning rules are too rigid and should allow more mixed-use development on such properties.
Another big issue, of course, is the lack of one of the most developer-beloved tax breaks in the city. When asked about the future of 421a, developer Robert Skolnick simply lamented that the tax abatement still hasn’t been revived — even though the governor has floated a possible replacement. Without it, he said, reiterating a common complaint of city developers, constructing rental housing isn’t financially tenable.
“In its absence, any site that we’ve looked at that’s potentially rental doesn’t make any sense to us,” he said.
As for the arrival of one of New York’s real estate players in the White House, Jay Neveloff, chair of the firm’s real estate practice, provided a vote of confidence. Neveloff has previously worked for President Donald Trump on a number of real estate matters.
“So far, his presidency has shown a tremendous growth in the stock market, and there’s more optimism by businesses in terms of investing. I think that optimism will continue,” Neveloff said of Trump. “As someone who has worked with him for many years, I know he’ll do great great things.”
Clarification: The proposed floor price for air right sales in Midtown East is $393 per square foot. The city would take $78.60 per square foot.