The Real Deal New York

Midtown East rezoning negotiations reach standstill over key detail

City Hall, Council disagree on floor price for air rights
July 18, 2017 08:05AM

Midtown East (Credit: Getty Images)

To floor price or not to floor price, that is the question. Negotiations over a rezoning of Midtown East hit a roadblock as City Council and City Hall can’t agree on whether to mandate a minimum price for air rights sales in the area.

The current rezoning plan calls for developers who buy air rights from landmarked properties to give a share of the purchase price to the city to pay for public infrastructure improvements. The de Blasio administration wants to set a minimum contribution of 20 percent of the sales price or $78.60 a foot to ensure developers don’t circumvent the contribution by artificially decreasing the air rights price (for example, through side deals in other neighborhoods).

Local council member Dan Garodnick opposed the so-called floor price, arguing that it could backfire. “We are requiring that a percentage of each air rights transfer be set aside for public improvements — but to require a fixed minimum may have the unintended effect of limiting the number of transactions and thus reducing the amount of money for the public,” he told Politico.

Naturally, the Real Estate Board of New York is siding with Garodnick on this issue. “Our community is not one that engages in fraudulent activities as a matter of course. It was a bit of a red herring,” REBNY president John Banks said.

Politico reported that the parties are still likely to reach an agreement by July 27, when the Council’s land use committee is scheduled to vote on a plan. But some participants are worried that the plan could share the fate of a proposed Theater District rezoning, which was abandoned earlier this year over a similar dispute.

The Midtown East rezoning plan is expected to add 6.5 million square feet of new office space over two decades. [Politico]Konrad Putzier