Developers rush to win approvals as Bloomberg’s clock ticks down

With only two months until a new mayor comes in, developers push to get as many green lights as possible for their projects

Nov.November 01, 2013 07:00 AM

development clockIt’s no secret that the end of Mayor Michael Bloomberg’s 12-year term has far-reaching implications for the real estate industry. But it’s not just because his likely successor, Bill de Blasio, is viewed as less pro-development than the billionaire businessman.

Regardless of who ends up in Gracie Mansion, an administration change means a strategy adjustment for developers, who have spent more than a decade getting used to Bloomberg’s taste in real estate projects as well as how his key appointees — from City Planning Commission Chair Amanda Burden to Department of Buildings Commissioner Robert LiMandri — operate. Now, they have to start from scratch.

“As a developer, the last thing you want is uncertainty, and there is a great deal of uncertainty if you’re going from one administration to the next,” said David Von Spreckelsen, senior vice president at developer Toll Brothers City Living.

So as the clock ticks down on the Bloomberg years, developers with projects in the planning stages are pulling out all the stops to tick off as many steps in the approval process as possible before a new mayor takes office. Of course, that’s easier said than done, especially as the current administration races to complete its own development agenda.

Andy Gerringer, managing director of new business development at the Marketing Directors, said that accelerating the quest for approvals provides a badly needed sense of security for developers.

“In order to have the certainty that they’re used to, I think everybody just tries to move things along faster,” he said.

Untangling ULURP

The further along a new development is in the city’s land-use approval process, the less likely it is to be altered or even derailed when the new mayor comes in.

Indeed, any project that needs city approval for a zoning change or variance must make it through a years-long process, starting with pre-certification through the Department of City Planning.

During the pre-certification phase, City Planning gathers basic information about a new project to determine what type of land-use application and environmental analysis will be required. And since there is no set time frame for the pre-certification, it can sometimes drag on for years.

“The pre-certification process is the killer,” said Von Spreckelsen. He recalled that when Toll was planning a residential project at 363-365 Bond Street along the Gowanus Canal, the pre-certification phase took “something like four years.”

Toll Brothers secured the rezoning, but walked away from the project in 2010 after the federal government designated the area a Superfund site. Toll Brothers currently has five projects in the planning stages, but all are as-of-right and don’t require city approval.

Projects now in the early stages of the pre-certification process are “clearly going into the next administration,” Von Spreckelsen said.

And, sources agreed that applications spilling into the next administration could face delays if the new mayor has different priorities, or makes major staff changes.

“It could be pretty hairy with a changing administration,” said David Wolkoff of G&M Realty, the developer of the proposed conversion of the graffiti-covered 5Pointz complex in Long Island City. “Will Amanda Burden be there with the next mayor? I don’t know. We’re all conditioned to how she does business.”

The procedural changes that inevitably accompany new leadership “can really slow somebody down if they have a big project on the drawing board,” Wolkoff said.

Once a proposed project makes it through pre-certification, it can begin to go through the city’s Uniform Land Use Review Procedure, a seven-month process during which it is reviewed by the local community board, Borough President, City Planning Commission, City Council and, finally, the mayor.

And while the mayor’s only official weigh-in comes at the end of ULURP, insiders said his support is crucial to shepherding a project through the entire process — especially getting it approved by the City Planning Commission, where the commissioner and six of the 13 members are mayoral appointees.

“The mayor’s office is acting behind the scenes throughout the process,” explained Stuart Saft, a real estate attorney and partner of Holland + Knight. “If you have a strong mayor and he wants to put the kibosh on a project, it doesn’t get very far.”

And when a project is a top priority to the mayor, it can suck up a lot of city staffers’ time. High on Bloomberg’s agenda right now, for example, is the Midtown East rezoning proposal, which would allow developers to build taller buildings after contributing to a fund earmarked for local pedestrian and transit improvements. Bloomberg staffers, sources said, are rushing to get the project approved by the council before the mayor leaves office on January 1.

“It takes up a lot of bandwidth, there’s no doubt about that,” said Stephen Lefkowitz, partner and real estate development attorney with Fried Frank. “The administration is obviously very anxious to see the conclusion of East Midtown.”

The council is expected to vote on the plan this month.

City Council’s blessing

The Midtown East rezoning isn’t the only project clamoring for City Council approval before January. Many developers view council approval as the crucial step in making sure their vision will survive Bloomberg’s departure. Once a project has secured that, sources said, a veto by the mayor is unlikely.

“It happens,” Saft said. “But by the time it gets to that point, a project has usually changed so dramatically and has incorporated and merged the thoughts of so many constituencies that it is usually smaller than originally planned, more community-focused. And so it just sails right through.”

Wolkoff, for example, said he was happy to get council approval last month for his controversial project, which would convert 5Pointz into two residential towers with retail space.

The City Council’s approval of a zoning variance for the project means “we’re literally at the go line — we are 99.99 percent there,” he said. That’s despite the fact that a federal judge issued a 10-day restraining order last month freezing demolition preparations at the site, after 16 graffiti artists filed a lawsuit in an attempt to save the art they painted there.

Also last month, a proposed megamall near Citi Field won council approval. The project, part of the $3 billion redevelopment of Willets Point by the Related Companies and Sterling Equities, was championed by Bloomberg’s Economic Development Corporation. But the approval wasn’t granted until the developers agreed to a handful of community demands, including accelerating the delivery of affordable housing and topping the mall with a rooftop farm.

Now the project is “on autopilot,” a Related spokesperson said.

One project that may not make it through the ULURP process before Bloomberg’s departure is the Childs Building, a former restaurant in Coney Island that Borough President Marty Markowitz and owner iStar Financial want turned into an amphitheater.

Community Board 13 voted against the project, which has Coney Island residents concerned about traffic and noise. But the board’s ruling is only advisory, and the project is expected to be approved by the city. The project went in front of the City Planning Commission last month, but has yet to go up for a vote.

Meanwhile, to move their projects through the process as quickly as possible, there are some steps developers can take.

“You try to get in line as early as possible with what you’ve got, hire all the right people, and you do everything you can with government relations people, your consultants and your lawyers, and try to push,” Von Spreckelsen said.

It’s crucial to hire architects who intimately understand ULURP and know how to align a proposal with the mayor’s priorities, industry insiders said.

“You need to understand what the public sector wants,” Lefkowitz said. “You have to understand from their point of view, since they control the levers.”

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