Density bonuses: Giving back for building up

Can developers figure out how to make density incentives work better in New York City?

Feb.February 05, 2008 05:38 PM

Chicago’s burgeoning green roofs and Seattle’s new Olympic Sculpture Park have one thing in common: They were funded in part through density incentives, city programs that allow developers to increase the size of a given project, or transfer development rights to another site, in exchange for community benefits.

Density bonuses are also common in New York, the city that pioneered the concept
in 1961. For example, Gladden Properties has announced plans to build a 40-story tower on Eighth Avenue between 54th and 55th streets.

To build to this height, Gladden, a joint venture between Boston Properties and Robert Gladstone, is negotiating a deal to purchase the development rights from two adjacent playhouses in the Theater District, the Shubert and the Booth. In exchange, Gladden will contribute $2.4 million to an existing fund whose goal is to promote interest in Broadway theaters.

But although local transactions have increased since the 1960s, the public amenities funded through such programs don’t always live up to expectations, critics say. For example, although money generated from the sale of development rights in the Theater District was intended to incubate new theater programs, none of the $2.5 million generated since 1998 has been distributed, according to city officials.

The Theater Subdistrict Council, which oversees the fund, has yet to determine how best to invest it.

By the same token, about 250 outdoor plazas and indoor atriums have been created through density bonuses. However, most have fallen into disrepair or do not provide adequate public access, said Kathy Madden, senior vice president of the Project for Public Spaces, a New York City-based nonprofit.

“It was a good idea, but it didn’t turn out,” Madden said. “Developers got very good at meeting the criteria while creating a lousy public space.” In many cases, the spaces have been appropriated for private use, such as cafés, Madden said.

There are other concerns. In many cities, developers can choose from a menu of bonus options, ranging from child-care centers and rural land protection to public art and public transportation improvements. In New York, by contrast, such choices are usually limited to creating affordable housing or privately owned public spaces, or historic preservation.

“We need to be more thoughtful about the things that will help us endure growth,” said Brad Lander, director of the Brooklyn-based Pratt Center for Community Development.

Compared to other municipalities, New York has done little to advance density incentives that would actually provide “a salve” for density, Lander added.

In Toronto, for example, density exchanges have helped fund bus shelters, nature trails, day-care centers, schools, tree irrigation systems, historical-building restoration and dozens of public sculptures. Concord Adex, which is currently building about 20 condo towers as part of the $1.5 billion City Place development, traded an additional 1 million square feet for 1,200 units of affordable housing on three city blocks, a series of parks and about $9 million dollars of outdoor art.

Under Seattle’s density bonus and transfer of development rights programs, developers such as Washington Mutual and Vulcan Inc. have provided hundreds of thousands of dollars for performing arts institutions and public art, including Benaroya Symphony Hall and the Seattle Art Museum’s sweeping waterfront Olympic Sculpture Park.

“The program has been strong and effective,” said Michael Killoren, director of the Seattle Office of Arts and Cultural Affairs, adding that the council hopes to extend the incentives to outside of downtown.

Last fall, R.C. Hedreen Co., which is developing a hotel condo tower in downtown Seattle, paid $930,000 to preserve 300 acres of farmland. In exchange, the developer was allowed to add 62,000 square feet of residential space and increase the tower’s height to above 300 feet. “It was a profitable tradeoff,” said Hedreen CEO David Thyer.

Influenced by towns like Chicago—which offers 13 different density incentive options—New York is trying to improve and update its menu of incentives. Responding to concerns about deficiencies in privately funded public plazas, New York’s City Council adopted a zoning amendment last October that updates design regulations for such spaces, said Rachaele Raynoff, a spokesperson for the New York City planning department. Planning officials will also recommend inclusion of an arts density bonus for nonprofit arts and cultural uses for the 125th Street rezoning plan that is currently going through the public review process.

“This is intended to stimulate new investment in arts, entertainment and retail activities,” said Raynoff.

Even when such programs are well-executed, density incentives raise concerns about the impact on neighborhood character. For example, density bonuses have aesthetic costs, Raynoff said. “There are areas where bigger buildings are desirable, and areas where they are not.”

Instead of trading added height for community benefits, the city should require developers to include a “base mandate” of public amenities, from grocery stores to schools, said Lander. “Then the city could allow a density bonus for expansion of these amenities.”

Presently, there are about 200 transfers of development and density bonus programs around the country. That’s up about 25 percent since 2003, said Rick Pruetz, a national expert on transfers of development rights and a consultant with California-based Planning & Implementation Strategies.

But that growth may be slowing in the wake of an economic downturn.

“If demand for housing decreases, demand for density incentives will slump,” said Darren Greve, who directs King County’s Transfer of Development Rights program in Seattle.

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