City Council cuts minimum air rights price under Midtown East rezoning proposal
But it's still higher than what REBNY wanted
A City Council committee has tweaked the rules surrounding the sale of air rights under the proposed Midtown East rezoning, decreasing the mandatory public contribution from these deals to $61.49 per square foot.
That puts the price of these deals at roughly a minimum of $307.45 per square foot, down from the initially proposed $393 per square foot. The city will take $61.49 per square foot — or 20 percent of the sale price, whichever is greater. The subcommittee on zoning and franchises voted in favor of the revised proposal on Thursday after resolving a few issues that arose during the land use review process — one of the most contentious being the terms surrounding air rights sales in the district.
Council member Dan Garodnick said the subcommittee arrived at the new price by focusing on average air rights sales and excludes land sales and Hudson Yards from its estimates. This appears to be a compromise between the analysis conducted by the city and another by the Real Estate Board of New York, though the new mandatory requirement is still well above the real estate group’s estimates. When asked about the changes to the rezoning proposal, REBNY’s president John Banks said Thursday’s vote was a “step backward.”
“Today’s agreement is a missed opportunity to ensure more, rather than less, commercial development,” Banks said in a statement. “As a result, it is less likely that the public improvements that are needed in Greater East Midtown will be achieved.”
Earlier this year, REBNY faulted the city’s reliance on land sales and its inclusion of Hudson Yards sales in its calculations, which effectively set prices at $393 per square foot. Based on its own analysis, REBNY said the minimum price for air rights should fall closer to $179 per square foot.
Other changes include requiring developers to incorporate building on sites greater than 30,000-square-feet to include privately owned public spaces. The committee also decided to exclude the east side of Third Avenue from the rezoning, in response, in part, to concerns from Turtle Bay residents and officials that new commercial development would impinge on their what was largely a residential section of the neighborhood. The rezoning proposal also specifically identifies transit improvements that developers will need to complete before they can lease out their buildings. The city has also committed $50 million to kickstart the public realm improvement fund.
The revised proposal kept intact a controversial zoning change to the Pfizer site — buildings at 219 East 42nd Street and 235 East 42nd Street — that will upgrade the sites’ allowed floor area ratio (FAR) of 10 to FAR of 15. The change means the owner of the sites can knock down the current towers and rebuild a modern office with an FAR of 15. They will be able to do so without contributing to the public improvement funds. City officials have explained that the change is simply an effort to make the sites uniform with the rest of the district, most of which already has an FAR of 15.
Pfizer plans to sell its current headquarters and is looking at six or seven properties for its possible new digs, Deputy Mayor Alicia Glen said during a press conference after the vote. Council member David Greenfield noted that Pfizer has publicly promised to keep its headquarters in the city.
During the press conference, officials said developers will contribute $500 million to improve seven subways in the district under the rezoning. The rezoning of more than 70 blocks in Midtown East is expected to create 6.5 million square feet of new commercial space and $50 million in seed money to Renovate East 43rd Street.
“East Midtown is back,” Garodnick said.
The proposal heads to the Land Use committee Thursday afternoon.