Advocates to city: Drive a harder bargain on Midtown East
Transit advocates are demanding the Bloomberg administration drive a harder bargain with developers as part of the rezoning of Midtown East.
Today, Gene Russianoff, who runs NYPIRG's Straphangers Campaign, will join with Tri-State Transportation Campaign executive director Veronica Vanterpool and Taskforce on Midtown East chair Lola Finkelstein to send a letter to planning commissioner Amanda Burden warning that the city's existing plan to rezone Midtown East might well amount to a "a dramatic subsidy for developers."
At issue are air rights.
The controversial Midtown East plan that the city is now shepherding through the land-use process would rezone a 73-block swath of the neighborhood around Grand Central Terminal. The end result is expected to be about about 12 new skyscrapers. Because many of those skyscrapers would replace existing buildings, the plan would result in a net increase of about 3.2 million square feet.
The rationale for the rezoning is that the office buildings around Grand Central are aging and increasingly undesirable to modern tenants, and that the zoning there is so outdated that some landlords can only replace their existing buildings with smaller ones, which would hardly be worth their time.
The city plans to charge developers at least $250 a square foot for the right to build extra tall buildings in the rezoned district and then use that money to fund transit and open space improvements.
The advocates argue the price is far too low.
"We are concerned that the City is dramatically underpricing the value of the development rights undercutting the City’s stated goal of improving transit and open space in East Midtown," write Russianoff, Vanterpool and Finkelstein.
In particular, the advocates take issue with the city's reliance on an appraisal of air rights that uses transactions dating back more than a decade, its contention that all air rights in the 73-block swath should be priced the same, even though the Grand Central office market consists of several submarkets, and the appraisal's reliance on typical air rights transactions (which are normally only allowed for adjacent properties) rather than the sort of air rights transactions that would be permitted between non-neighboring buildings under the Midtown East plan.
"[T]he City could potentially lose out on $363 million dollars of funding," they write. "To put that in perspective, the pedestrianization of Times Square is expected to cost the City approximately $50 million dollars. The cost difference could be enough to dramatically improve the open spaces, streets, and sidewalks of East Midtown and additionally support the critical transit upgrades we all recognize are desperately needed."
This is not the first time this argument has been raised.
Argent Ventures, a real estate company that controls the air rights above Grand Central (and therefore has an interest in increasing the air-rights price) recently put out a study arguing that the city's $250-a-square-foot number was too low.
That study is cited in the advocates' letter.
In a statement, Bloomberg spokeswoman Julie Wood defended the city's own appraisal methodology.
"The appraisal was done by an independent firm with excellent credentials and we’re confident in their numbers," she said.