The de Blasio administration pulled the plug Monday on proposed legislation that would give the city a 20 percent cut of any air rights sales in midtown Manhattan’s Theater District, according to Crain’s. The reversal followed disputes with City Council members over a key element–a floor price for the sales. The proposal had been part of a long effort to get theater owners to up the amount they contribute to a fund used for venue maintenance and support for smaller theaters. There is now speculation as to whether the move could cast a shadow on the administration’s Midtown East rezoning plan, which is a similar policy initiative.
As 6sqft previously explained, “when developers purchase air rights from theaters between West 40th and West 57th Streets from Sixth to Eighth Avenues, they pay $17.60 per square foot to the Theater Subdistrict Fund. Because so many Broadway theater buildings are landmarked, transferable development rights can usually only be used for adjacent properties, but the city created the special district in 1998 to help the theater industry thrive amid sharply rising real estate prices; within the district, air rights can be moved more freely in a larger area outside the usual ‘arms length’ restrictions.” In turn, the fund uses the money to support emerging companies, subsidize smaller productions, and help make expensive tickets more accessible.
The de Blasio administration felt theater owners weren’t paying enough to the fund, and proposed that a 20 percent slice of any air rights sales would replace the old flat fee, with a minimum price per square foot of $346. The proposal included a floor price to deter sellers from claiming a low value to reduce the amount of their fund payment, then adding the remaining value in another transaction.
The city council opposed the floor price, as did the Real Estate Board of New York (REBNY), on the grounds that it could falsely inflate prices and keep theaters from being able to sell during economic downturns. The council reportedly removed the floor price from the proposal, replacing it with a provision for the Department of Finance to conduct audits instead. This alteration led the Department of City Planning to pull its application just before a vote on it by the council subcommittee. A council spokeswoman said in a later statement, “The City Council shares the administration’s goal of fully protecting the public,” and feels that the de Blasio administration is “depriving nonprofit theater groups of additional resources to support their mission” by scrapping the proposal.
A similar air rights opportunity has been proposed by the city in its Midtown East rezoning plan; it’s not known whether Theater District proposal’s demise will hamper that initiative; REBNY and a number of area churches already oppose the addition of a floor price there.
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Neighborhoods : Midtown West