Sunday, February 24, 2013

Getting real on rezonings: "you’re dumping a whole lot of untapped value on property owners" (and an override of zoning is even more lucrative)

From The Great Air Race, an article about air rights and developer on the front of today's New York TImes Real Estate section:
Controversial when it was built, Trump World Tower has its defenders. “You could subscribe to the theory that towers like these are the Empire State Buildings of the 21st century,” said Joshua Stein, a prominent commercial real estate lawyer.
“In the real estate market,” he added, “some projects are very buffeted by the economic winds and some aren’t, but residential development projects are often the first to get buffeted. And now we’re in a market where people are developing again, which is why we’re talking about development rights again. Whenever you see a potential rezoning, like we’re seeing with Midtown East, you create unused development potential: you’re dumping a whole lot of untapped value on property owners.
(Emphasis added)

He is saying the obvious, but the obvious needs to be said more often.

The rationale for rezonings

Rezonings aim not merely to increase density and pursue the goals of growth, as Department of City Planning said about the Downtown Brooklyn rezoning:
The Department of City Planning and the New York City Economic Development Corporation (EDC), in partnership with the Downtown Brooklyn Council (DBC), a local business organization, are proposing a new comprehensive development plan to facilitate the continued growth of Downtown Brooklyn. The plan recommends a series of zoning map and zoning text changes, new public open spaces, pedestrian and transit improvements, urban renewal, street mappings and other actions that would foster a multi-use urban environment to serve the residents, businesses, academic institutions and cultural institutions of Downtown Brooklyn and its surrounding communities. Building on the success of previous development efforts that have retained and attracted companies in New York, the plan would create new retail and housing, and would foster expanded academic and cultural facilities.
The Downtown Brooklyn rezoning also made numerous property owners rich, as it dumped "a whole lot of untapped value" on them. That's one of the themes of the film My Brooklyn.

Even better than a rezoning...

So, what dumps even more untapped value? An override of zoning for a particular applicant--essentially a private rezoning. And that's what happened with the Atlantic Yards project.

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