Manufacturing areas to be rezoned?

New York City Mayor Rudolf Giuliani is expected to be briefed this week on a proposal to take a look at rezoning portions of 22,000 acres of industrial areas to permit more retailing. The idea was floated originally a year ago by then Planning Commissioner Richard L. Schaffer and that department has been conducting studies since that time.

Some of these manufacturing sites are also being considered for daytime social service treatment facilities.

While the manufacturing areas are being underutilized, city officials are under pressure from Big Box retailers who currently have to apply for variances or special permits to open their large stores. Additionally, voters feel they are being overwhelmed with treatment centers being place in residential neighborhoods.

According to City Planning Department spokesperson Kevin Davitt, these proposals are not expected to be implemented right away. "This is something we're thinking about and waiting to see where it will weigh in with the general public and the Mayor."

While vacant land owners and large retailers may be rejoicing that serious consideration is being given to this rezoning, small businesses are fearful they will not be able to compete. But others say the local retailers will just have to provide better service. Nevertheless, in an environment where each discount seller tries to "guarantee the lowest prices," it may not be enough.

But the city has always found room for the deli that opens early and stays open late around the corner from giant supermarkets; while local clothing shops even now compete across the street from major department stores and surely, even in the same malls.

A City Planning study last year looked at the impact of two large Pathmark stores that went through the special permit process. They found no significant impact on the local stores.

At the same time, the siting of treatment facilities will have to be carefully considered so as not to conflict with land use by retailers.

"A lot of this will be coordinated," explained Davitt. "We don't want to scare away people looking at this as a means of investment, and we are not even at the point of designating any areas."

Articles in the media, however, have already managed to ruin one Chelsea deal where the potential purchaser was concerned that those requiring social services might come for treatment nearby. David Brimwell, a broker with Taranto Management, said the prospect deferred a sale. "It's put a cloud over it, just the way a proposed condemnation does."

Chelsea is not an area that the city planners are considering, Davitt assured REW, pointing to even more industrialized areas such as Hunts Point in The Bronx.

"Manhattan would probably be the last place to be looked at because its already saturated [with social services]," he said. "The idea is to look at underutilized zones and where it will have a negligible effect on any development."

Michael Caretnay Bailkin, a partner with Stadtmauer Bailkin Levine & Masyr, who represents a number of big box retailers, discounted the effects of social service facilities in the industrial areas. "Unless you put a shelter next to somebody's plant they don't consider it," he noted.

Even so, Brimwell believes building owners are going to be upset. "Anybody is going to be up in arms," he added. "It's a touchy issue."

But real estate experts also point to the out of the way sites being considered by these retailers that tend to covet automobile and highway access rather than mass transit. Purveyors of social services, on the other hand, will be dealing with individuals who more than likely will have to travel on subways and buses and be nearer to more lively areas.

Those attorneys who represent the retailers say a city zoning change will make it easier for their clients to open new sites and obtain financing as well.

Paul D. Selver, a partner with Brown & Wood said, "Anytime you don't have to go through an extended process for a new facility its much easier to make a commitment to open a facility."

Sybil Pollet, a partner in Pollet & Pollet, noted that obtaining variances is always an uncertain process, while zoning provides guidelines for development. "Anytime you have legislation that tells people what they can do and what they cannot do, it gives the developer and the financial side a certainty, and that is always a relief," she said.

Pollet called variances "the ultimate escape valve in the zoning resolution" because having the appeals process is what prevents the city from being sued for an unconstitutional taking. But, she cautioned, the proofs for a variance are difficult and always an uncertainty, unlike special permits which are authorized.

A special permit is obtained by going through the Uniform Land Use Review Process.

For a variance, the owner must appear before Standards and Appeals and show there is something unique about the situation, as well as a hardship. "The community can come in and the results are not certain at all," she said.

And preparing for these hearings is costly. "The owner has to provide an economic analysis and lots of drawings," Pollet explained. "From an owner's perspective, it's an expensive process."

Selver wryly noted he didn't know anybody who preferred to go through the variance process. "It tends to add a level of cost in terms of time and out of pocket expense and it inhibits people from coming into the city on an easy basis," he added.

Additionally, the variance process takes a long time. "We generally say 18 to 24 months, but it's possible to do it faster," Selver noted, pointing to one project that sped through approvals in seven months, "because everyone realized it was the right thing to do."

Right now, Selver said, most retailers view New York City, and particularly the outer boroughs, as areas that aren't being served well enough by these discounters. But worse for city coffers, residents are taking their cars and spending their money at these same retailers in New Jersey, Westchester and Long Island. Queens and Nassau have about the same total personal income, said a former City Planning official, but the total retail sales in Nassau are twice that in Queens.

While current zoning limits clothing and food stores in particular to about 10,000 square feet without a variance, the retailers would like to see a change that would allow them to build stores up to about 150,000 square feet. "They all have a different magic floor size, usually between 100,000 and 150,000 square feet," said Selver.

While the current proposal is now at 100,000 square feet, the former official said they were waiting to complete an environmental impact statement to see what the impact would be at higher levels. "It should probably go higher," said the former planner. "Whether it will get to 150,000, it's hard to say."

Zoning also requires that stores provide parking for three to four cars per 1,000 square feet, although some areas require 6.5 spaces per 1,000 square feet, noted Selver.

When the zoning was changed in 1974, the planners did not envision large hardware or office supply stores. Nearly ten percent of all New York City land is M-zoned and much of it is lying empty or vacant.