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Suggested zoning action for downtown.

Recognizing the fundamental frailty of the Downtown market, New York City officials are now studying actions and other options which might be included in a forthcoming "Lower Manhattan Plan" aimed at reviving this very important section of the the city.

At the heart of the problem is a significantly more competitive and globalized economy whose elements interact via increasingly advanced computer and communications networks. An economy operating in this mode seems to require fewer office workers, and seems to be less dependent on a downtown Manhattan office base. Furthermore, many of the older office buildings in downtown Manhattan have small or irregular floor plates, or low floor-to-floor heights which inhibit electrical retrofitting. These disadvantageous features have rendered such office buildings substandard or obsolete. Consequently, the office vacancy rate in downtown Manhattan -- particularly in the older buildings -- has skyrocketed and for the foreseeable future might remain unusually high, with correspondingly depressed rent levels, unless some remedial action or event occurs.

Among the alternative courses of action now being considered by many owners of the older office buildings in downtown Manhattan are: 1) Conversion of the office building to an apartment building, provided that the structure is adaptable to residential light and air standards. In many cases, this may not be feasible, owing to problematic floor sizes or building configurations 2) Demolition of the office building if gross rental income does or will not exceed operating expense and debt service. The site would then be held in its resulting vacant condition for an indefinite period -- until there is some significant improvement in the real estate market so that redevelopment can proceed. But demolition work is expensive, and a site that is small, irregularly shaped or poorly located may not be suitable for a modern office building.

Suggested below is another alternative which might be more promising for certain sites than the two mentioned above. This suggested alternative would require certain changes in city and state legislation and regulations.

Essentially, the suggested alternative would establish a primary public goal of enhancing land value in downtown Manhattan, by way of land use legislation aimed at promoting the "highest and best" use of land. Land value enhancement is a legitimate zoning consideration, as set forth in Sections 25-110 and 25-111 of the city's Administrative Code, and Section 20 of the State's General City Law.

In downtown Manhattan, now or in the foreseeable future, the "highest and best" use of land for new construction may very well be high-rise, high-density residential. This hypothesis is based on an anticipated demand for nearby residential space by executives and other business or professional persons who work in or serve clients in the office buildings. Apartments enjoying excellent views uniquely attributable to a downtown Manhattan location -- i.e. views of: the waterfront, various islands, the Hudson River, the East River, or Midtown Manhattan -- should generally be the focus of greatest demand and should therefore command the highest purchase prices or rents.

Accordingly, a land use policy aimed at enhancing land values in downtown Manhattan might favor legislative action enabling the development of new apartment buildings at the greatest permissible unit densities, and with heights and orientations offering superb views. Specifically, such legislation might take the form of a special purpose zoning district for downtown Manhattan which would include the following regulatory elements: 1) A maximum permitted basic residential floor area ratio (F.A.R.) of 15.0, rather than the current 12.0, for new apartment buildings. The basic F.A.R. for a new apartment building and a new office building would then be the same (15.0) here. 2) A transfer of development rights mechanism, enabling a district-wide transfer of surplus residential floor area potential from one or more granting parcels occupied by an obsolete office building scheduled for demolition, to one or more receiving sites occupied by an obsolete office building scheduled for demolition. In their post-demolition condition, each granting parcel would be transformed into a publicly-accessible park or playground, and each receiving site would be redeveloped with an apartment tower. The apartment tower would have the F.A.R. corresponding to the surplus floor-area potential transferred from the granting parcel. 3) Height and setback controls applying to the new apartment tower would allow for optimal views of the magnificent surroundings.

These are the probable benefits of the suggested special purpose zoning district for downtown Manhattan: (a) An enhancement of land values and the real estate tax base; (b) A new path for capitalizing on a site which is burdened with an obsolete office building lacking the light and air features necessary for conversion to residential occupancy, or which is otherwise unsuitable for redevelopment with a new office building as a result of small size, irregular shape or poor location; (c) A possible reduction in the overall cost of demolition, since one residential developer might be controlling the demolition of obsolete office buildings at several locations simultaneously; (d) The creation of a mixed residential and commercial environment in lower Manhattan which would be active during most hours; and (e) The interspersing of new park or playground spaces in this high-bulk area.

This suggested special purpose zoning district action would require a major shift in the city's general approach to land use regulation. Ordinarily, the city seeks to achieve an obscure "balance" between economic development concerns, environmental concerns, transportation concerns, housing concerns and other relevant land use concerns, in adopting zoning legislation. In contrast, under this suggested framework, the city would be placing a strong priority on its economic and housing development objectives in downtown Manhattan. Whether city officials are prepared to initiate an entrepreneurial land use policy for downtown Manhattan in this increasingly competitive global and technological era is the major unresolved question.
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Title Annotation:Zoning Advice; downtown New York, New York
Author:Kowaloff, Steven D.
Publication:Real Estate Weekly
Article Type:Column
Date:Aug 25, 1993
Words:956
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