Newsday (Nassau Edition) from Hempstead, New York • 100

t'T rr 1 i- PPF Air Spaces Used As Building Blocks ing height may still create more impact A skyscraper particularly one with stores or offices might put an added strain on services "The people who use those streets are now subject to more he said Cities the only places weighing the tradeoffs Suburban Montgomery County Md outside Washington DC severely curtailed development three years ago to help preserve endangered farmland "That was the says Lyn Coleman principal planner with the Maryland National Capital Park and Planning Commission The carrot she adds is that landowners in the protected area can sell "development above their soil one such right for every five acres to home builders who transfer the space to add density to approved areas Coleman reports the builders are enthusiastic just want more units they care and that 6000 rights at a current market price of each have been sold But homeowners have filed several lawsuits protesting the increased density More use of the ever-more-precious air has created other fears In the case of the fledgling lollipop condos the state attorney office worries about the impact on the existing tenants A sponsor now is required to disclose air-rights plans "He has to say whether he wants to build more or whether he wants to sell next says Mary Sabatini DiStephan assistant attorney general in the bureau of real-estate financing As the potential value of the air grows DiStephan says the number of sponsors reserving the right to use the extra air has increased Continued from Page 1 "air to make their own usually adjacent towers bigger than they could otherwise be The air-rights concept new simply more visible these days Two weeks ago for example First Boston Corp unveiled controversial plans using what is being called the largest sale of air rights ever to construct a 74-story tower on a Madison Avenue lot zoned for a building half that size The use of extra air from nearby landmark Grand Central Terminal would allow the building to be about double the bulk usually permitted under zoning limits And something of a flurry of air-rights activity in the city in residential construction as well Lower interest rates a demand for luxury housing near prime avenue sites and the end of the popular 421a tax-abatement program helped spark a flood of housing construction in Manhattan much of it involving the sale of air rights This concept and its more complex counterpart TDRs or transfer of development rights are in evidence across the nation TDRs have helped preserve landmark buildings and restore the South Street Seaport in New York City save farmland and spur single-family-home construction in Montgomery County retain low-income housing in Seattle and have even served as collateral for a building loan in Denver And a plan to preserve pine barrens and encourage affordable housing is under discussion in the Town of Brookhaven But the air-rights sales that provide the money to pursue those goals also often lead to bigger bulkier buildings And critics contend that causes more traffic overcrowding and a less desirable environment "You may create urban planning problems in allowing density to get so says Richard Rodde-wig senior vice president of Shlaes and Co a Chicago consulting and appraisal firm In simple terms the transfer of air rights works like this: the owner of a five-story building in an area where zoning permits 20 floors ran sell that unused space to a developer next door That developer then can add 15 stories of space to his structure In New York this is called a zoning-lot merger The combined total falls within the allowable height just divided unevenly Of course not quite that easy Residential construction is limited to a certain density so "you may conceivably have more rights than you can actually says Norman Marcus a Manhattan attorney who was general counsel to the City Planning Commission until recently In Manhattan zoning-lot mergers are almost routine The key is location the transfer must be made to an adjacent site The city reviews the action but generally little fuss The intended goal is a mix of public good and private benefit Larger more profitable buildings are supposed to pay more taxes and may provide additional jobs housing or community amenities It always work that way not a zero-sum says David Alan Richards real-estate partner at Sidley Austin in Manhattan One low-rise building and one high-rise which together meet the allowable zon Above Promenade luxury condos loom over the Town School and at left the first condo building located on 52nd Street gar House This residential building on the East Side incorporated air rights from an adjacent building in a historic district says Samuel Lindenbaum a Manhattan attorney who represents builders and developers and used a city bonus for housing quality That housing program is a sort of hybrid plan "The city says 'we will give you something for building better says Lance Michaels an associate city planner The developer gets points for features such as security or short corridors If the score is high enough the builder is allowed to shift air rights over a zoning boundary something not usually permitted Although employed less than a dozen times he estimates been more popular recently At the Promenade on the Upper East Side developer Jeffrey Glick used the housing quality program and two zoning-lot mergers to build his 217-unit luxury condo over an existing private school While air rights involved in every one of his projects something I deal with all the time because my sites are Developer Ian Bruce Eichner also illustrates the enthusiasm for these arcane building blocks Out of four projects he has under way two involve air rights and the other two use other bonuses offered by the city His Cityspire tower on West 56th Street on its way to 72 stories is about twice as tall as it might have been thanks to building tools that included an air-rights purchase and a form of a TDR in which he got a size bonus for renovation of the City Center Theater a city-owned landmark Eichner ultimately dealt with dozens of agencies agreed to contribute several million dollars to the City Opera and Ballet in return for some air rights for the estimated $190 million project He been dissuaded "Obviously my business is to Eichner says He acknowledges that there has been controversy about the scale or impact of deals of this magnitude but says "you give up something to get Can it go on? Recent downzoning of east-west side streets a fertile source of air rights for nearby avenue sites could dry up the activity attorney Lindenbaum says And in many rases air above desirable spots was sold off long ago or the rights exist above a structure far from a dream site or as with the Empire State Building no extra space exists since it was built to the maximum On the other hand Roddewig points out "If you add up the unbuilt potential in the city a total available supply of over 20 million square above the designated landmarks alone (The lollipop name stems from the legal requirements Condos must be built on land so these above-ground structures get a legal connection through an easement in an elevator shaft On paper then the condo has a lollipop shape) Other problems crop up when the market is weak In Denver a generous program that hoped to encourage conversion of empty historic warehouse space into housing has been stopped short by the dismal real-estate market While sales are stagnant though development rights are perceived as having significant value says Lisa Purdy president of Citisrape a historic preservation firm The Hall used its own rights as collateral for a bank loan to fund office renovation In Manhattan as in other cities the more elaborate development rights transfers were designed to help save landmarks that were being demolished as their lots became more valuable "In effect the TDR allowed the owner of the historic building to get paid for the land says Roddewig of the Shlaes firm in Chicago As encouragement municipalities such as New York make this kind of transfer more generous allowing the development rights to be moved farther away In its purest form the TDR is rarely used probably 10 times in the past decade estimates Dorothy Miner counsel to the New York City Landmarks Preservation Commission A more common variation on the landmark TDR was used in the construction of the Trafal- NEWSDAY SATURDAY SEPTEMBER 27 1986 Real Estate 35 4 -Vk'l (4 rt-Tf?.