On January 12, the Panel Discussion organized by the Women’s Leadership Initiative of the ULI New York District Council at the Wells Fargo Learning Center, brought together some of the key players involved at different levels of the recent Greater East Midtown Rezoning.
The rezoning of East Midtown, initiated by Mayor Michael Bloomberg prior to leaving office, then picked up by his successor Bill De Blasio, was passed in August 2017 – it includes the area from 35th to 57th Street between 5th and 2nd Avenue – with Grand Central Station at it’s strategic heart. The plan is intended to bring back the competitive advantage of East Midtown as a major global business district by creating zoning incentives and allowances aimed at the addition of new office developments and the reconversion of existing office spaces suitable for the working environments of today, while also ensuring that the pedestrian and public space realms follow suit and increase the vitality of the area.
Moderating the event, Lynne Sagalyn, a professor of Real Estate Finance at Columbia Business School, began by explaining how the initial process under Mayor Bloomberg started at quite a fast pace – too fast to be able to have all the strategic goals passed as a policy framework in New York City due to Landmark preservation, local residents’ concerns and various political interests. In 2014, the Vanderbilt Corridor sub-district, adjacent to Grand Central, was rezoned – the South part of which would have the One Vanderbilt office tower, developed by SL Green. Around the same time, Mayor De Blasio formed the East Midtown Steering Committee to bring together various stakeholders, including local community boards, business interests and historic conservation groups, to form a consensus for the policies shaping the future of the area. Part of their recommendation included having an as-of-right zoning framework that encouraged high density development – critical for a city as large and complex as New York. This was to be balanced by the upgrading of public transit and the pedestrian realm along the high density corridors to relieve the congestion. Another key recommendation was the transfer of development air rights from historic sites throughout the district. Prior to this, and except a few smaller cases, transfer of air rights in the city was mainly limited across adjacent city blocks. The Steering Committee recommended that the Landmark Preservation Committee would decide which buildings would be designated historic prior to the enactment of the rezoning.
Another mechanism, first utilized in the Hudson Yards Rezoned District, was the ability for qualifying sites to increase their base floor to area ratio (FAR) by providing pre-approved transit improvements. Finally, a special provision would be made for the redevelopment of buildings built prior to 1961 which are now considered overbuilt in terms of their FAR.
Daniel Garodnick, a member of the East Midtown Steering Committee and former New York City Council Member, mentioned that part of the impetus for the rezoning was outdated zoning regulations that didn’t incentivize developers to add to the stock of office space in the area. The building stock that is available is not desirable for today’s office environments due to the ceiling heights, existing floor layouts and general structural issues. He went on to explain that without having an as-of-right framework, development in the area would not take place at the needed pace. However, the framework should not only serve developments and business interests but also the general public interest. This led to the rethinking of the initial framework. In the process, the Vanderbilt Corridor sub- district rezoning was given the go ahead with SL Green’s One Vanderbilt tower being allowed to be built at a higher density in exchange for improving the infrastructure in and around Grand Central (approximately $220 million worth). The Steering Committee also recommended that transit improvements be put directly into the zoning resolution – giving certainty to the public that the improvements would take place while also providing the freedom of an as-of-right framework to the developers.
Leslie Himmel, the Co-Managing Partner at Himmel & Meringoff Properties, representing the builder and building owner’s vision of the rezoning, described how Midtown is currently not a prime office location for a lot businesses compared to some areas further downtown. A lot of the desirability of the downtown and newer stock of office spaces in an area such as Hudson Yards has to do with the design and planning of the buildings which have higher ceilings, as well as smaller and fewer structural components that allow for flexibility of the use of space.
Chris Jones, Senior Vice President and Chief Planner at the Regional Plan Association, also a member of the East Midtown Steering Committee, explained that from the outset the case had to be made for investing in Midtown since the area would fall behind new areas such as Hudson Yards – which would bring in new stock of modern office space. What was important about the process, and what ended up in the zoning text amendment, was a mechanism that encouraged investment in the public realm – thus making a strong case for the link between infrastructure and real estate value. He mentioned that, while this may be obvious, there isn’t a systematic method in place in New York City to ensure this value creation compared to other cities around the world. Funding transit and infrastructure improvements as part of rezoning of an area may therefore be a tool to do so. The other important piece of the puzzle was the way political consensus was reached in order to get this done. A lot of what took place was urban planning through community engagement, meeting and negotiating with various stakeholders who would understand that their decisions would be put into practice. Finally, the pace at which the negotiations took place struck the right balance between receiving the right amount of feedback and keeping up with the momentum that was at play.
Melanie Meyers, a Partner at the law firm Fried Frank, represented a number of developers with properties in East Midtown that sought to have their vision for the future of the area put into practice. Part of this was grappling with the understanding of how the range of the building types could contribute to the infrastructure and public realm since their contributions would be directly linked to their footprint and size. A public space improvement board was then set up to deal with the funds received.
Dan Garodnick went on to explain that there are two ways that the public would see the benefits from each development, other than through direct taxes. Firstly, through direct engagement with the MTA (New York’s Metropolitan Transport Authority), basic improvements were identified that could be dealt with without having to get approval through ULURP (Uniform Land Use Procedure) – a process that could significantly delay development. Secondly, through the transfer of the Landmark air rights previously mentioned, from historic sites such as St Patrick’s Cathedral, a percentage of the transfer would go to a city-administered fund. The fund’s contributions would therefore be directly contingent on the amount of development that would be done in the area, which could vary at any given time. With the above two processes, roughly a billion dollars worth of public space improvements should take effect in the area. Garodnick went on further to explain that on one level the Steering Committee wanted to maintain a level of flexibility to how the funds would be spent but to also to be able to deal with the immediate infrastructure needs. Melanie Meyers also explained that the important question for the future of the board would be whether its role is to be an administrator of the funds or more of a proactive visionary entity that would work towards a long term plan.
In the end, it must be highlighted that the passing of the East Midtown Rezoning represents one of the biggest achievements ever undertaken by the city and, as Lynne Sagalyn put it, represents the city’s learning curve from decades of development. This will ensure that all future rezoning will in turn obligate developers to invest in public improvement and, while not directly linked to this particular discussion, other up-zoning attempts would also lead to the creation of more affordable housing instead. Looking forward, it is also exciting to see what effects the East Midtown Rezoning precedent will have on the future policies that the city will pass, as well as the lessons to be learnt from the plan’s enactment.
Saba Carmel Meidany, is a Project Manager and Senior Designer at Magnusson Architecture and Planning where he is involved in the planning, design, and construction of mixed-use multifamily housing developments in New York City.
You can view the presentation slides used at this program here.