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Since the New York City Council adopted the City of Yes for Housing Opportunity zoning text amendment one year ago, there has been a significant increase in development rights (a/k/a “air rights”) transactions across the City.
The amount of development rights generated on a property varies across the City depending upon the size of the property and the zoning district in which a property is situated. One way to increase the amount of development rights on a property is to enter into a development rights transaction with an adjoining property owner (sharing at least 10 linear feet) that has not fully utilized their development rights. Unused development rights can be purchased and transferred from one property to another via a zoning lot merger subject to various limitations set forth in the Zoning Resolution. By merging one tax lot with another tax lot into a single zoning lot (while continuing to maintain separate tax lots), development rights can be calculated across this larger zoning lot, allowing a distribution of development rights amongst the properties.
Development rights transactions consist of negotiating and preparing a purchase and sale agreement as well as several recordable documents against each property. One such document is a Declaration of Zoning Lot Restrictions, which merges the tax lots into a single zoning lot. The other critical document is referred to as a zoning lot development agreement or “ZLDA”. ZLDAs are the operative documents that effectuate the development rights transfer from one property to another and establish the property owners’ rights and obligations respective to each other.
This past year, we have seen a significant rise in development transactions across NYC, including in the outer boroughs. Our firm is actively handling more transactions now than ever before. We believe that this increase has been brought on mainly by developers utilizing new provisions from the City of Yes for Housing Opportunity zoning text amendment, which has eased or lifted residential zoning restrictions that made the development of certain properties financially infeasible. The zoning text amendment created the affordable housing initiative known as the Universal Affordability Preference (UAP) program, which has upzoned properties citywide. The zoning text amendment in connection with establishing the UAP program eliminated the previous Voluntary Inclusionary Housing program, which in turn, increased the amount of market-rate development rights for properties formerly mapped in these areas. The zoning text amendment also loosened the restrictions found in certain bulk regulations, such as the split-lot regulations (found in Article VII, Chapter 7 of the Zoning Resolution), minimum distance between buildings, courts, yards, light and air and more. These changes to the Zoning Resolution have all created opportunities to utilize and/or transfer development rights in areas where it may not have been feasible under the prior regulations.
Specifically, since the City of Yes for Housing Opportunity zoning text amendment, our firm has assisted clients in securing thousands of square feet of additional market rate and affordable development rights and hundreds of additional dwelling units as well as in facilitating development rights transfers that previous minimum distance between buildings issues would not have permitted.
If you own or manage property in NYC and are interested in learning about potential development rights opportunities that you may have, please call or e-mail firm partner, Christopher R. DeNicola, Esq., at (516) 228-1300 or cdenicola@sahnward.com, respectively.
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