Air Rights & Development Rights

AIR RIGHTS/DEVELOPMENT RIGHTS

1. KNOW YOUR AIR RIGHTS:

Incredibly, many people in New York City do not know the significant nature of what is commonly known as “air rights.” There are so many instances where hundreds, thousands, if not millions of dollars have been lost because of the lack of understanding and appreciation of this most fundamental concept. For over two decades, Kishner & Miller have been assisting clients in maximizing and unlocking the potential that their building holds by way of assisting building owners and/or developers in understanding their air rights to which they may own, and/or assembling a group of properties to maximize development rights. While most people refer to the term “air rights,” what they are really referring to is what is legally known as “development rights.” This is because the issue is not “how much actual air do I own,” but rather “what is my right to develop into the sky.” How unbelievable that in New York City one can actually own a piece of the sky!

Whether you are a homeowner, home buyer, or an investor/developer, you can benefit from speaking with our knowledgeable/seasoned attorneys about development rights in New York. Kishner & Miller will provide you with the necessary time to educate you in air development rights, as well as the details of how they are calculated and properly used. It is essential for a developer to understand how to assemble air rights to produce skyscrapers, and how a property owner can add value to their property with a penthouse addition or by transferring their air rights to another owner. Additionally, by having this knowledge you may be able to determine whether your apartment view can be blocked in the future. Kishner & Miller will educate you in the terminology and the zoning codes behind air rights so that you can converse like an expert. The categories of those who may benefit from the knowledge of air rights/development rights are:

  • Townhouse Buyers and Sellers
  • Condo and Coop Unit Buyers
  • Multi-Use Property Owners
  • Developers
  • Brokers Representing all of the above

Call us now at (212) 585-3425 or email Kishner@kishnerlegal.com

2. Zoning Resolution of the City of New York:

To fully appreciate one’s development rights, an individual must fully understand the impact of the Zoning Resolution of the City of New York (“ZR”). The ZR determines the extent of permitted development rights (also known as “air rights” or “floor area”). The ZR regulates the use and bulk (i.e. size, height, setbacks, etc.) of buildings and other structures. Development rights are determined by the application of such regulations to a zoning lot. A zoning lot is not the same as a tax lot. Generally a zoning lot is comprised of a single tax lot, or two or more tax lots contiguous for at least 10 linear feet. However, the ZR does get amended from time to time thereby making it absolutely essential that knowledgeable legal counsel such as KISHNER & MILLER is available to you to understand your rights and the benefits attributable to your property. ZR and amendments thereto are adopted by the City Planning Commission and the City Council. In 1961, comprehensive amendments to ZR modified concepts of “zoning lot” and “floor area ratio” and applied them to all building lots. Development Rights are mainly defined by permitted “floor area” on a “zoning lot.”

The following are some key definitions:

A. Floor area = sum of the gross areas of the several floors of a building measured from the exterior faces of exterior walls, including, inter alia, basement space, and excluding, inter alia, cellar space (unless used for dwelling purposes) and floor space used for mechanical equipment.

B. Floor area ratio (“FAR”) = total floor area on a zoning lot divided by the lot area of the zoning lot. Example: A building containing 20,000 square feet on a lot with a lot area of 10,000 square feet has an FAR of 2.0. (20,000 SF/10,000 SF = 2.0)

3. Zoning Lot Mergers Transfers of Development Rights

Prior to 1961, Zoning Resolution allowed towers of unrestricted heights, provided that building at tower level covered not more than 25 percent of the lot and complied with setback requirements. In order to avail themselves of such provision, developers bought light and air easements from adjacent lot owners. The lots covered by the easement became a single lot for zoning purposes (deeds with easements). Now, people who seek to acquire, construct, and assemble air rights try to formulate and obtain Zoning Lot Merger of Contiguous Tax Lots. Some of these may be done as of right ministerial procedure. ZR defines “zoning lot” as, inter alia, a tract of land consisting of two or more lots of record contiguous for a minimum of 10 linear feet, located within a single block. The effect of a zoning lot merger is that unused floor area may be used in development or enlargement on any portion of the merged zoning lot, subject to use and bulk regulations of the Zoning Resolution and other lawful restrictions. Prior to issuing a building permit or certificate of occupancy, Department of Buildings must be furnished with the following documents to be recorded in the City Register’s office:

  1. A certification from a title company of “parties in interest;” and
  2. Either:
    • (a) If the lot is in single ownership, a Zoning Lot Description and Ownership Statement from the permit applicant, containing a metes and bounds description of the zoning lot; or
    • (b) If the lot’s underlying the merged zoning lot are not in single ownership, then a Declaration of Zoning Lot Restrictions, declaring that such tract of land is to be treated as one zoning lot, executed by all “parties in interest”(except parties who waive in writing their right to execute such Declaration).
  3. Who is a “party in interest”?
    • a. Fee owners and mortgages
    • b. Holders of recorded or visible easements
    • c. Contract vendees and holders of options to purchase
    • d. The United States as to federal liens
    • e. Judgment creditors with docketed judgments and mechanics’ lienors
    • f. The City of New York for real estate taxes
    • g. Holders of reverters or rights of re-entry
    • h. A Space tenant with a right to make improvements that may increase the amount of floor area being used, in conflict with the total available, retained FAR.

4. TDR: Special Zoning Districts

There are certain areas, that due to their unique location in New York City, have certain abilities to transfer their development rights in a different manner than other areas of New York City. If you reside in one of these areas and want to learn more about your rights concerning how to transfer of development rights please call our offices right away.

  1. TDR from High Line Transfer Corridor in Special West Chelsea District, pursuant to as-of-right procedure at Department of Buildings, with required notice to and review by Department of City Planning.
  2. TDR within South Street Sub district of Special Lower Manhattan District, requires certification from City Planning Commission.
  3. TDR in Theater Sub district of Special Midtown District from listed theaters, by CPC certification, authorization or special permit.
  4. TDR in Grand Central Sub district of Special Midtown District from landmark sites, by certification or special permit.
  5. TDR in Special Hudson Yards District from certain granting sites.

Narrowly speaking, TDR’s involve the transfer of development rights from one zoning lot to a non-contiguous zoning lot. For a helpful description of TDR’s and related concepts, see General City Law §§20-f, which was enacted in 1989 to enable localities throughout New York State to avail themselves of TDR’s to accomplish a variety of public purposes. Broadly, however, the term TDR is used also to apply to zoning lot mergers.

5. Reasons for Zoning Lot Mergers and Transfer of Development Rights

  1. To erect bigger buildings.
  2. To compensate for zoning, landmark and other restrictions. Owners of landmark buildings, Times Square theaters, and lots under the High Line may sell their unused air rights in order to generate income and to compensate for restrictions on development on their own lots.
  3. Outdoor advertising sign companies may seek to merge two or more tax lots into a single zoning lot in order to enlarge the permitted surface area of their signs.
  4. Property owners may seek to merge two contiguous lots to ensure compliance with the light and air provisions of the New York State Multiple Dwelling Law.

6. Limitations on Transfers of Floor Area

  • A. Designated landmarks and historic districts.
  • B. ZR bulk regulations, including restrictions on height, setback, lot coverage, and yards. In recent years, the City has been mapping contextual zoning districts in all five boroughs, which impose height and other restrictions that may prevent full utilization of transferred floor area.
  • C. Zoning district boundaries.  Generally, on newly created zoning lots that are divided by zoning district boundaries, floor area may not be transferred across such district boundaries.
    • New York City’s Zoning Resolution has two parts: zoning text. Text establishes zoning districts       and sets forth regulations governing their land use and development. The maps show the                    locations and boundaries of the zoning districts.
    • The city is divided into three basic zoning districts: residential (R), commercial (C) and                      manufacturing (M). The three basic districts are further divided into a range of lower-,                  medium- and higher-density residential, commercial and manufacturing districts.
    • Any of these districts may in turn be overlaid by special purpose zoning districts tailored to the      unique characteristics of certain neighborhoods. Some block fronts in residential districts may        have a commercial overlay district as well in order to provide neighborhood retail stores and            services. Limited Height Districts, another type of overlay district, impose height limits on new        buildings in certain historic districts designated by the NYC Landmarks Preservation                          Commission. These overlay districts modify and supplement the controls of the underlying             zoning district.
    • The residential, commercial and manufacturing chapters summarize the regulations for each           zoning district and illustrate the typical building forms they are likely to produce.
    • Each zoning district regulates:
      • permitted uses listed in one or more of 18 use groups;
      • the size of the building in relation to the size of the zoning lot,known as the floor area ratio or  FAR;
      • for residential uses, the number of dwelling units permitted, the amount of open space and plantings required on the zoning lot and the maximum amount of the lot that can be covered by a building;
      •  the distance between the building and the front, side and rear lot lines;
      • the amount of required or permitted parking; and
      • other features applicable to specific residential, commercial or manufacturing districts.

7. MECHANICS OF DEVELOPMENT RIGHTS TRANSFERS AND ACQUISITIONS

Unused Development Rights are also termed “Excess Development Rights”, “Transferred Development Rights” and “Available Development Rights” depending on the term employed in the operative transfer documents.

Although the term “transfer” is frequently used in discussing the allocation of development rights to one or more tax lots within a single zoning lot, the term actually refers to the conveyance of development rights across zoning lots from a “sending lot” to a “receiving lot”. For an existing building, the amount of available development rights equals the maximum amount of floor area allocable to the zoning lot (on which the building is erected) minus the amount of floor area utilized by the existing building(s). The primary agreement to effectuate such transfer within a merged zoning lot is governed by a Purchase and Sale Agreement, which has annexed as exhibits all documents necessary and proper to accomplish the transfer.

OPERATIVE DOCUMENTS UTILIZED TO EFFECT TRANSFER

  1. Purchase and Sale Agreement — a contract agreeing to the transfer and acquisition of the Unused Development rights for a specified consideration. The Purchase and Sale Agreement may also contain a provision agreeing to the granting of a light and air easement for the benefit of the developer so that the Seller is prevented from blocking the views of the upper floors of the developer’s building or to provide rear-yard light and air so as to comply with the Multiple Dwelling Law and the Zoning Resolution with respect to rear-yard setbacks.
  2. Declaration of Zoning Lot Restrictions – a recordable document effectuating the merger of one or more zoning lots.
  3. Zoning Lot and Development Agreement (the “ZLDA”) — a recordable document governing the allocation of development rights among parties to the zoning lot merger. If the ZLDA confers a light and air easement as well as unused Development Rights, it can be denominated a Zoning Lot, Development and Easement Agreement.
  4. Certification (“Exhibit II”) – Document prepared by Title Company identifying the “parties in interest” including fee owners and mortgagees.
  5. Zoning Lot Description and Ownership Statement By Building Department Applicant (“Exhibit III”) – Certification by the Developer to be submitted to Buildings Department with Zoning Lot Diagram with an attached boundary survey made by licensed surveyor.
  6. Department of Buildings – Plan/Work Approval Application, is prepared by an architect and filed with the Buildings Department (“DOB”) in connection with the construction of a new building on the zoning lot or alteration of an existing building.

Call us now at (212) 585-3425 or email Kishner@kishnerlegal.com