The City’s Planning Department withdraws its proposal to increase contributions to the Theater Fund, which supports local, off-Broadway theater productions. On February 27, 2017, the Department of Planning withdrew its application to raise the contribution rate for air rights sales within Manhattan’s Special Theater Subdistrict right before the City Council’s Zoning Subcommittee was set to vote on the issue. The proposed text amendment would have instituted a higher contribution rate, established a floor sale price, altered the sale review process, and changed the parameters of the Theater Fund’s authorities.
Chair Donovan Richards expressed disappointment with the Planning Department’s decision. “This committee believes that it was long overdue to raise the contribution amount to the fund,” said Richards. In addition to the increased contribution rate, the City Council was pushing for stronger mechanisms to oversee the transactions and ensure the public received appropriate compensation to support. According to Council Member Daniel Garodnick, the City Council had proposed a mandatory audit of every air rights transfer in place of a floor price. Garodnick lambasted the de Blasio administration for “taking its marbles and going home” instead of working with the Council to resolve the disagreement. “It’s disappointing. It’s surprising. And it’s too bad for the cultural institutions that really are the losers here,” said Garodnick.
The Special Theater Subdistrict—the first special district established under the Zoning Resolution—was created to preserve and protect the theaters from the westward expansion of Midtown office development. In 1998, a zoning text amendment created the Theater Subdistrict Fund to develop new audiences and promote the production of new theater work. A special permit mechanism facilitated the transfer of development rights within the subdistrict in exchange for legal assurances of the continued use of the transferring lot as a theater and a contribution to the Theater Subdistrict Fund.
A study generated by Avison Young for the New York City Economic Development Corporation reported a considerable increase in the value of transferable development rights in the Theater Subdistrict since 1998. Specifically, from 2001 to 2007 eleven transfers occurred ranging from $82 to $390 per square foot, and averaging $224 per square foot. From 2008 to 2016 sixteen transfers occurred ranging from $298 to $692 per square foot, and averaging $461 per square foot.
Currently, a transfer of development rights from an enumerated theater requires a contribution to the Theater Subdistrict Fund of $17.60 per square foot transferred. City Planning’s proposed amendment would change the contribution rate to a set 20 percent of the sales price and would establish a floor price for transfers as a basis for a minimum contribution. The City Planning Commission was required to review and adjust the contribution amount every two to five years. The initial contribution rate to the fund was set at $10 per square foot and was increased by City Planning to $14.91 in 2006 and $17.60 in 2011.
On November 16, 2016, the City Planning Commission voted 10-0, with one abstention, to approve the proposed increase in contributions with a modification. The Commission altered the proposal to include a phase in period for the rate increase.
By: Jonathon Sizemore (Jonathon is the CityLaw Fellow and a New York Law School Graduate, Class of 2016).