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Land Use, Housing & Zoning
BSA 148-03BZ, application for amendment to variance for 11-113 West 28th Street
At the regularly scheduled monthly meeting of Community Board Five on Thursday, July 10, 2014, the Board passed the following resolution by a vote of 29 in favor; 10 opposed; 1 abstaining.
WHEREAS, The applicant, owner of a building at 111-113 West 28th Street, wants to amend a BSA variance 148-03-BZ issued in 2003 and amended in 2006; and
WHEREAS, The Premises affected is 111/13 West 28th Street, between 6th and 7th Avenues, Block 804, Lots 1101-1105 (formerly 28 and 29); and
WHEREAS, The Premises, built to 21,305.1 SF of potential 42,298 SF (20,992.9 SF in available development rights) is a single tax lot in a 10 FAR M1-6 district (prohibiting residential use) and is neither a LPC-designated landmark nor part of an LPC-designated historic district and can therefore build to maximum FAR or transfer air rights to neighboring lots; and
WHEREAS, In 2003, the applicant sought and received a variance to allow for both the conversion from manufacturing to residential use of the 2nd and 3rd floors and the new development of two residential floors and a penthouse based in part on the representation that permitted uses prevented any "reasonable possibility" of a "reasonable return" thus creating a financial hardship; and
WHEREAS, A variance granting residential use is a benefit making property more valuable than similarly-sized and similarly-zoned properties in a neighborhood; and
WHEREAS, Residential use places additional burdens on the community (schools, parking, etc…); and
WHEREAS, In 2005 the applicant sought and received in 2006 an amendment to the variance to allow for additional residential use in the form of a mezzanine in the residential penthouse; and
WHEREAS, Now, in 2014, the applicant seeks BSA approval through a reopening and amendment of their variance for the transfer of unused development rights appurtenant to the Premises to an adjacent parcel in Block 804 comprising Lots 30, 31 and 32 (105-109 West 28th Street; the "Development Site"); and
WHEREAS, The BSA says that: "Community Boards and civic groups can be extremely helpful to the Board when testimony and comments speak directly to the findings, including issues or information on neighborhood character and impact, real estate prices, unique conditions, and other development projects in the area;" and
WHEREAS, While the Applicant refused to disclose the amount of the current sale, the 2008 transfer of 19,170 SF of development rights from 145 W 27 St to 146 W 28th St (located a block south of the Premises) for $2,369,988.00 ($123.63 / SF) indicates the sale value of the development rights is most certainly above $2.5 million; and
WHEREAS, When a property that received a variance due to financial hardship subsequently seeks to profit from the sale of air rights (previously alleged to be worthless), the NY Court of Appeals in Bella Vista v. Bennett, 89 N.Y. 2d 565 (1997) requires that the BSA have jurisdiction over the lot merger and place their earlier finding in considerable doubt:
"If a landowner retains the bonus option to sell surplus development rights as they existed before the use variance is acquired, the variance might not have been the "minimum variance necessary to afford relief," and the lack of any "reasonable possibility" of a "reasonable return" is retrospectively placed in considerable doubt...Allowing the combination of a use variance with a spinoff as-of-right surplus development rights between adjoining properties, so that a FAR deficient lot could then quality even for a permitted use, might enable variance holders to manipulate and augment the generous benefit of their variances. The BSA must retain the power of review of these kinds of proposals to preserve coherent land use determinations and adherence to the zoning plan itself;" and
WHEREAS, The Applicant claims in their April 9, 2014 letter to BSA that in 2003, "There were no viable opportunities for the transfer of unused development rights to adjacent properties. Therefore, the findings made for these variances are not invalidated or called into question by the proposed merger;" and
WHEREAS, Though Landauer Valuation & Advisory says that in 2003, "Signs of recovery were evident in the residential sector, but not in the hotel sector. There was almost no demand for hotel land or development rights during that period," our independent analysis shows there was a 2003 market for hotel development; between 2001 and 2003 three new hotels were built within a quarter-mile radius of the Premises at 116 W 31 St, 158 W 25 St and 108 W 24 St; and
WHEREAS, The question before the BSA is not whether unused development rights can be sold at a given point in time but, rather, whether the totality of a property (including unused development rights) have a "reasonable possibility" of a reasonable return; and
WHEREAS, The applicant represents that, unlike in Bella Vista, the subject site and the proposed development site have been under separate, unrelated ownership since at least the time of the Board's 2003 grant and the owner of the variance site therefore lacked control over either the timing of new development on the adjacent property or the use of the development rights for such a development; and
WHEREAS, While the identical ownership feature of Bella Vista is evidence of intentional manipulation of the variance process, separate ownership should not be seen as evidence for why air rights are not able to provide a reasonable return; and
WHEREAS, Community Board Five believes that basic analysis of City records in the vicinity of the Premises show that by 2003 there was a clear market for development of hotels, including through transfer of development rights; therefore be it
RESOLVED, Community Board Five recommends denial of the amendment to the variance for 111/13 West 28th St on grounds that allowing a zoning lot merger to facilitate the sale of 20,992.9 SF in development rights would place the Premises in an unfairly advantageous position relative to neighboring properties who previously had not had the generous residential use benefits afforded by the BSA in 2003 and 2005; and be it further
RESOLVED, Allowing the applicant to sell their development rights after having received a hardship variance in a time of an active hotel development market would undermine the basis for the use variance grant and offend proper land use regulation and application