Whenever you assume Gary Barnett, you assume Billionaires’ Row penthouses, not run-down rental buildings.
However Barnett’s Fifth Avenue air rights deal affords an answer for rent-stabilized properties in crisis.
Barnett’s Extell Improvement is buying 135,000 sq. toes of air rights from the Metropolitan Membership on Fifth Avenue for his mixed-use project at 655 Madison Avenue — a deal made potential by the Metropolis of Sure.
The membership’s 790 Fifth Avenue is a landmark. Earlier than Metropolis of Sure, it may promote air rights to a really restricted variety of properties subsequent to it, however as a result of the market was microscopic, a deal by no means occurred. The membership is barely utilizing 42 p.c of its theoretical sq. footage, in keeping with PropertyScout.
The Metropolis of Sure for Housing Alternative, handed in 2023, allowed landmarks to transfer air rights to websites farther away. Barnett’s improvement website is a full avenue from the Metropolitan Membership, however now it might probably purchase the membership’s rights.
If Extell makes use of the 135,000 further sq. toes to construct extra residences, it will imply properties for a whole bunch extra individuals and tens of millions of {dollars} of further tax income. I feel we will all agree these are good issues.
One other plus: The Metropolitan Membership will get cash from the sale. Landmarks are costly to keep up, and the sale proceeds can be used to fund persevering with upkeep underneath a plan filed with the Landmarks Preservation Fee.
Given the additional prices that the fee imposes on buildings when it makes them landmarks, increasing their capability to promote air rights was the least town may do.
Why not assist rent-stabilized buildings in the identical means?
They, too, have been burdened by the federal government: The state strangled their revenues by passing the HSTPA in 2019. It additionally made the legislation everlasting, eradicating landlords’ leverage to barter adjustments. Demolition of those buildings is extraordinarily troublesome as a result of tenants have a proper to perpetual lease renewals.
Even when an proprietor should purchase out sufficient tenants to succeed in 80 or one hundred pc emptiness, the state’s Division of Houses and Group Renewal generally refuses permission to considerably rehabilitate the constructing and take away it from lease regulation. HCR has turn out to be increasingly stingy about this.
For a lot of house owners, there’s no escape from this financial vise. All they’ll do is purchase time by deferring upkeep.
Mayor-elect Zohran Mamdani is in search of methods to assist landlords sustain their rent-stabilized buildings without raising rents. Giving them the power to promote air rights to a broad vary of patrons is a technique to do this — and would additionally permit builders to construct extra housing, which can also be desperately needed.
NIMBY teams reminiscent of Village Preservation and other people in Queens who voted for Andrew Cuomo would voice hysterical opposition to the prospect of extra residences, however Mamdani doesn’t owe them something.
Tenant teams, in the meantime, would doubtless help a measure that raises cash from builders and ensures it might probably solely be spent to improve rental buildings. YIMBY teams would welcome the creation of housing.
Builders hate Mamdani’s plan to lift taxes, however they willingly pay for air rights. And in contrast to a tax hike, town may liberalize air rights transfers with no new state legislation.
The housing scarcity is crushing New Yorkers, and rent-stabilized buildings are falling aside. Mamdani and Julie Menin, the following Metropolis Council speaker, may get their tenures off to a powerful begin by creating income actually out of skinny air for 2 of town’s most urgent wants.
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