Tag Archives: Air Rights

The people have spoken, and they said no

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As The Lo-Down, Bowery Boogie, The Real Deal, and Crain’s have already reported, only 690 out of the 1,227 participants in Tuesday’s vote said yes, which is 128 short what was needed for the deal to pass.

It will be interesting to see if the developers conclude that there is no way to get a deal passed, or whether they’ll do more market research to see if there are changes to their plans (perhaps scaling them down a little?) that might turn around 128+ votes if the developers and Board go back to the negotiating table.  Given that the vote fell considerably short of the needed two-thirds, however, the developers may conclude that we will never approve any deal and simply move forward with their as-of-right construction plan (whatever it might be).

Opinion: Vote Yes on Air Rights

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Vote Yes GraphicOn June 12, Seward Park Cooperative will vote on whether or not to sell about 165,000 square feet of our unused development rights (aka “air rights”) to the developers of the Bialystoker Nursing Home and its adjacent lots for $53.7 million in cash.  After much consideration, we believe we should vote YES.

A YES vote is not without downsides. Nobody (except the developer) prefers huge buildings next door, and the buildings they can build with our air rights are significantly bigger than the buildings they could build as-of-right. Rainbow Park, where many of us spend much time with our families, will get a few less hours of direct sun at certain times of year.  And we think the East Broadway streetscape will look better if the buildings are kept smaller.

But at the end of the day, we have a choice between bigger buildings next door, or bigger bills for all of our shareholders.  We cannot justify spending tens of thousands of dollars out of each of our pockets over the coming years (and forcing many of our neighbors who already struggle to pay their bills to do the same) to keep the buildings next door smaller, when we could all save that money by accepting bigger buildings.  Despite our reservations, we will be voting YES, because we think it is the right thing to do for the co-op.

Note that two thirds of those participating in the vote must say YES for it to pass.  Voting in the Board election without casting a vote on the air rights question is an abstention, which is effectively a NO vote.  Please be sure to vote YES or NO on the air rights question.  Do not leave it blank or abstain.

Micah Arbisser, John Bellettiere, Harold Bravo, Minh Duong, Randi Halpern, Jeffrey Hillock, Linda Jones, Caroline Laskow, Brett Leitner, Terry MacAvery, Kate Nammacher, Eric Reich, Ian Rosenberg, Roshni & Jacob Sacks, Gina Sung, Alexis Tomarken, Michael Tumminia, Hilary Weissman, Lori & Paul Weissman, Jodi & Jac Zagoory

For responses to many criticisms of the deal, please click here.

Opinion: Air Rights Naysayer FAQ

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Following are our thoughts on a number of issues that have been raised by opponents of the air rights deal:

  • If we vote no, will the developers come back with a higher or better offer?  It could happen, but we think it’s extremely risky to count on it.  At some point the deal will no longer be profitable for the developer.  And if we vote down the deal by too large a margin, they may conclude we’ll never accept a deal at any price and stop negotiating with us altogether.
  • What about sharing of open space?  We read the relevant lawsuits that are trying to change the longstanding practice of allocating specific open space to specific buildings on a combined zoning lot, and we think there is very little risk that the status quo will change in a manner that grants the Bialystoker residents access to Rainbow Park.  If you have questions about this, please reach out to us directly as it is too complex to detail here.
  • What about Ascend’s track record as a developer?  We are selling them air rights, not buying their condos. The problems they had in the past were primarily things like leaks and minor construction defects that affected their buildings’ residents, not their buildings’ neighbors.  Developers and builders are also not the same thing. We don’t know who they will use as the general contractor to build their new buildings.
  • What about the cantilever?  The cantilever will make their building wider, which will affect views.  But cantilevers are not exotic or dangerous–they are extremely common in NYC construction and we do not believe they present a structural risk to our property or theirs (have you ever heard of a 30+ story apartment building collapsing?).
  • What about the shadows on Building 2? Any new tower will produce new shadows.  But when you actually compare the with-air-rights and the as-of-right shadow studies from Ascend’s website (see also the deal opponents’ own shadow study, which is presented more clearly but only shows one time of day), there are only a few hours a day during spring and fall when there is a material difference between the two development plans in how much of Building 2 is in the shade. The rest of the day in the spring/fall, and almost all day in the winter and summer, the two designs produce very similar shadow impacts.
  • What about subway crowding and traffic?  New housing is being built all over our neighborhood.  The difference between an as-of-right development and an air rights development on the Bialystoker site is a tiny drop in the neighborhood’s population bucket.  Even the most aggressive estimates of how many people might live at the Bialystoker site would represent less than a 1% increase in daily ridership at the East Broadway subway station–if every resident took the subway every day.
  • What about how close the new buildings will be to the F section? A “with air rights” development will be about 60 feet (not 37 feet as stated in a flier we saw) from the nearest corner of the F section.  An “as of right” development is likely to be about 90 feet away. For context, the distance between the corner of the J section and the Seward Park Library is about 45 feet, the distance between the F and E section windows that face each other is about 50 feet, the distance between the corner of the A section and the Grand Street Guild building across the street is about 100 feet.
  • What if Ascend flips the property to someone else?  All of the restrictions we have negotiated (the maximum building envelope, restrictions on construction hours, rooftop cell towers, where they put their garbage, etc.) will be in a Zoning Lot Development Agreement that will be recorded like a deed and “run with the land,” so it will remain binding on whoever owns the property.
  • Isn’t it unfair that the maintenance holiday disproportionately benefits people with bigger apartments?  People with bigger apartments pay more in maintenance each month.  Whether the proceeds of the deal are used for a maintenance holiday or to pay down debt or pay for capital improvements or some other purpose, all of the benefits of a deal will accrue in proportion to how we pay maintenance. It is true that the downside impact of doing a deal is not evenly distributed among apartments.  That is unfortunate (we have real sympathy for those neighbors who would lose views or sunlight as a result of a deal–it’s the main reason we considered voting no), but corporate and tax laws largely prevent the Board from applying proceeds other than in proportion to how we pay maintenance.
  • If we vote no, how do we know what they will build?  We don’t know for sure.  They could build one building, or two buildings, or the land could sit vacant for quite a few years.  Three possible scenarios were detailed in architect David West’s January 22 presentation.  But we agree with Mr. West that they would most likely build one approximately 28 story, relatively skinny, building on the eastern lot (where the office building previously stood) in the very near future.
  • But won’t we be giving up our future ability to use the air rights?  We have three distinct pools of unused air rights: one on the building 1-2 lot, one on the building 3-4 lot, and one on the Apple Bank lot. Air rights generally can’t cross streets.  Absent City Council intervention, if we do not sell air rights to the Bialystoker developers, the only other places we could use those particular air rights would be (a) in the front yards of buildings 1 and 2, or (b) to replace buildings 1-2 and/or the garage and Rainbow Park.  None of those scenarios seems remotely likely in our lifetimes, so we see this as a one-time chance to monetize our building 1-2 air rights.
  • Will our property values decrease?  We believe the significant loss of views in a handful of apartments will have an impact on those units’ value, although we don’t believe it will be a large impact. The historical differences in price per square foot between apartments in similar condition with similar layouts but different views are not huge.  We do not believe the deal will have an adverse impact on Seward Park Coop property values generally, as our finances will be in significantly better shape when prospective buyers review them, and nearby development has never adversely affected our property values before (to the contrary, bringing more prospective buyers of expensive condos to the neighborhood generally pushes up our property values).
  • Won’t our property taxes go up?  Property taxes are determined by reference to the rental income reported by “comparable” buildings selected by the city.  The deal is therefore unlikely to have a direct impact on our property taxes, unless we upgrade our property to the point where the city decides our “comparable” buildings should be higher end than they are today.
  • Could they build something ginormous if “something were to happen” to the landmarked nursing home building?  At various informational meetings Board members have mentioned that the contract includes a maximum “building envelope” within which the developers are allowed to build if we approve the deal.  We have not seen the details (Board members, please share!), but this should prevent the developers from restacking our air rights in some crazy unexpected way. There is actually more risk of them building something unexpected in an as-of-right scenario if somehow the nursing home building disappeared.

A few air rights fact-checks – Round 2

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Advocate both for and against the air rights deal have been working overtime to generate fliers.

Here are some corrections to a few of the more misleading statements we’ve seen.  There will likely be more to come.

"It's the total mass" flierThis flier is mostly accurate. We tend to agree that one 28-story building is the most likely as-of-right alternative to the deal. But the flier places the 28-story building on the wrong lot. Due to “setback” requirements, we do not believe it is possible to build 28 stories on the corner lot (even the “with air rights” plans don’t call for a 28 story building on that lot).  Perhaps not coincidentally, a 28-story building on the correct lot would cast a shadow with almost exactly the same impact on Rainbow Park as the “with air rights” scenario.
"2 buildings no matter what"This flier has a few issues (common to most of its numerous cousins as well):

  • As was pointed out by an opposition flier, the scale of the two photos is different.
  • The statement that two buildings are happening “no matter what” is inaccurate.  It’s a possible scenario, but we believe the single 28-story tower on the eastern lot to be the most likely as-of-right scenario (which, ironically, would make the impact of the YES vs. NO scenarios less disparate).
  • The $53 million figure is pre-tax, so the co-op won’t actually benefit to the tune of $53 million (we believe the $39 million after-tax estimate is more meaningful).
"37' from building 2"In no circumstance will the air rights towers be 37′ from building 2.  The shortest distance from the corner of building 2 to the Bialystoker lot line is about 60′.  The new buildings won’t be any closer to the F section (and only 12 feet closer to the C section) than the old East Broadway Medical Associates building.  The shortest distance between an F section window and the new buildings will be about 20% farther than the distance between the F section and the E section.
 "questions and some answers"This is the most egregiously misleading flier we have seen so far.  It incorrectly states that we will “permanently give up our access to a strip of our open space,” that we wont’ know how big they can build if say YES until after the deal is done, and that a successor owner would not be legally bound to abide by our contract if Ascend sells to someone else.

Breaking: Air Rights Sale to be on June 2018 Ballot

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Today the co-op circulated the official announcement of the air rights sale by e-mail.  Since the last communications, there have been two key changes:

  1. The sale price was increased by over $5MM, which has been ear-marked for a 4-month total maintenance holiday for shareholders.
  2. The Board has decided to unanimously endorse a YES vote on the referendum.

We will have further analysis and opinions on the sale in the coming days…

A few air rights fact-checks

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Opponents of the air rights deal have been busy mailing, hand-delivering, and e-mailing materials to shareholders and updating their website.  We thought it was worthwhile to take a look at a few of their claims:

  • “The developer can only build 71,000 sq ft as-of-right, but, if we sell our air rights, will build a massive structure that’s more than 3 times bigger.”  True.  The developers talk about the deal as a question of 115,000 sq ft as-of-right vs. 277,000 sq ft with air rights, because that’s the floor area that they’ll have to sell post-development.  But the 44,000 sq ft landmarked Bialystoker home isn’t going anywhere, so from our perspective, it’s really a choice between whether the developers can build new buildings totaling 71,000 sq ft or 233,000 sq ft.
  • “The co-op will net about $26 million after tax.”  Probably true.  We have not yet seen the tax analysis that the Board has commissioned, but expect it to be in the ballpark of $25-30 million after tax.
  • “The deal can pass with 365 (or fewer) yes votes.”  Theoretically true but misleading and irrelevant.  The bylaws require 2/3 of those participating in the vote to say “yes” in order for it to pass.  While in theory it could pass with only 365 “yes” votes, that would mean only 547 shareholders turned out to vote, and we expect turnout to be very high.
  • “Shorter buildings with more floor space are more likely [if the deal fails than the 20 and 17 story buildings Ascend says it is ‘considering’].”  Maybe true.  The deal opponents are correct that 71,000 square feet spread among 37 newly built stories would yield very skinny towers with a high proportion of square feet dedicated to unsellable elevators and stairwells.  But higher floor apartments also command somewhat higher prices per square foot, and the footprint of what the developers can build as-of-right may be limited by zoning requirements for setbacks and rear yards (we don’t know enough about those requirements to offer an opinion).  So we have no way of knowing for sure what the as-of-right alternative to an air rights deal would look like.
  • “This sale is not the last chance for the coop to monetize its assets.”  Sort of true. The developers were engaging in some misleading hyperbole of their own when they said in their first big flier that they are our only potential buyer and this is our only chance to sell. It’s true that if we reject the deal, then the developers (or a new developer who might take over the project) could come back with a better offer.  And it’s true that our air rights can be used to build something on our own property.  But the deal opponents overstate their case almost as badly as the developers.  If the shareholders reject the deal by a large margin, it’s equally possible that whoever ends up with the project would decide it’s not worth spending more money to try to do a deal with us, and would forge ahead with whatever they can build as-of-right.  And if they build as-of-right, the only way we can use our air rights (absent the City Council changing the rules) will be to build on our own property.

Overall, we’d rate this first flurry of materials (excluding some of the anonymous mailings) from the opponent group as “not terribly misleading.”  In the stuff they’ve put their names on, they’ve made some good and important points, called out the developers where the developers edged into misleading territory, and mostly (but not entirely) refrained from going into misleading or disingenuous territory themselves.  Some of the anonymous communications have been far less responsible, and we urge readers to ignore anonymous materials and focus on the ones that are attributed to specific individuals or groups.

It bears repeating, however, that shareholders will not be deciding whether they want a 71,000 or 233,000 square foot development next door, but whether we think the downsides of a 233,000 square foot development (and there are definitely downsides) are worth accepting in exchange for the developers putting tens of millions of dollars in our cooperative coffers.