Theater Subdistrict Development Rights

Theater Subdistrict development rights, the Midtown variant of transfers by district, part of the site assembly subject Michael Stern writes about alongside mergers and landmark sales, read most clearly as a comparison. Picture two low buildings on one block between Sixth and Eighth Avenues: a playhouse with wings and a full stage, and an old bank the city has designated a landmark. Both stand far below the bulk their lots would allow, and both may sell the difference. The New York Post set out in 2013 what makes the theater different: a zoning plan then fifteen years old under which listed Broadway houses could sell floor area to lots throughout a zone stretching from about West 40th to West 57th Street, not merely to the same block or the lot opposite, with a fixed payment per square foot going into a Theater Subdistrict Fund.¹ The landmark beside it has neither the district nor the fund. What follows lays the two routes out clause by clause.

The routes have different ancestors. The Department of City Planning’s account of the fund dates the Special Theater District to 1967, the earliest special district in the Zoning Resolution, designed so that playhouses would not be pushed out as offices moved west; in 1982 the new Special Midtown District took the theater area in as one of its parts and let it pass development rights a short distance.⁶ On June 3, 1998, an amendment to the text gave the houses listed in the Resolution the right to send floor area to any receiving lot in the subdistrict, on condition that each remain a working legitimate theater and pay into a fund created at the same time.⁶ The landmark route descends instead from the 1968 rule that has its own entry, and StreetEasy’s primer still gives its reach as a lot facing the landmark or one a few doors along.⁴

Figure

Two low buildings, two routes

	Listed theater, Section 81 744	Landmark elsewhere in Midtown, Section 81 747
Who signs off	A certification by the City Planning Commission, now by its Chairperson for most cases	A special permit from the Commission
Where the floor area may land	Any receiving site within the Theater Subdistrict	A lot next to the landmark or facing it
What the sender promises	To keep the house running as a legitimate theater, with periodic inspection and maintenance reports	To maintain the landmark
Who else is paid	The Theater Subdistrict Fund, which reserves at least a fifth of receipts for inspections	Nobody beyond the parties

Clause against clause

The text shows the two routes parting at each step. Section 81 74 lets a granting site send floor area under Section 81 744 once the City Planning Commission certifies the transfer, while a landmark lot inside the subdistrict must take another road, a special permit under Section 81 747; tearing down a theater, or earning a bonus by restoring one, likewise requires its own special permit.⁷ Any approval that touches an existing house depends on the assurances in Section 81 743 that legitimate theater use will go on, and a receiving lot may gather added bulk from every such source only up to the district’s ceiling ratios, with bonuses unrelated to theaters held to a ratio of 2.0 in the densest districts and floor area earned through theaters permitted to become apartments up to a residential ratio of 12.0.⁷ The eligible houses appear in a table frozen on August 6, 1998, mostly freestanding buildings with full stage and wings, a few of them flagged as unable to send.⁷

Money is the second point of difference, and on it the theater route asks more. The Resolution has the Theater Subdistrict Council hold the fund in its own interest bearing account, tell the Comptroller, the Council Speaker and City Planning whenever a payment comes in, set aside at least a fifth of receipts for the periodic inspection and maintenance reports that the assurances call for, and use the remainder for the section’s purposes, enforcement of a theater’s restrictive declaration among them, though never for physical repairs to a theater.⁷ Each year a report to City Planning, the Comptroller and the Speaker lists every deposit and every withdrawal.⁷

Figure

How the subdistrict took shape, year by year

1. 01
   1967Zoning creates the Special Theater District, the earliest of its special districts, so playhouses are not crowded out as offices move west, and rewards a new building that includes a new theater with added floor area.
2. 02
   1982The Special Midtown District takes the theater area in as one of its parts and lets it pass development rights a short distance.
3. 03
   1998Listed houses may now send floor area to any lot in the subdistrict, provided each stays a working legitimate theater and pays into a newly created fund.
4. 04
   2016Payments are pegged to what the rights really sell for instead of to assessed values, and the Chairperson now certifies most transfers.

The Post reported the totals at the end of 2013: sales that added up, in square feet, to 473,546, roughly $6.4 million paid in at an average of $13.56 a foot, grants from the fund to theater companies and school programs across the district, and a payment that had climbed from $10 a square foot to $14.91 in 2006 and $17.60 in 2011, recalculated by City Planning at intervals of several years from assessed values.¹

The 2016 amendment did away with that recalculation. City Planning’s page explains that assessed values lag behind sale prices, that the drafters of 1998 had aimed at a payment close to 20 percent of land value, and that the new text therefore ties the payment to what the transferred rights actually fetch; the Commission adopted it on November 16, 2016, with the 20 percent rate phased in, and moved most Section 81 744 transfers from Commission certification to Chairperson certification, because the full Commission was by then only confirming figures and papers staff had already checked.⁶ 6sqft described the mechanics in early 2017: a share of 20 percent with a minimum of $346 a square foot in place of the $17.60 fee, about $9.6 million collected over 37 transactions since 1998, and the planning director’s remark that Times Square was where the city first let air rights float district wide and that pricing them had been learned by doing.² The report also noted the same design in the East Midtown plan, under which landmarks would sell to sites throughout a district while a fifth of each sale would fund public improvements.²

The third point of difference is volume, and it is why the comparison matters. 99% Invisible reports that the three companies owning the main commercial Broadway houses sold floor area by the hundreds of thousands of square feet in a decade under the 1998 law, and it pairs the theaters with churches as the clearest proof of air rights serving preservation.³ Furman Center work reported in 2013 found the ordinary landmark provision used twice in nine years, and kept the Theater District and the South Street Seaport out of its price averages because their special rules set them apart from the wider market.⁵ A receiving area as wide as the district, a certification in place of a permit, and a fund in place of a private bargain turned the theaters into sellers where landmarks mostly stayed put.

Figure

Fifteen years of transfers, as the Post tallied them

of floor area sold, counted in feet, under the 1998 rules

473,546

average paid into the fund per foot conveyed

$13.56

the fee per square foot, raised in 2006 and again in 2011 on assessed values

$10 to $17.60

square feet one theater owner conveyed in 2008 toward a single office tower on West 55th Street

157,636

Both routes end on the same kind of paper. The theater records a restrictive declaration committing it to legitimate theater use, inspected and reported on at intervals the fund pays for; the landmark records a maintenance obligation against its own title. Either way, bulk departs and an obligation remains on the low building, the pattern common to every program in transferable development rights and to the Midtown rules in special districts.