BY JOHN KIRITSIS, ESQ., CPA, MBA, MS, JD, LL.M
Selling air rights, also known as development rights or transferable development rights (TDRs), is a process in which property owners in New York City (NYC) can transfer the unused development potential of their property to another site for the purpose of increasing the allowable floor area or building height on the receiving site. This can be a complex process involving various regulations and considerations. Here’s an overview of selling air rights in NYC:
- Air Rights Basics:
Air rights represent the right to build upward on a property beyond the existing structure’s height. If a property owner isn’t fully utilizing their allowable zoning rights, they may be able to sell or transfer those unused rights to another property.
- Receiving Site and Sending Site:
The receiving site is the property that intends to use the purchased air rights to increase its floor area or building height. The sending site is the property selling the air rights.
- Zoning Regulations:
NYC’s zoning regulations determine the density, height, and allowable uses of properties. Air rights transfers must comply with these regulations and zoning districts.
- Landmarks and Historic Districts:
Properties within historic districts or designated landmarks have additional restrictions on development and air rights transfers. Such transfers may require approval from the Landmarks Preservation Commission.
- Land Use Review Process:
Air rights transfers often require approval from city agencies, such as the Department of City Planning (DCP). Depending on the size and location of the transfer, it might require going through the Uniform Land Use Review Procedure (ULURP).
- Special Districts and Incentive Zoning:
Certain areas of NYC have special zoning regulations that allow for increased density or height in exchange for public benefits, such as affordable housing or open space.
- Negotiating Terms:
The selling and purchasing of air rights involve negotiations between property owners. The price for air rights can vary significantly based on factors like location, demand, and the development potential of the receiving site.
- Legal Agreements:
Selling air rights requires legal agreements between the sending and receiving sites, outlining the terms of the transfer, payment, and any other conditions.
Property owners may need to obtain appraisals to determine the value of the air rights being sold.
- Documentation and Filing:
Selling air rights involves submitting various documents to city agencies, including a restriction on the sending site’s deed to reflect the reduction in development potential.
- Community Engagement:
In some cases, community boards and neighborhood organizations may be involved in the air rights transfer process, especially if the transfer requires a zoning change.
Selling air rights in NYC can provide property owners with additional revenue and contribute to the city’s development. However, due to the complexity of the process and the involvement of zoning regulations, legal experts and real estate professionals should be consulted to navigate the intricacies of air rights transfers successfully.
Citations, References and Potentially Useful Resources for Further Information:
New York State Constitution
Federal Securities Regulation
New York State Martin Act
New York Condominium Act
New York State Security Regulations
New York Business Corporation Law
New York Limited Liability Company Law
New York Uniform Partnership Act
Federal Internal Revenue Code
New York State Tax Laws, Rules & Regulations
New York City Tax Laws, Rules & Regulations
Winston Churchill Owners, Inc. v. Regents Real Estate Associates
Board of Managers of the Park Regis Condominium v. Park Regis Owners Corp.
Park Sutton Condominium v. 447 E. 57th St. LLC
28 E. 10th Street Corp. v. Veras
Riverside Syndicate, Inc. v. Munroe
Essex House Condominium v. Marks
The Parc Vendome Condominium v. Atkinson
54-56 Meserole Street Owners Corp. v. Rossi
The Beekman Regent Condominium v. Bottiglieri
Chelsea 19th LLC v. West 19th Street Realty LLC
New York Department of Finance
New York City Department of Buildings
New York City Bar Association
New York State Bar Association
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