News broke last week that The Blackstone Group was partnering with Canadian investment firm Ivanhoe Cambridge to buy Stuyvesant Town and Peter Cooper Village for $5.3 billion.
As part of the new agreement with the city, Blackstone will preserve 5,000 units as affordable for the next 20 years, according to The New York Times.
Only later did more details emerge, that the deal contains an inducement: Blackstone has New York City's backing to sell the property’s unused development rights, as The Wall Street Journal reported Friday.
Per the Journal:
Development rights — also known as air rights — are a hotly contested jewel sought by Manhattan developers. Every property has its own allocation of air rights based on zoning, and for those buildings that haven’t used all of them, the rights can be sold to others looking to build vertically. But such sales are generally restricted to properties on the same block.
Stuyvesant Town has more than 700,000 square feet of these rights, according to people who have reviewed the property’s zoning. That is more than half the size of the Chrysler Building— roughly enough for about 1,000 rental apartments.
Yesterday, City Comptroller Scott Stringer sent John Gray, global head of real estate, a letter asking for clarification on the density of the air rights Blackstone may be transferring.
Here are portions of the letter:
[W]e must express our concern regarding your intention to pursue transferring air rights from ST/PCV to the surrounding communities. This component of the agreement has not been disclosed in any detailed way either in the public documents or in our New York’s communities are keenly aware of the potential impacts associated with air rights, and any plan to radically change the zoning of a large parcel of land must include the community’s voice. ST/PCV tenants, the local community board, and the surrounding neighborhoods need and deserve a detailed description of Blackstone’s intentions including the scale, timeline and public purpose of the zoning change.
Air rights are not a commodity that can be transferred across the city at will; they are zoned onto individual properties pursuant to a larger neighborhood plan and only after full consideration of the potential impacts. The transfer of air rights from one block to another has only been permitted in connection with a clear public purpose and only when limited to the immediate vicinity of the site in question...
While ST/PCV is an iconic community endowed with substantial open space, the two superblocks that make up the complex include neither landmarks nor public parks. Further, the neighborhoods immediately surrounding the superblocks have few vacant parcels to accommodate any new density. Therefore, the public purpose of your proposal, and the boundaries within which an air rights transfer can occur, are not readily apparent.
The public reporting has indicated that only 700,000 square feet of air rights are available on the site. However, the October 2015 term sheet applies no restriction on the total density that can be transferred, and Department of City Planning data indicates that the unused air rights on the two superblocks could amount to 10.7 million square feet when community facility uses are included. While we recognize that no official number has yet to be set, the potential impacts of 10.7 million square feet of density on public transit, streets or other critical infrastructure are staggering, and the true number must be clarified and publicly disclosed.
Finally, while we appreciate that no formal agreement has been submitted, a change of this potential magnitude deserves immediate public disclosure and discussion. It is essential that these conversations begin prior to finalizing an agreement to ensure time for community consultation.
The letter was also signed by Congresswoman Carolyn Maloney, State Sen. Brad Hoylman and State Assemblymember Brian Kavanagh.
Among the questions they are seeking answers to:
• What is the scale of density of air rights that Blackstone is intending to transfer?
• What is Blackstone’s intended timeline for public discussions, disclosures and feedback?
• What geographical constraints is Blackstone considering for receiving sites of the density?