New York City regulates development intensity, including by limiting the square footage of zoning floor area (ZFA) (i.e., so-called “development rights”) permitted without discretionary zoning approval. A site’s maximum ZFA depends on its applicable lot area, which sometimes can be exceeded using ZFA from another, adjacent zoning lot. The most common way is by a zoning lot merger, whereby adjacent zoning lots (with consent from owners, lenders and other interested parties) are combined into an enlarged zoning lot, with a maximum ZFA equaling that of the sum of each of the individual constituent zoning lots. Unused ZFA can be reallocated to a specific site in the new zoning lot that is targeted for future development.
While otherwise not required to transfer unused development rights by “traditional” zoning lot merger, BSA approval is needed where a newly-enlarged zoning lot would include a site that has previously been granted a BSA variance. The appropriate BSA application is to reopen, and amend, the original variance. BSA’s approval is not automatic, but rather a circumstantial inquiry of whether the variance would be undermined. See, e.g., BSA Cal. No. 885-78-BZ (2009) (citing Bella Vista).
Before transferring unused development rights in NYC, confirm whether any relevant site benefits from a BSA variance. If so, review any underlying BSA documentation to evaluate the likelihood of BSA approval. Responsibility should be allocated (between a seller and a purchaser) for pursuing any necessary BSA approval. A well-drafted agreement can establish crucial protections, including deadlines and consequences.
While this article focuses on one discrete issue, there are many considerations in transferring unused development rights in New York City, the failure of which to evaluate could be problematic.