Real Estate Tax Incentive Programs

As the de Blasio administration comes to a close, and with Eric Adams nominated as the Democratic mayoral nominee, the New York City real estate industry is preparing for the impact of the impending transition. As we inevitably look back at the trials of the current regime, it seems the entire industry is anxious for Adams’ ascension.

Considering the often divisive discourse at the City Council, it’s laudable that de Blasio was able to see several critical zoning initiatives to completion, such as the Mandatory Inclusionary Housing program and neighborhood rezonings such as East Midtown and Inwood—and now (we certainly hope) Gowanus and SoHo/NoHo.

Indeed, in the real estate realm, New York City (which, lest we forget, is twice the size of Los Angeles—and Brooklyn alone now matches Chicago's population) does not have a strong mayoral form of government: The City Council is all-powerful and, by a simple majority vote, can veto virtually anything the mayor proposes, including zoning modifications, Special Permit projects, and even Landmarks designations. Consequently, any mayor’s relationship with the City Council is arguably the most critical component determining success in implementing land use policy.

Borough President Adams knows land use. He knows the people and the process. A quick look at his voluminous and serious recommendations on ULURP applications, including the recent Gowanus Rezoning statement, shows the depth of his thoughts and concern. Some are worried that the presumptive mayor will push back against the current perception that he is real estate-friendly—but based on statements and meetings already held, it seems that his approach in this realm will be balanced and thoughtful. Early indications will come from his proposed "cabinet" appointments, which may receive a more-thorough-than-usual vetting at the City Council.

As a New York-based urban planner and land use attorney, a former commissioner of the Board of Standards and Appeals, and former director of the Department of City Planning's Brooklyn office, I believe there are several areas the new mayoral administration should prioritize in terms of zoning.

One is to continue to think critically about manufacturing and industrial zoning districts. Areas such as Industry City (and Sunset Park more broadly), the Garment District, the Meatpacking District, Madison Square North and Long Island City—as well as neighborhoods including Bushwick and Staten Island’s west shore—all have large areas of manufacturing-zoned land, with little industrial activity. The need for "last-mile" (and increasingly last-block) warehousing and storage is clear, and sufficient areas of the City must be zoned to accommodate these uses.

However, these are not "industrial" or "manufacturing" uses. The city must carefully weigh the need for continuing to limit residential use (housing is not allowed in manufacturing districts) in significant portions of the city. Why is housing not allowed in the several blocks north of Madison Square Park?

And why not permit new housing in the Meatpacking District, zoned for manufacturing with absolutely no industrial activity? And clearly Long Island City’s 2 FAR M-4 zoned areas must be rezoned for growth, mixed use, and live-work.

Additionally, it’s crucial for the mayor to make difficult decisions about how certain neighborhoods are zoned and rezoned. He should have the courage of his convictions—and, where needed, be unafraid of controversy. As of this writing, we do not know the outcome in Gowanus or SoHo/NoHo. Hopefully, these largely affluent areas will be rezoned and see new, community-oriented growth and thousands of affordable housing units over the coming years. But other communities, including important transit corridors in the Bronx where new Metro-North stations will be built (such as Morris Park), should be rezoned for new density and growth.

We should also examine new rules to facilitate housing by allowing more conversions of older office buildings throughout the city and by making micro-units and (properly managed) SROs as-of-right in certain communities. Alternative forms of housing and living arrangements should be implemented and zoned to be no longer "reactive" but "proactive." Additionally, zoning and land use policy should incentivize open space and waterfront development, providing additional and non-discretional density bonuses for publicly accessible open areas.

Despite the herculean challenges it faced at the City Council, de Blasio’s planning department succeeded with several zoning and rule changes. Notwithstanding the ill-conceived and blatantly political zoning limiting hotels, many of this administration's initiatives were sound, and presented bold and useful land use plans.

As the new mayor takes office, he should expand the planning department staff, particularly at the environmental review and technical review divisions; prioritize new strategies for converting older non-residential buildings; facilitate housing growth with low-income housing in particular; and focus on the strategic use and re-use of manufacturing-zoned land. The Planning Department, aka "New York’s Smartest," is a collection of brilliant minds—we need them, and so does the next mayor.

Mitchell Korbey is a partner and the chair of Land Use and Zoning at Herrick, Feinstein LLP.

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This article originally appeared in the September 1st edition of City Limits. Click here to read the full article.