Theater District Will Get Taller, if Not Richer
August 6, 2006
By PATRICK McGEEHAN
Via NYTimes.com
The hottest thing on Broadway these days may be the air above some of its most famous theaters.
During the city’s real estate boom, theater owners have started capitalizing on a special zoning arrangement created eight years ago that lets them sell their unused rights to add to their buildings’ height. Developers can transfer these air rights to other sites in the theater district and construct taller buildings than would otherwise be allowed.
Two pending transfers of air rights promise an added benefit that was crucial to the original approval of that arrangement: As much as $1.4 million is supposed to be set aside to help the theater community, by attracting new patrons or underwriting serious drama.
But there’s a snag. Though two developers — who are buying the air rights for more than $20 million — are ready to hand over the special payments, the city government is not prepared to accept them. It never created the fund to hold the money or the council that is supposed to oversee it. As a result, it is not clear if the theater community will ever directly benefit from the windfall.
Others, meanwhile, are maneuvering to get the money. The Board of Education has raised its hand for the first payments from developers, most of which it would use to improve auditoriums in public schools, city officials said.
Jack Goldstein, who was working for Actors’ Equity Association, a union of actors and stagehands, in 1998, when the arrangement was set up, said diverting the money to schools would violate pledges made to bolster what was then a fragile theater economy.
“There was a promise that was made to the theater community and the public, and I think it should be kept, and I think it can be,” Mr. Goldstein said.
Neighborhood leaders in the vicinity of the theater district are also wary that the money may be sent elsewhere.
“Our community has a big proportion of working actors, so we want this to go to people who actually work in and support the theater,” said J. Lee Compton, the chairman of Manhattan Community Board 4, whose territory includes one of the theaters that is selling its unused development rights.
The long-running debate about how to spend this potential stream of revenue from developers illustrates how much the theater business and the New York City real estate market have changed since the late 1990’s.
Back then, theater owners and Broadway luminaries, including Stephen Sondheim and Tony Randall, campaigned for financial aid for an ailing industry. They feared that empty theaters and a paucity of new plays signaled worsening prospects for high-quality drama.
The city’s response was to change zoning rules in 1998, allowing the owners of 25 Broadway houses to transfer their air rights anywhere within a 34-block zone north of 40th Street between Avenue of the Americas and Eighth Avenue. (Normally, air rights can be transferred only to contiguous building sites.)
To transfer development rights from a theater to a distant site, the buyers were required to pay an extra $10 per square foot on top of the regular purchase price for the air rights. The money was to be administered by a new Theater Subdistrict Council, with 20 percent to be set aside for monitoring the physical condition of the theaters. The rest was to be used to benefit the theater community by subsidizing tickets to shows for poorer city residents or by offering loans or grants to producers of serious plays.
But until this year, no theater owner had taken advantage of the air-rights provision. In the past eight years, attendance has rebounded as the public appetite has grown for serious shows like “Doubt” and “The History Boys.” The Broadway Initiative, a theater-advocacy group Mr. Sondheim presided over, disbanded and the movement to find alternative sources of financing for plays faded out.
At the same time, demand increased for places to build apartment buildings close to Times Square. Few lots in the theater district can accommodate big buildings without a transfer of air rights. So, lately, developers have been knocking on the doors of the theater owners.
At the northeast corner of 46th Street and Eighth Avenue, a New Jersey-based builder, S.J.P. Residential, plans to erect a 42-story condominium tower on the former site of McHale’s pub. To do that, S.J.P. arranged to acquire about 140,000 square feet of air rights from two Broadway theaters, the Brooks Atkinson around the corner and the Al Hirschfeld, which is more than a block away.
The deal with the Brooks Atkinson, which is owned by the Nederlander Organization, did not fall under the special zoning rules created in 1998, but the pending purchase of the Hirschfeld’s air rights does. This week, the City Planning Commission is scheduled to vote to authorize the second of two transfers of air rights from the Hirschfeld, which is owned by Jujamcyn Theaters, to the McHale’s site.
If approved by the Planning Commission and then the City Council, the sales of the Hirschfeld’s air rights would yield about $580,000 for the Theater Subdistrict Fund. A third piece of the Hirschfeld’s air rights, along with a larger bundle of air rights from another Jujamcyn theater, the St. James, are being acquired by the developer of a site on 54th Street between Broadway and Eighth Avenue. Combined, the transactions would produce about $1.4 million for the theater fund.
“This is a unique transaction,” said Paul Libin, producing director of Jujamcyn. “They could have come and knocked on our door earlier, but there was no reason for them to do it.” But now, he added, “There’s a boom going on in New York, and I suppose that’s why people knocked on our door.”
After these sales, whose terms Mr. Libin declined to disclose, Jujamcyn would have no significant development rights left to sell, he said. The air rights for the company’s other theaters were sold before the 1998 zoning change took effect, he said.
“Selling the air rights is all about perpetuating the Broadway theater,” Mr. Libin said.
But, he added, “circumstances have changed so dramatically” that using money from developers to finance productions now “doesn’t make any sense at all.”
Alan Eisenberg, the executive director of Actors’ Equity, noted that the original promise made in 1998 could still be met by giving the developers’ payments to the Theater Development Fund, which sells discounted play tickets to attract a broader audience.
The City Planning Department’s staff, however, favors giving most of the money expected from the special transfers — more than $1.1 million — to two programs run by the city’s Board of Education, said Edith Hsu-Chen, deputy director in the department’s Manhattan office. One, known as Arts Space, makes grants to public schools to upgrade their performance facilities. Another aims to stage summer musical productions starring public high school students.
“One of the key purposes of the theater subdistrict zoning is to develop new audiences,” Ms. Hsu-Chen said. “What better way to accomplish this than to link kids directly to Broadway as active participants?”
The school programs are pet projects of Gerald Schoenfeld, chairman of the Shubert Organization, which owns or operates 17 Broadway theaters.
Still, Meile Rockefeller, co-chairwoman of the land-use committee of Manhattan Community Board 5, said the schools proposals were “fine as a short-term remedy for a problem that caught the city unprepared.” But, she added, “It’s not a long-term solution.”
By PATRICK McGEEHAN
Via NYTimes.com
The hottest thing on Broadway these days may be the air above some of its most famous theaters.
During the city’s real estate boom, theater owners have started capitalizing on a special zoning arrangement created eight years ago that lets them sell their unused rights to add to their buildings’ height. Developers can transfer these air rights to other sites in the theater district and construct taller buildings than would otherwise be allowed.
Two pending transfers of air rights promise an added benefit that was crucial to the original approval of that arrangement: As much as $1.4 million is supposed to be set aside to help the theater community, by attracting new patrons or underwriting serious drama.
But there’s a snag. Though two developers — who are buying the air rights for more than $20 million — are ready to hand over the special payments, the city government is not prepared to accept them. It never created the fund to hold the money or the council that is supposed to oversee it. As a result, it is not clear if the theater community will ever directly benefit from the windfall.
Others, meanwhile, are maneuvering to get the money. The Board of Education has raised its hand for the first payments from developers, most of which it would use to improve auditoriums in public schools, city officials said.
Jack Goldstein, who was working for Actors’ Equity Association, a union of actors and stagehands, in 1998, when the arrangement was set up, said diverting the money to schools would violate pledges made to bolster what was then a fragile theater economy.
“There was a promise that was made to the theater community and the public, and I think it should be kept, and I think it can be,” Mr. Goldstein said.
Neighborhood leaders in the vicinity of the theater district are also wary that the money may be sent elsewhere.
“Our community has a big proportion of working actors, so we want this to go to people who actually work in and support the theater,” said J. Lee Compton, the chairman of Manhattan Community Board 4, whose territory includes one of the theaters that is selling its unused development rights.
The long-running debate about how to spend this potential stream of revenue from developers illustrates how much the theater business and the New York City real estate market have changed since the late 1990’s.
Back then, theater owners and Broadway luminaries, including Stephen Sondheim and Tony Randall, campaigned for financial aid for an ailing industry. They feared that empty theaters and a paucity of new plays signaled worsening prospects for high-quality drama.
The city’s response was to change zoning rules in 1998, allowing the owners of 25 Broadway houses to transfer their air rights anywhere within a 34-block zone north of 40th Street between Avenue of the Americas and Eighth Avenue. (Normally, air rights can be transferred only to contiguous building sites.)
To transfer development rights from a theater to a distant site, the buyers were required to pay an extra $10 per square foot on top of the regular purchase price for the air rights. The money was to be administered by a new Theater Subdistrict Council, with 20 percent to be set aside for monitoring the physical condition of the theaters. The rest was to be used to benefit the theater community by subsidizing tickets to shows for poorer city residents or by offering loans or grants to producers of serious plays.
But until this year, no theater owner had taken advantage of the air-rights provision. In the past eight years, attendance has rebounded as the public appetite has grown for serious shows like “Doubt” and “The History Boys.” The Broadway Initiative, a theater-advocacy group Mr. Sondheim presided over, disbanded and the movement to find alternative sources of financing for plays faded out.
At the same time, demand increased for places to build apartment buildings close to Times Square. Few lots in the theater district can accommodate big buildings without a transfer of air rights. So, lately, developers have been knocking on the doors of the theater owners.
At the northeast corner of 46th Street and Eighth Avenue, a New Jersey-based builder, S.J.P. Residential, plans to erect a 42-story condominium tower on the former site of McHale’s pub. To do that, S.J.P. arranged to acquire about 140,000 square feet of air rights from two Broadway theaters, the Brooks Atkinson around the corner and the Al Hirschfeld, which is more than a block away.
The deal with the Brooks Atkinson, which is owned by the Nederlander Organization, did not fall under the special zoning rules created in 1998, but the pending purchase of the Hirschfeld’s air rights does. This week, the City Planning Commission is scheduled to vote to authorize the second of two transfers of air rights from the Hirschfeld, which is owned by Jujamcyn Theaters, to the McHale’s site.
If approved by the Planning Commission and then the City Council, the sales of the Hirschfeld’s air rights would yield about $580,000 for the Theater Subdistrict Fund. A third piece of the Hirschfeld’s air rights, along with a larger bundle of air rights from another Jujamcyn theater, the St. James, are being acquired by the developer of a site on 54th Street between Broadway and Eighth Avenue. Combined, the transactions would produce about $1.4 million for the theater fund.
“This is a unique transaction,” said Paul Libin, producing director of Jujamcyn. “They could have come and knocked on our door earlier, but there was no reason for them to do it.” But now, he added, “There’s a boom going on in New York, and I suppose that’s why people knocked on our door.”
After these sales, whose terms Mr. Libin declined to disclose, Jujamcyn would have no significant development rights left to sell, he said. The air rights for the company’s other theaters were sold before the 1998 zoning change took effect, he said.
“Selling the air rights is all about perpetuating the Broadway theater,” Mr. Libin said.
But, he added, “circumstances have changed so dramatically” that using money from developers to finance productions now “doesn’t make any sense at all.”
Alan Eisenberg, the executive director of Actors’ Equity, noted that the original promise made in 1998 could still be met by giving the developers’ payments to the Theater Development Fund, which sells discounted play tickets to attract a broader audience.
The City Planning Department’s staff, however, favors giving most of the money expected from the special transfers — more than $1.1 million — to two programs run by the city’s Board of Education, said Edith Hsu-Chen, deputy director in the department’s Manhattan office. One, known as Arts Space, makes grants to public schools to upgrade their performance facilities. Another aims to stage summer musical productions starring public high school students.
“One of the key purposes of the theater subdistrict zoning is to develop new audiences,” Ms. Hsu-Chen said. “What better way to accomplish this than to link kids directly to Broadway as active participants?”
The school programs are pet projects of Gerald Schoenfeld, chairman of the Shubert Organization, which owns or operates 17 Broadway theaters.
Still, Meile Rockefeller, co-chairwoman of the land-use committee of Manhattan Community Board 5, said the schools proposals were “fine as a short-term remedy for a problem that caught the city unprepared.” But, she added, “It’s not a long-term solution.”
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