The Real Estate Board of New York to The Department of City Planning on the Midtown South Mixed-Use Plan Draft Scope of Work

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REBNY appreciates the opportunity to comment on the Midtown South Mixed-Use Plan (MSMX) Draft Scope of Work, CEQR No. 24DCP094M.

REBNY supports the Midtown South Mixed-Use Plan, which considers recommendations by The Office Adaptive Reuse Taskforce, to rezone centrally located, high-density Midtown districts from manufacturing use to allow for the creation of new residential buildings through conversions or new construction alongside commercial activity. MSMX will include amendments to the zoning map and amendments to the Zoning Resolution which will affect a 42-block area of the Midtown South neighborhood to facilitate a more vibrant, mixed-use neighborhood, create opportunities for housing development and conversions. The proposal is a comprehensive plan, answering the needs of the current neighborhood and changing nature of work patterns, while addressing the ongoing housing crisis in NYC. REBNY commends the Department of City Planning for this undertaking.

New York City is facing a housing crisis with housing production significantly lagging job growth. NYC permits only 29 units of housing for every 1000 residents. According to research by the Furman Center, increases in housing supply decrease or slows rent growth across a given jurisdiction and can lead to decreased rent in the surrounding area.

Outdated zoning regulations impede housing construction and undercut the City's Fair Housing goals. The City of Yes (COY) for Housing Opportunity seeks to address these inequitable barriers by expanding the City's capacity for increased housing development across all neighborhoods, while the MSMX plan will serve as a catalyst for housing production by permitting residential use in a neighborhood with great transit access and proximity to jobs.

Importantly, the project area will allow for the highest permitted residential density and will foster office-to-residential conversions, contingent on the passage of City of Yes for Housing Opportunity.

City of Yes for Housing Opportunity is the last of the three citywide zoning text amendments proposed by the Department of City Planning under Mayor Adam's City of Yes initiative. Once passed, the zoning resolution will permit the conversion of office to residential use for buildings constructed prior to 1990 in areas of the city that permit residential use. This is an important change to the Zoning Resolution, which currently only permits buildings up to 1961, or 1977 south of Murray Street in Lower Manhattan, to convert their floor area to residential use.

Housing Opportunity will also introduce two new districts, R11 and R12 districts into the Zoning Resolution, which will permit up to 15 and 18 FAR respectively, above the existing 12 FAR Cap. While the ability to implement a residential FAR higher than 12 FAR will ultimately depend on state action to do so via changes to the New York State Multiple Dwelling Law (MDL), and the subsequent adoption of the text amendment creating these districts, the department should include in its scope here for the MSMX plan these proposed new residential districts as potential options for the rezoning.

The City's affordability crisis will persist without tools that allow supply to match demand. Rezonings like the MSMX plan are an important catalyst for securing more housing production in NYC. However, it's important to keep in mind that regulatory reform is not enough without a tax incentive, and a tax incentive won't work if there's no place to use it.

Given the cost constraints associated with converting and the affordability requirements that come with the requirements of MIH, a tax incentive is imperative. The successful imposition and implementation of MIH is predicated on the need for a tax tool to offset the permanent loss in revenue from setting affordable rents below operating costs.

Whether a building is suitable to convert will depend on a variety of physical and financial considerations unique to each building, and a voluntary tax incentive will be an important part of the financial picture to make a mixed income rental viable. At the same time, since not every former office building will be a suitable conversion candidate, and with the potential for higher residential density, opportunities for new construction should be encouraged as well under MIH, and those new development projects will need a tax tool to complement the new construction.

While the MSMX plan will help to address the housing crisis in New York City and directly responds to the City of Yes Housing Opportunity proposal to permit conversions citywide, it's important to scope all possible outcomes such as residential density above 12 FAR. Lastly, conversions will not be realized and housing development will not occur without a tax tool from the state to offset cost constraints associated with developing housing in New York City.

Thank you for considering these points.

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