In a city where physical land is scarce and at a premium, developers look increasingly to the skies for building opportunity. Air rights measured by the square foot are transferable, zoning regulation-permitting, from one lot to another. Developers tailor blueprints not just to the plot of land, but also to airspace that can be annexed above and around the property.
How do air rights work? Every lot in the city has vertical zoning potential. As an example, if you own a lot that can be a maximum of fifteen stories, you can either construct a building that will be fifteen stories or construct a shorter building and sell the remaining feet as air rights. Air rights can be redistributed in two ways: via zoning lot merger (the consolidation of two or more adjoining lots, allowing rights to be shifted within the enlarged site) or a transfer from one zoning lot to another.
Generally, transfers of air rights are permitted between adjoining lots in the same zoning district. Transfers between non-adjoining lots may be allowed if they promote the preservation of historic buildings, open space or unique cultural resources. What if all of the buildings adjacent to you have reached their maximum building potential? For many landmark buildings, who can also transfer air rights to buildings across the street and catty corner to the landmark building, this is the case. Recently, however, St. Patrick’s Cathedral, St. Bartholomew’s Episcopal Church and Central Synagogue proposed a plan whereby landmark buildings would be able to transfer their air rights to less built-out areas east of Fifth Avenue.
Some buildings make millions of dollars in profit selling their air rights. The Door, a social service agency, sold the air rights to its building on Broome Street to a real estate developer for $325 per square foot, for a total of $32 million. Katz’s Deli recently sold its air rights for an undisclosed sum to real estate developer Ben Shaoul, enabling the development of a new 10 story building at 196 Orchard Street, just down the street.
Some condo and co-op buildings have done the same, and if your building is thinking about selling its air rights, a mark in the “positive” column can be found by considering the following example: a co-op at 152 West 58th Street sold its air rights for $200 per square foot for a total of $4.1 million. The building then used the proceeds to pay off the outstanding $1.9 million on its mortgage, lower maintenance payments, pay for required Local Law 11 repairs and pay off $1.9 million in taxes and closing costs. Liquid assets are not the only benefit: your condo or co-op could also use a sale of air rights to negotiate access to a nearby health club or dictate the developer’s construction schedule.
Local Law 11, formerly Local Law 10 has a new official acronym – FISP – the Façade Inspection Safety Program. Before we discuss what exactly the law entails, let’s examine its history.
A little background
Like so many other regulations involving New York City buildings, the origins of the façade inspection laws are tragic. Local Law 10 was signed into law by former mayor Ed Koch following the 1979 death of a Barnard College student who was struck by a piece of terracotta that fell from the 8th story of a building in Harlem.
Local Law 10 required every building in the city with more than 6 stories to be inspected by a licensed engineer or registered architect every 5 years, but contained a number of exceptions to the inspection requirement. It would transpire that the 1979 death of a Barnard College Student was not the last façade-related injury. In 1982, a young attorney was struck by a piece of a cornice that fell from a 30 story building in Brooklyn. At the time, a little more than 2 years following the date Local Law 10 was enacted, approximately 40% of regulated buildings had yet to file a report so Local Law 10 was given a second chance. However, a series of partial building collapses in late 1997 resulted in then-Mayor Giuliani signing Local Law 11 into law in March, 1998.
Local Law 11/FISP
Local Law 11 removed many of Local Law 10’s exceptions to inspection, requiring the inspection of all exterior walls including use of a suspended scaffold or other means of observing the façade from the ground to the top of the parapet.
Inspectors are further required to notify the Department of Buildings of any unsafe conditions. Pursuant to inspection, buildings are classified as safe, unsafe, or safe with a repair and maintenance program (SWARMP). SWARMP conditions are those identified as safe at the time of the inspection, but at risk of developing into unsafe conditions before the beginning of the next FISP inspection cycle. Any item that could fall from a building is an unsafe condition, whether it be a loose brick, mortar, shifted parapet walls or stonework, or other loose items on fire escapes or window sills. An unsafe building must be repaired within 30 days.
Following a fatal accident involving a fall from a 17th story balcony in July, 2013, Local Law 11, now the FISP, was updated to strengthen requirements for balcony inspections, which include inspection of terraces, walkways, corridors, fire escapes, the roof and setbacks, and also railings, which include balusters, intermediate railings and panel fillers.
As intricate as the façade inspection process is, it may seem easier to just ignore it. As a building owner, you should be sure to file your reports on time. Failure to file incurs a penalty of $1,000 per year. Filing late triggers this penalty in addition to $250 per month in late fees. Thinking of delaying repair to an unsafe condition? Thing again. Failing to meet deadlines in repair of unsafe conditions will cost you $1,000 per month in penalties, pro-rated daily, until the unsafe condition is fixed. If you think there is a chance you may not meet your deadline, file for an extension – which will only cost you $135. Most importantly, be sure you hire qualified, experienced professionals. If your report is incomplete or fails to follow format, content and organization requirements, you face additional fees, penalties and in some cases, the costs of a re-inspection.