The Real Estate Board of New York to The City Planning Commission on the Midtown South Mixed-Use Plan

Download the Testimony

The Real Estate Board of New York (REBNY) is the City’s leading real estate trade association representing commercial, residential, and institutional property owners, builders, managers, investors, brokers, salespeople, and other organizations and individuals active in New York City real estate. REBNY appreciates the opportunity to testify in support of the Midtown South Mixed-Use Plan (MSMX), C250185ZMM.

REBNY strongly supports the proposed Midtown South Mixed-Use Plan, which is a critical step toward increasing housing production in one of the most centrally located and infrastructure-rich neighborhoods in New York City. As housing production continues to lag population growth, New York City must take bold and deliberate steps to enable more housing. Currently, the city permits only 29 units of housing for every 1,000 residents, well below what is needed to meet demand. Research from the NYU Furman Center has shown that increases in housing supply can reduce or slow rent growth across jurisdictions and may even lower rents in surrounding areas. Zoning changes that enable new housing are essential tools in addressing the housing shortage.

The Midtown South Mixed-Use Plan responds directly to recommendations made by the Office Adaptive Reuse Task Force and seeks to unlock residential development in areas long restricted to manufacturing and commercial uses. Allowing residential use in Midtown South will unlock the opportunity to utilize the 467-m state tax incentive that encourages office to residential conversions and requires affordability.

The proposed plan is the first application of new zoning tools adopted under City of Yes for Housing Opportunity, which represents the most significant reform to the city’s zoning resolution since 1961. The success of City of Yes depends on its implementation through neighborhood-level rezonings, and the Midtown South Mixed-Use Plan sets the precedent. Notably, this proposal will be the first to map the newly created R11 and R12 residential districts, which for the first time allow residential density above 12 FAR.

This opportunity will be a catalyst for substantial housing creation in a transit- and amenity-rich neighborhood. MSMX estimates it will result in the development of approximately 9,700 new homes, including up to 2,900 affordable units through the mapping of Mandatory Inclusionary Housing (MIH). Any reduction in the proposed density will significantly impact these projections and stymie necessary housing growth.

Presently, two tax incentives could be utilized in coordination with the proposed zoning changes to create the projected housing units under MIH. First, the office-to-residential tax incentive, 467-m, requires 25% of the building to be affordable, permanently, at an average income band of 80% AMI, with the requirement for a 40% AMI band. This tax incentive was carefully calibrated given the complexities and costs involved in conversions. The tax incentive for new rental construction, 485-x, also imposes a 25% affordability share that must be permanently affordable for households averaging at 60% AMI. This tax benefit also requires significant upfront costs related to construction labor standards. Limiting MIH options to lower the AMI average would make these programs financially infeasible and stifle housing production.

Therefore, all MIH options should remain in this proposal through adoption to ensure the zoning will work today with the tax tools presently available to build affordable mixed income housing. Additionally, flexibility is necessary given the volatility in the marketplace with inflation, high interest rates, and tariffs. Importantly, the plan also advances tools that reinforce the public realm, including the facilitation of Transferable Development Rights (TDRs) and the encouragement of Privately Owned Public Spaces (POPS), which together can support both preservation and new development.

However, REBNY believes the plan can go further to allow greater flexibility in certain areas. The district boundaries result in split lots where one portion is subject to MIH and the other to the Universal Affordability Preference (UAP). In these cases, it is critical that affordable units, regardless of program, be permitted anywhere on the zoning lot. The City Planning Commission should make clear that both standard and affordable units in such situations should not be constrained to one portion of the lot.

Further, the provision that only landmarked sites may transfer development rights freely if 50 percent of their lot area lies within the study area should be amended to allow greater flexibility. There is no clear rationale for the 50 percent threshold, and we encourage the application of Section 121-341 to non-landmarked sites as well to enable broader flexibility and greater development.

This proposal reflects a thoughtful and comprehensive approach that supports the city’s housing goals, encourages office to residential conversions and responds to the changing nature of evolving work patterns by creating a mixed-use neighborhood. REBNY commends the Department of City Planning for this critical effort and recommends that the City Planning Commission adopt the Midtown South Mixed-Use Plan.

Thank you for the consideration of these points.