The city’s proposal to rezone Midtown East has sparked a dispute with Andrew Penson’s Argent Ventures over the value of air rights in the area, the Wall Street Journal reported.
The city aims to charge developers about $250 per square foot for the right to build higher in the area that would be rezoned under the proposal, according to the city. But a new appraisal commissioned by Argent says that the rights are worth north of $400 per square foot, and that the city is undercharging considerably. Revenues from the air rights will fund transit improvements for Grand Central Terminal and help maintain public spaces, the city told the Journal.
Since the proposal was first put forward last year, there has been little consensus about the value of the rights, as The Real Deal reported. The $250 per square foot figure was “determined by an independent expert appraiser,” a City Planning Commission spokesperson told the paper, referring to Robert Von Ancken of Landauer Valuation & Advisory, who arrived at the number by valuing the air rights at 65 percent of the value of the land.
But Argent’s appraisers, Jerome Haims Realty, valued the space at 80 percent of the value of the land on a per square foot basis.
“Air rights are worth just as much as the underlying land — in fact, they represent the best part of the building, so they’re worth even more,” Penson told the Journal.
The higher price tag would be lucrative for Penson, as he would be in direct competition with the city to sell air rights were the rezoning to pass. Argent purchased air rights above and the land below Grand Central Terminal in 2007. [WSJ] – Hiten Samtani