Mayor Giuliani announces proposal that could line theater community pockets

NEW YORK – Broadway theater owners received a substantial holiday gift Dec. 29 from New York Mayor Rudolph Giuliani, who announced a proposal that would allow the theater community — particularly the Shubert, Nederlander and Jujamcyn organizations — to pluck tens of millions of dollars out of thin air. Literally.

The ambitious real estate plan revolves around the sale of development or “air space” rights, and could not only line the pockets of theater owners and developers but ultimately result in new theaters and more productions of those endangered Broadway species — the straight play and the small musical.

The unveiling took place on the stage of the Lyceum Theater (currently home to a revival of “The Sunshine Boys”), and featured the mayor, who proclaimed that theater “defines the soul” of the city; Ron Silver, president of Actors’ Equity; “Sunshine” co-star Jack Klugman; City Council president Peter Vallone; and many of the theater industry’s most powerful players.

According to this plan, 25 theaters, most of which are landmarked buildings, would be allowed to sell a total of 2 million feet of air rights to developers. With the current value placed at about $50 per square foot on average, the theater owners are looking at a potential total of $100 million worth of air rights to be sold off.

The Shubert Organization’s Winter Garden Theatre, home to “Cats,” has the most space to sell, with 285,000 square feet.

But the actual air space above the theaters in question won’t be used: What is being sold is the right to develop an equal amount of air space elsewhere in the theater district.

Developers would be able to build taller towers or denser buildings on properties in the area running from Sixth to Eighth Avenues and from 40th to 57th Streets. City planners have identified 22 sites, mainly along Broadway and Seventh and Eighth Avenues, that will likely be the ones to receive the theaters’ air space rights.

In other words, a theater on 40th Street, which does not take up all of the development space it is entitled to under the area’s zoning laws, could sell off to a building 15 blocks away the rights to add more floors than it was originally zoned for. (The current rules restrict the use of these development rights to lots of land adjacent to the specific site or connected through common ownership.)

The Shubert Organization is looking forward to the largest potential bonanza. It owns 12 of those theaters including the Cort, the Golden, the Ambassador, the Broadhurst, and the Music Box.

The Nederlander theaters include the Nederlander, the Lunt-Fontanne and the Neil Simon, while Jujamcyn-owned houses on the list include the Virginia and the Martin Beck.

One important catch is that the theaters that sell their rights must be operating as legitimate theaters, and continue to do so for as long as the new or expanded building exists — indefinitely, in other words. Rebecca Robertson, vice president of real estate and special projects for the Shubert Organization, says the opportunity to sell off the air rights will help protect some of the smaller theaters, which might otherwise have been converted to non-theatrical uses.

“It will keep legitimate theater in some of the smaller houses,” she says. Robertson also points out that the plan requires owners to spend some of the money gained on properly maintaining the theaters.

“It is a vital step toward promoting the ongoing health and expansion of the theater,” says Pat Scott, commissioner of the Mayor’s Office on Film, Theater and Broadcasting. “We will see some very good old theaters with new projects in them as well as some new state-of-the-art theaters.”

Scott is referring to the section of the deal that creates economic incentives for building new theaters, particularly as part of mixed-use buildings like the Marquis Theater/Marriott Hotel combo. If a new theater is built, the floor area of the theater itself would not be counted toward the development rights. That would enable the builder to make the hotel or office tower larger than it could be under the current rules.

“I think we will look around in five years and see new theaters,” says Jack Goldstein, the departing coordinator for the Broadway Initiative, who is credited with being one of the two main architects of the project, along with City Planning director Joseph Rose.

Looking past the art of these deals to the arts itself, perhaps the most significant part of the proposal involves the Broadway Initiative itself. The Initiative is a lending system that provides a financial assistance package to help make small musicals and straight plays economically viable on Broadway. The new plan requires that theater owners donate $10 to the Initiative for every square foot of air space sold (for a potential total of $20 million).

“The Broadway Initiative will put this money into more productions,” says Goldstein, although he adds that it will take some time before the economic impact is felt.

The results of the protracted negotiations appear to have pleased everyone, except perhaps for residents of Clinton, the midtown neighborhood in which many of the new developments may spring up. Jo Ann Macy, chairman of the Clinton Land Use and Zoning Committee for Community Board 4, says she expects the board to fight the proposal.

Macy says she doesn’t think “floating air rights will strengthen the theater industry, and taller building (allowances) aren’t needed to encourage development in the area. It is happening already.”

She says residents are concerned that the addition of numerous towers along Eighth Avenue would diminish the amount of affordable housing on the strip and possibly, as development increases, in the entire Clinton neighborhood.

Residents — many of whom are actors, playwrights and others in the theater industry who may need the lower rents more than the Shuberts and Nederlanders need the millions — are also worried about changing the flavor of the community.

But Robertson, acknowledging that the “feisty” board has done “an extraordinary job of protecting the neighborhood,” says she is convinced that the community and theater industry can work together with the city as discussions move forward.

“We will address their concerns,” Robertson says.

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