The SoHo/NoHo Re-Zoning Report

The city has released a much-anticipated report that recommends zoning reforms for the SoHo and NoHo neighborhoods. The proposal would be the first major land-use change for the area since 1971 and aims to increase diversity and improve quality of life. It most notably addresses as-of-right commercial uses and the creation affordable housing.

The President of the Real Estate Board of New York (REBNY) James Whelan commented, “The City’s proposal is centered on two key ideas that all New Yorkers can support: Building affordable housing in high-income neighborhoods and addressing our unprecedented retail crisis. Borough President Brewer and Council Member Chin deserve praise for convening the collaborative, community-driven steering committee that informed this much-needed plan.”

The proposal would impact a 63-block area and is expected to result in a net increase of approximately 3,200 new residential units, 50,000 square feet of retail space, and 20,000 square feet of community facility space.

As-of-Right Use Expansion

Among the provisions is the legalization of additional ground-floor retail space. While the two neighborhoods are already major retail destinations, the rezoning proposal calls for expanding permitted ground floor uses for eateries, arts and cultural spaces, and commercial use. Currently, many of the uses are not as-of-right and this revision is long overdue.

The plan also recommends changes to the joint living-work quarters of artists (JLWQA) policy. The current law only allows “certified artists” to occupy live-work spaces. The report recommends preserving the policy but expanding the definition of who is eligible for those live-work spaces. It states, “most residents in SoHo/NoHo are not certified artists, and legal residency should not be reserved to a legacy group.”

Development

The rezoning also incorporates an “upzoning” for both residential and commercial uses, while placing height limits on new developments in order to maintain the character of each neighborhood. New development proposals would still require approvals from the Landmarks Preservation Commission if a site falls within a historic district, but they would not have to be reviewed by the City Planning Commission. The current zoning approval process is highly restrictive and burdensome. The plan would reduce several of the impediments to development and redevelopment. 

Mandatory Inclusionary Housing

Mandatory Inclusionary Housing would be required within new residential developments, enlargements, and conversions from non‐residential to residential use. Currently MIH regulations do not apply to residential buildings under 10 units AND less than 12,500 square feet of residential floor area on the zoning lot. However, it is unclear whether the City Planning Commission will tweak the MIH text with special regulations applying only to the SoHo/NoHo rezoning, and it is something to keep an eye on. In cases where these requirements would make development financially infeasible, developers may apply to the BSA for a special permit to reduce or modify the requirements, but this is very challenging to achieve.

The MIH program includes two primary options that pair set‐aside percentages with different affordability levels to reach a range of low and moderate incomes while accounting for the financial feasibility trade-off inherent between income levels and size of the affordable set‐aside. Option 1 would require 25 percent of residential floor area to be for affordable housing units for residents with incomes averaging 60 percent of the AMI ($25/SF). Option 1 also includes a requirement that 10 percent of residential floor area be affordable at 40 percent AMI ($16/SF). Option 2 would require 30 percent of residential floor area to be for affordable housing units for residents with incomes averaging 80 percent AMI ($34/SF). For context purposes, average fair market rents in new construction buildings in the area typically achieve closer to $100/SF.

Conclusion

If approved, the SoHo / NoHo rezoning would benefit property values as it broadens the potential tenant base by legalizing both residential and commercial uses, especially if MIH requirements do not apply to buildings under 10 units and 12,500 square feet. Currently, many tenants in the area occupy spaces illegally due to inadequate allowable uses. While often overlooked, it still presents risk for both tenants and property owners. Additionally, the potential for more development in the area would drive foot traffic and be a boost for retailers. Finally, it would generate more tax revenue for the city, helping to address the current budget deficit.

The proponents of the proposal are advocating for an expedited timeline and approval ahead of the 2021 city elections. The proposed timeline is as follows:

·     Enter ULURP by 2021

·     Estimated 7-8 months to finalize (before Mayor, City Council, and Borough President leave office)

City Resources

·     SoHo/NoHo Neighborhood Plan website 

·     Slides from most recent meeting: meeting slides

·     Recording of the meeting: recording of the meeting