Purchasing a Building Exceeding NYC's Maximum Allowable Floor Area: Understanding the Consequences
When considering the purchase of a building in New York City (NYC), one crucial aspect to evaluate is whether the structure adheres to the established zoning regulations. The floor area ratio (FAR) rules dictate the maximum allowable floor area a building can have for a given parcel of land. However, buildings that predate current zoning laws may be grandfathered, providing an exemption from some of these requirements. In such cases, it’s still essential to perform comprehensive due diligence to understand the implications and potential risks involved in acquiring a non-conforming structure.
Understanding Grandfathered Buildings
Typically, existing buildings that were constructed before the current zoning laws were established are considered grandfathered. This means they can continue to operate and be used as originally intended, without being required to conform to all the modern zoning regulations. However, if the building’s FAR has been exceeded, the purchase may have implications far beyond the intended use.
Due Diligence and Backstory Investigation
When you acquire a non-conforming building, especially one that was recently constructed, it is imperative to conduct thorough due diligence to uncover the building’s history and its current status. Here are a few key points to consider:
Was the Building Non-Conforming When It Was Built?
One of the first questions to address is whether the building was non-conforming at the time it was initially constructed. If it was, this could provide important context for the building’s history and any obligations that may still apply to the new owner.
Was the Building Obtained Through an Air-Rights Deal?
In some cases, the additional floor area may have been acquired through an air-rights deal or other considerations. If so, the new owner may be required to continue honoring the terms of this agreement, potentially limiting the building’s future development options. Understanding these agreements is critical to ensuring you are aware of any financial or operational constraints that may arise.
History of Litigation
Keep an eye out for any past or ongoing legal issues related to the building. Non-conforming structures often become points of contention, particularly if they are located in an area that has seen significant development. Any past litigation, whether it pertains to the building’s compliance with zoning laws or disputes over its use, can complicate the ownership process and have implications for the current or potential future use of the property.
New York City's Privately Owned Public Space (POPS)
New York City has a rich history of using Privately Owned Public Space (POPS) as a tool to incentivize development and increase the city’s public space. Developers often trade additional FAR for the creation and maintenance of public spaces, turning their commercial developments into community assets. However, this arrangement can also lead to complications. As these spaces are intended to be accessible and maintained for public use, disputes may arise over whether the public has adequate access or if the space is being managed appropriately.
The Potential Risks of Purchasing a Non-Conforming Building
Acquiring a building that has exceeded its maximum allowable FAR can come with several risks and potential complications:
Legal and Financial Implications
Non-compliance with zoning laws can result in fines, legal action, and the requirement to bring the building into compliance at the owner’s expense. These costs can be substantial, especially if significant renovations or re-zoning are needed.
Operational Constraints
The terms of any air-rights deals or other agreements may impose limitations on how the building can be used, potentially limiting the ability to alter the existing structure or increase its value through renovations or redevelopments.
Community and Public Relations Issues
Non-conforming structures, particularly those involving POPS, can face scrutiny from the community and public officials. If the public spaces are not maintained or accessible, this can lead to public backlash and further legal challenges.
Conclusion
Purchasing a building that has exceeded its maximum allowable FAR in NYC requires a comprehensive due diligence process. Understanding the building’s history and any agreements or legal issues associated with it is crucial for ensuring a successful acquisition and mitigating potential risks. By carefully considering these factors, you can navigate the complexities of non-conforming buildings and make informed decisions that align with your investment goals.