As we saw last time, by limiting the developmental rights -- the allowable floor area -- in every zone, zoning created a market of space. By the same token, it made it possible for the gov't to create property out of air, out of words in the zoning text. Upzone a neighborhood -- allow more floor area per lot -- the owner now not only can build more actual rental space but, if he doesn't have the financial resources to construct, can sell the unbuilt floor area to another developer who does. This gives the gov't powerful leverage on developers.
We also saw that while the small landowners benefit form the sale of developmental rights ("air rights"), their property becomes developmentally inert and in the long run, less profitable, and because the nearby skyscraper has raised the local real estate taxes, the property may become a source of discontent. In addition, the Modernist model of surrounding tall, dense buildings with park space instead of integrating residences with commercial storefronts aligned on the streetscape turned out to be a disaster in the so-called "projects." Modernist ideals were replaced with a belief in value of the urban integrated streetscape -- storefronts on the street-level which would bring lively commerce and businesses that would clean and protect the street. This led to a reaction against the tower-in-the-park zoning which created disjointed, discontinuous streetscapes.
The response was the current model of zoning called "contextual." The city added another innovation, this in the measure of space: the height cap. Zoning would now provide a floor space allowance, but also a height cap, so a developer could no longer buy unused developmental rights ("air rights") to build out-of-scale skyscrapers in low- or mid-rise zones.
Meanwhile, the gov't got out of the business of constructing low-income housing (projects) using instead its leverage through zoning to get developers to build affordable housing. The Bloomberg model worked so:
1. Designate a height cap in a zone that is higher than is needed for the designated floor area.
2. Offer the developer additional floor area if the developer built some affordable housing there.
So it's an incentive deal made to the developer. If he builds affordable housing in addition to the market rate units he wants, the city will allow him more space to build additional market rate units. The market rate bonus wasn't much, but it was more than nothing. Typically, the ratio was something like 4 units affordable, 1 unit market rate. The developer might be allowed, in other words, to build another 25% more space, but the total building would have to be 20% affordable, so the market rate bonus was just 5%.
Not many developers bothered with the bonus. De Blasio claimed that they didn't want the bonus because in order to squeeze in the affordable units within the height cap, the entire building had to have low ceilings. So the Department of City Planning came up with a fix: raise all the contextual heights so that developers didn't have to sacrifice ceiling height for the affordability bonus. The developer could build high ceilings for the luxury clients and still have room for affordable housing plus the market rate bonus incentive. The developer could eat his cake and the city could have it too.
De Blasio also proposed that wherever there's an upzoning, affordable housing would have to be included -- if the developer gets an increase in floor area, the developer must build 20% of the building as affordable housing. Since this mandatory inclusionary housing doesn't apply unless there's an upzoning, de Blasio's proposal is similar to the Bloomberg model. But under the Bloomberg model developers might advocate to get an upzoning and not bother with the bonus affordability incentive. Under the de Blasio model, the developers might think twice about advocating for an upzoning since the affordability would be forced on them.
Next up, the role of affordable housing non profits and the community boards.