Enhanced Business Areas & 25 Kent: NYC’s Commercial/Industrial Zoning Proposal
Unpacks the details of NYC’s Enhanced Business Area tool, addresses question of whether such a tool works to further the goals of the Mayor’s Industrial Plan, and presents ways in which the proposal can be improved to fully be accountable to industrial and manufacturing neighborhoods and the communities they employ.
Introduction
In November 2015 the de Blasio Administration announced the Mayor’s Industrial Action Plan, a crucial step towards preserving and expanding the City’s industrial sector which is a key source of good jobs throughout the five boroughs. Industrial advocates, industrial businesses and community groups that have long advocated for a targeted industrial plan to foster and protect the sector, applauded the Mayor’s proposal as a crucial step forward.
In spite of these promising developments in the political landscape, the remaining industrial and manufacturing businesses in New York City still face significant challenges. This white paper details the Department of City Planning’s new Enhanced Business Areas proposal.
The importance the Enhanced Business Area rezoning proposal is enormous. It is the first proposal after the Mayor’s 2015 Industrial announcement that is intended to incorporate and reflect the City’s Industrial Plan. The proposal creates new a zoning tool for creating mixed-use commercial – industrial developments in exchange for added density.
Because the Enhanced Business Area will be a new tool industrial land use reform across the city, it is crucial that the City carefully consider its merits, impact on the immediate neighborhood, and implications for the broader industrial and manufacturing sector.
The industrial sector has long been an avenue leading to equitable economic opportunity for immigrant populations, people of color, and low income communities. Any Enhanced Business Area proposal must ensure the future protection and growth of these critical business and quality jobs.
Background
The role of the industrial and manufacturing sector in New York City has increasingly been a topic of interest for advocates, policy experts, and government officials committed to promoting an equitable economy. Over generations, the industrial and manufacturing sector has provided an open avenue for immigrants, low-skill workers, and those without higher education to achieve a middle class living. New York City’s industrial and manufacturing sector continues to play a vital role in the city’s economy. The industrial sector provides quality jobs, with average wages in Brooklyn and Queens of $50,934. The industrial sector is also a vital source of employment for the city’s racial and ethnic minority populations; over 80% of industrial workers are from populations of color.
The City has come to recognize the importance of the industrial and manufacturing sector as an engine for economic growth and quality jobs. The 2014 report by the New York City Council, Engines of Opportunity: Reinvigorating New York City’s Manufacturing Zones for the 21st Century, rightfully highlighted the importance of supporting the industrial and manufacturing sector in the new millennium. The report highlights the economic opportunities the industrial sector creates for immigrants, low-skill workers, and those without higher education. It also focuses on land use reform as a necessary component to any successful industrial policy. In support of industrial jobs, the Council made recommendations to address underlying land use challenges that threaten the existence and growth of the industrial sector and jobs. The efforts of industrial advocates and the Council helped to drive the Mayor’s 2015 Industrial Action Plan, a 10-point proposal that combined city funding, land use changes, programmatic initiatives, and political investment.
In spite of these promising developments in the political landscape, the remaining industrial and manufacturing businesses in New York City still face significant challenges. Insufficient land use protections to hinder growth and threaten sustainability. Since 2005, the amount of industrial and manufacturing land in the city has declined by 8%. A wide variety of as-of-right uses in land zoned for industrial and manufacturing uses (M-zoned) forces manufacturers to struggle to compete with more lucrative and less job intensive uses, such as hotels, big box storage, or even luxury residential development. While these concerns have been raised in previous City documents or announcements, no land use protections have been implemented to prevent the proliferation of such uses.
The Enhanced Business Area Proposal
The Enhanced Business Area proposal is a rezoning application with three specific levels of application.
- Part 1 is a zoning text amendment (Section 74-96) to the city’s zoning code. It creates a new zoning tool, the Enhanced Business Area, which creates a new mechanism for mixing manufacturing and commercial uses within one building.
- Part 2 is the first geographic placement of an Enhanced Business Area. It is mapped on 14 blocks in the Greenpoint-Williamsburg Industrial Business Zone. Within the 14 blocks mapped as an Enhanced Business Area, developers are eligible to apply for two newly created special permits.
- Part 3 is the development at 25 Kent Avenue’s application for these two Special Permits. These special permits make noted alterations to developments within the Enhanced Business Area: the first allows for a change of uses, the second special permit pertains to parking and loading berth requirements.
While the development at 25 Kent Avenue itself has a role to play in the larger discussion of the nature of the Greenpoint-Williamsburg Industrial Business Zone, the most striking portion of the proposal, and that with the broadest implications for the industrial and manufacturing sector citywide is in Part 1, the zoning text amendment that creates the Enhanced Business Area.
Because the new section of Enhanced Business Area zoning text is only mapped in the 14-block area encompassing 25 Kent Avenue, the application is technically a local community specific rezoning. However, the proposal has been drafted “so that other Enhanced Business Areas may be mapped throughout the city pursuant to future zoning text amendments”, indicating the possibility and likelihood for this Enhanced Business Area to set the precedent for future developments and neighborhoods.
It is worth noting that the Enhanced Business Area mapped in the zoning proposal is the large majority of the Greenpoint-Williamsburg Industrial Business Zone. The Enhanced Business Area leaves out the smaller M1-1 and M3-1 areas. However, it is not a replacement to the existing Greenpoint-Williamsburg Industrial Business Zone. The underlying as-of-right zoning in the M1-2 district will not be changed.
Enhanced Business Area Text Amendment
The zoning text amendment allows for developments within the Enhanced Business Area to apply for one or two special permits: a density increase and new use designations permit and/or a loading berths and parking spaces modification permit. For the development taking place at 25 Kent Avenue, the developer is applying for both permits.
Special Permit: Density Increase and New Use Designations
The first special permit created by the proposed zoning text amendment introduces a mix of two different uses, “Business Enhancing Uses” and “Incentive Uses”, as incentive to increase floor area ratio (FAR) for developments. A detailed breakdown of each of the qualifying and disqualifying uses is included in Appendix I and II.
To incentivize development in M1-2 districts, the base maximum Floor Area Ratio (FAR) of 2.0 may be increased up to an additional 2.8 FAR, resulting in a total FAR of 4.8 for the building. The additional bonus FAR has to maintain a 1-to-2.5 square foot ratio of Business Enhancing Uses to Incentive Uses. In other words, a developer can add up to 0.8 FAR for Business Enhancing Uses paired with an up to additional 2.0 FAR in Incentive Uses.
The table below explains the EBA uses as described in the proposed Zoning Text Amendment5. The site at 25 Kent Avenue is applying for a Density Increase and New Use Designations Special Permit. While this is the only property currently applying for this special permit, any development or project within the 14-block Enhanced Business Area would be eligible to apply for this kind of special permit through the ULURP process. As a result, the ratio illustrated in the table creates the possibility for Greenpoint-Williamsburg Enhanced Business Area to over time become a de facto mixed-use district, with little manufacturing zoned land.
Special Permit: Modify Number of Loading Berths and Parking Spaces
The second special permit created by the proposed zoning text amendment is an application to modify loading berth and parking space requirements. As the language is written in the zoning text amendment, future developments with this special permit could apply for either a reduction or waiver of their own loading berth and parking requirements.
The 25 Kent Avenue site is also applying for a Special Permit to Modify the Number of Loading Berths and Parking Spaces. At the 25 Kent development, there would be three loading docks and a 275-space below-grade parking garage to meet anticipated demands on-site.
Analysis: Can It Work?
The Enhanced Business Area, introduced in the proposed zoning text amendment, ties light industrial and manufacturing (Business Enhancing Uses) to commercial (Incentive Uses), and is being presented as a way to “reinforce the light industrial and manufacturing character of the area”. However, it also seeks to do this “while allowing a mix of other uses that are permitted on an as-of-right basis within the existing M1-2 zoning district”6. Unfortunately, these two goals do not entirely overlap.
Need for Real Zoning Reforms
The root cause of many of the challenges facing the industrial and manufacturing sector has been a lack of meaningful land use reforms. The influx of competing uses mentioned in the proposal has not been simply the result of an industry that happened to expand into a new area. Rather, the competing uses were permitted to build as a result of the broad allowances granted under the City’s current zoning code.
Particular uses that are currently permitted within M1-2 districts, such as hotels and big box storage, are disallowed from being used within the 2.0 Incentive Use space. However, these same inconsistent uses are still permitted within the base 2.0 FAR. While the City itself has acknowledged that competing uses like the ones prohibited in the Incentive Use definition make it harder for industrial and manufacturing businesses to compete, the proposed mechanism does not meaningfully correct this problem and fails to apply the Incentive Use definition throughout a single building, let alone across the proposed Enhanced Business Area.
Ratio of Industrial to Commercial
The consequence of this lack of zoning reform has been the unfortunate decision to not use manufacturing-zoned land for manufacturing uses. Because of the broad allowances within the M1-2 districts, areas like the Greenpoint-Williamsburg Industrial Business Zone have increasingly been shifting toward commercial and hotel uses. Because the zoning has the capability of dictating uses and in many respects, influencing the market, the allocation of 0.8 FAR for light industrial and manufacturing uses does not create a sufficient bulwark against the alarming loss of industrial small businesses and quality jobs.
While the base 2.0 FAR is open to any of the as-of-right uses, which includes industrial and manufacturing, the most profitable uses are most likely to be pursued as opposed to those that create the most number of good paying jobs. Requiring just under 17% of building to be geared towards this type of use in an Industrial Business Zone does very little to reinforce the character of the neighborhood.
Though this application is limited to Williamsburg, the Enhanced Business Area may be applied to different parts of the city. It remains to be seen whether the industrial to bonus incentive ratio proposed by the 25 Kent model can be applied similarly to M1-2 districts outside the IBZ. The zoning text amendment reiterates the lack of zoning protections for industrial and manufacturing land citywide.
Enforceability and Affordability
The financial principle driving the Enhanced Business-Incentive Use mix is that industrial and manufacturing uses are not as profitable for developers as commercial uses. The set aside of 0.8 FAR for Business Enhancing Uses would essentially be subsidized by the rest of the building in a way similar to affordable housing units being subsidized by market-rate units. However, it is unclear how the proposal came to the current 0.8 ratio, how the division of uses will be enforced, and how the affordability of these spaces will be ensured.
Additionally, there is no indication as to the rent levels industrial and manufacturing tenants should be expecting in the Business Enhancing space. Without designated affordable rents, it is unlikely that the space will ultimately be used for actual industrial or manufacturing uses. With so many competing uses already proliferating within the Industrial Business Zone as a result of speculation, it is unlikely industrial and manufacturing businesses that have historically been in this area will continue to do so if affordability measures are not added.
Recommendations for EBA
The proposed zoning text amendment is limited in its capacity to ensuring the preservation of industrial and manufacturing areas. As this zoning text amendment and its special permit process will set the standard for Enhanced Business Areas in the future, it is crucial for the proposal that comes out of this process to have a commitment to space for production centered industrial businesses, to be accountable to the character of the neighborhood, and to address present and future industrial area needs.
Restrict Non-Industrial Uses in Industrial Areas
The Enhanced Business Area model provides a ripe opportunity for the Administration to make good on the promise of not allowing hotels, big box storage, or residential use in Industrial Business Zones. The loophole continues to allow hotels and big box storage in the base FAR needs to be closed in order for this portion of the Mayor’s Industrial Plan to be realized. Rather than allow these uses as-of-right, hotels and big box storage should be part of a special permit process, ensuring communities have greater control over the development happening in their neighborhoods.
Equitable Ratios t oSupport and Fortify Industrial and Manufacturing
The mapping of Enhanced Business Areas should not be primarily for the development of office space at the expense of industrial and manufacturing businesses. To reinforce the character of industrial and manufacturing neighborhoods and provide significant opportunities for quality jobs, the ratio of Business Enhancing Uses to Incentive Uses must be increased.
Integrate Non-Profit, Mission-Driven Developers
As researched in a recent policy brief by the Pratt Center, The City of San Francisco is pursuing a mixed-used model that incorporates non-profit, mission driven developers on the industrial component of a mixed-used development7. This approach combines affordable rents for qualified businesses, a commitment to finding tenants that fit the Business Enhancing Use definition, and a local jobs strategy to produce a comprehensive strategy that prioritizes affordability of space and enforceability of uses. The Enhanced Business Area tool requires new mechanisms that lock in affordable rents and ensure that Business Enhancing space is utilized for the purposes defined. The San Francisco model provides a means of doing both.
Commit To a Pilot Process With Review
The Enhanced Business Area application is running concurrent to various studies on industrial area, IBZs, and mixed-use industrial development. Therefore the mapping of the first Enhanced Business Area should explicitly be a pilot program. We do not know how EBAs adhere to and maintain the City’s stated overall industrial land use goals. No other EBAs should be mapped until it is made clear whether or not this tool, or a modified version, benefits or is detrimental to the industrial character and business strength citywide.
Conclusion
The de Blasio Administration’s 2015 Industrial Action Plan rightfully focused on expanding opportunities for industrial and manufacturing businesses and jobs in New York City. The Enhanced Business Area pro-posal has the possibility of creating a model that will provide relief for industrial and manufacturing businesses across the city, but in its current form falls short of creating meaningful zoning reforms. Without broader zoning reforms, the industrial and manufacturing sector has an uncertain future. While the Enhanced Business Area as a tool can not fix the entirety of this problem, it can provide relief in the immediate term to a sector that has historically created economic opportunity for all New Yorkers. With the recommended changes, the proposal can give way to an ecosystem of equitable economic develop-ment that engages communities and achieves a balanced mixture of uses.