Located on the side blocks from 35th to 40th Streets between 7th and 9th Avenues is an area known as the Special Garment Center District (“SGCD”), a section of the city covered by a protective zoning scheme designed to preserve the presence of apparel manufacturing and design showrooms 1. The SGCD allows apparel design, supply, production, and sales to be clustered together without the intrusion of the ever-increasing presence of office uses 2. Practically located in such close proximity to Fashion Avenue (7th Avenue), designers and buyers are able to satisfy their functional requirements in the most efficient manner possible.
Recently, however, the SGCD zoning scheme has come under a great deal of scrutiny from landlords, developers, and office tenants seeking to move into the protected area 3. Recent press has generated outcries that the zoning resolution, introduced in 1987, limits tenancy in the protected area solely to apparel companies, and that present tenants are paying rents substantially below market cost 4. Faced with considerable disquiet, the city’s Economic Development Corporation and Real Estate Board have been working with executives from the Fashion Center Business Improvement District (“BID”) and the Garment Industry Development Corporation (“GIDC”) to develop a new zoning scheme 5.
The Department of City Planning is responsible for the creation of New York City’s Garment District 6. The layout, uses, and appearance of New York’s many neighborhoods are due to the zoning schemes developed by the Department 7. Zoning “determines the size and use of buildings, where they are located and, in large measure, the densities of the city’s diverse neighborhoods 8.” In 1916, at the forefront of zoning policy, New York enacted the Zoning Resolution of 1916, a comprehensive scheme that would create the basis for height and appearance of buildings, as well as the separation and exclusion of discordant uses in particular neighborhoods 9. The department of City Planning designed this zoning scheme to be flexible 10. Over the first half of the twentieth century, several factors brought substantial changes to the 1916 zoning: population growth, mass transit, gov-ernment housing, and technological advances 11. The Department of City Planning undertook to revise the earlier Resolution, which resulted in the 1961 Zoning Resolution – the present legislation 12. This scheme used incentives, contextual analysis, and the creation of “special districts” to “make zoning a more responsive and sensitive planning tool” that would allow for changes in urban design and development theories in a city that was still clearly growing and maturing 13.
As established by the 1961 Zoning Resolution, New York is divided into three main zoning classifications: residential, commercial, and manufacturing, each of which is further subdivided into lower-, medium-, and higher-density districts 14. These districts are assigned depending on the purpose and desired character of an area, and can be combined and overlaid to create the “special districts,” which can be specifically “tailored to the unique characteristics of certain neighborhoods 15.” For example, residential and commercial districts can be overlaid to allow neighborhood shops and retail stores in a primarily residential area 16.
The type of district defines what “use groups 17” are allowed 18, as well as the size of the building in relation to the zoning lot (“floor area ratio”), the distance between the building and the lot lines, the amount of parking required, and other features specific to the particular district 19.
The New York City Department of Buildings (“DOB”) is the agency charged with policing the Zoning Resolution in general and interpreting its various requirements 20. It is the job of the DOB to make sure that each district is comprised of only conforming uses 21. The DOB is also responsible for activities such as granting building permits, reviewing applications for occupancy and alterations, and seeking remedies for zoning violations 22. Should the need arise for the zoning scheme of a specific area to be amended, the Department of City Planning may propose a “rezoning” in order to address the projected changes in land use 23. This is precisely the challenge that the Garment District faces today.
In 1987, recognizing the “unique character” of the Garment District and the need to “preserve apparel production and showroom space,” New York City’s Department of City Planning created the Special Garment Center District (“SGCD”) in the hopes of “limit[ing] conversion of manufacturing space to office use 24.” The special protection covered roughly six million square feet of usable space, in an area stretching from the North side of 35th Street to the South side of 40th Street, between 7th and 9th Avenues 25. Only the side streets are protected, beginning 100 feet in from the avenues, and protection does not include buildings that front the avenues 26.
Besides apparel manufacturing, showrooms, and design centers, a great variety of additional conforming uses are allowed in the SGCD, including musical instrument repair shops, jewelry, ceramics, and car rental shops 27. Allowing additional conforming uses provides landlords with an ample supply of prospective tenants. The primary issue, however, is office space, which does not conform to the SGCD zoning 28.
In 2004, in response to the creation of the Hudson Yards district, an amendment to the original 1987 Zoning Resolution (“the Resolution”) divided the Garment Center into Preservation Areas P-1 and P-2 29. According to Section 121-113 of the Resolution, if a landlord in Preservation Area P-1 seeks to convert protected floor space to a noncon-forming use, he or she must preserve an equivalent amount of square footage elsewhere in the protected district 30. This ensures that sufficient amount of floor-space is conserved for manufacturing and apparel uses, and that the area cannot be completely overrun by high-paying office tenants.
In Preservation Area P-2, the four-block area affected by the Hudson Yards Dis-trict rezoning 31, the preservation requirements are based on the size of the building 32. Buildings with a square footage of less than 70,000 square feet are exempt from the protective zoning restrictions 33. Therefore, they may transform production space as the demand for office space requires. Buildings with over 70,000 square feet of space must fol-low the same requirements as Preservation Area P-1 34. These guidelines ensure that, while allowing change and development within the district, a “critical mass” of apparel manufacturing and production will remain 35.
In addition to the spatial preservation requirements stated above, landlords are also subject to a number of procedural requirements before any conversion may take place. First, a landlord must file a “restrictive declaration” with the City Register, detailing where the equivalent floor space to be set aside will be located 36. Next, she must have the Chairperson of the City Planning Commission certify that the floor area in question has been preserved subject to the restrictions set out in the Zoning Resolution 37. Finally, the landlord must apply to the Department of Buildings for a building permit 38. If the area is being converted to a nonconforming use, then she must obtain what is called a Type I Building Permit, which requires the building’s certificate of occupancy to be amended to reflect the change in use 39.
These lengthy conversion procedures have been a contributing factor to the landlords’ and office tenants’ opposition to the present zoning scheme, as well as a reason for a substantial loss of legally-used floor space 40. The areas surrounding the Garment District are fast becoming redeveloped as real estate prices in Manhattan soar. With Times Square to the North, the New York Times building and Hudson Yards to the West, Herald Square expanding from the South, and sky-high rents in Midtown East, the City Planning Commission is under tremendous pressure from developers looking to capitalize on the high demand for space in the SGCD 41.
The Resolution’s extensive procedural requirements have caused a great deal of illegal conversion to nonconforming use as landlords became frustrated with the lengthy process for use-change applications 42. Taking the situation into their own hands, many applied for a Type II Alteration (as opposed to a Building) permit. This allowed landlords them to sidestep certification by the Chairman of the City Planning Commission and self-certify, through a registered architect, that their “alterations” to the building did not constitute a use change 43. The permits stated that “the owners had requested approval for ‘new drywall partitions,’ or similar work suggesting office construction,” yet failed to disclose any change of use, listing occupancy as “factory 44.” In effect, these illegal conversions completely bypass the protections afforded by the 1987 Resolution 45. Since landlords save substantial time by filing a Type II Alteration permit, and the Department of Buildings only spot-checks perhaps 15% of these applications, the zoning regulations are easily avoided 46. The New York Industrial Retention Network identified a number of applications in which the building owner even failed to disclose that the building was located in a Special District, and through the Type II self-certification scheme, such an omission is able to slip by completely unnoticed 47.
According to a survey by the Garment Industry Development Corporation in July 2006, over three million square feet of space were being used by apparel-related businesses – 57% of the total usable square footage, with an additional 21% of the space taken up by legal non-apparel usage allowed by the zoning 48. With 13% of the space taken up by illegal use conversions, a mere 9% of the more than six million square feet is left empty or under construction 49. This, along with the presence of over 24,000 fashion employees 50 (nine thousand of which are involved with apparel production) in the SGCD, is clear evidence that the area is still a thriving center for garment production and apparel-related uses 51.
Unfortunately, nearly 800,000 square feet of protected space has been lost to illegal nonconforming use 52. The Department of Buildings, the agency responsible for enforcing the zoning, originally operated through “a special task force of the Mayor’s Office of Midtown Enforcement,” termed the Garment Center Enforcement Project 53. The project was designed to regularly perform surveys of the area to ensure compliance with zoning regulations, health codes, and other safety regulations 54. By 1992, however, funding for the Project was cut, and enforcement efforts ground to a halt 55. Without a force dedicated to policing the conversions, it became all too easy to avoid the restrictions of the SGCD’s protective zoning scheme.
The continued illegal conversion has another effect on the Garment District. Contrary to the belief of many, the SGCD is not rent controlled 56. The cluster of manufacturing-related businesses created by the zoning lowers rents, since manufacturers are simply unable to afford what showrooms and studios can pay. Despite this, 75% of SGCD tenants are paying market rents 57. The infusion of offices and other high-paying nonconforming uses, however, drives up costs and forces showrooms off the Avenues and on to side streets, despite the fact that the zoning protections are supposed to preserve manufacturing space 58.
The protections originally granted to the Garment District have already been challenged, not only by landlords or illegal tenants, but also by rezoning. In November 2004, the City Planning Commission approved a zoning proposal that would create the P-2 Preservation Area of the present SGCD 59. Though the larger buildings (those containing greater than 70,000 square feet of space) still retain the preservation regulations requiring landlords to set aside equivalent floor space for manufacturing when making a change to a nonconforming use, smaller buildings would be exempt – rezoned to allow for residential and commercial uses without retaining the Garment Center preservations 60. In addition, “the northern-most block within the Special Garment Center District, located between West 39th and 40th streets and containing minimal garment-related uses, would be rezoned for high density commercial development, removed from the Special Garment Center District and incorporated into the Special Hudson Yards District 61.” While a single block may seem minimal, the P-2 Preservation Area was only five blocks, so the Hudson Yards project resulted in a not insignificant 20% loss.
Developers and tenants in favor of eliminating the Garment District’s protective zoning scheme also argue that the lower profits generated by the presence of manufacturing tenants make it undesirable for landlords to improve upon and keep up their buildings 62. The restrictions have “depressed real estate values, discouraged reinvestment in properties suffering from neglect and . . . failed to stem the decline in [garment related] jobs 63.” Amanda Burden, the chair of the city Planning Commission, said that “the garment center is no longer a desirable place to work precisely because of the poor condition of many office buildings. Lifting the restrictions will help lure landlords who will refurbish their properties and attract a variety of industries to give the center new life 64.” With the extensive development in the surrounding districts, landlords in the SGCD feel as if they are being left behind – that the Garment district is the “only area in Manhattan that's not cool 65.” Landlords prefer office tenants because of their ability to pay heightened costs, and the rising rents caused by illegal conversions are an obstacle for both new and existing conforming tenants 66. If a successful change in the zoning could legitimize previous conversions and allow for office tenancy, there would be “a powerful economic incentive for landlords to improve their buildings by renovating facades and lobbies,” thereby attracting more desirable tenants 67.
Though City planning officials announced this past February that the city was planning to revamp the 1987 Resolution, nothing has been decided yet 68. There are several paths that the Department of City Planning might take. One option would be for the Department to leave the present zoning scheme unchanged (much to the dismay of landlords and developers). Conversely, they could remove the protections altogether and allow development and exorbitant rents to drive the fashion industry out of Manhattan. A further possibility would be for the Department to strike some kind of a balance, leaving in place substantial (if reduced) square footage preservation requirements while allowing some use change to occur, perhaps even legalizing the now-illegal nonconforming uses already present in the SGCD.
It seems that the first two alternatives are impossible. The City will almost certainly not leave in place a zoning scheme that officials have called “stifling” to the economy, “a failure 69,” and “doomed from day one 70.” There is simply too much pressure to rent to higher-paying offices and law firms. On the other hand, designers and unions will certainly not support a removal of protections altogether.
The only hope seems to be a compromise. Earlier proposals for a new zoning scheme included suggestions to reduce the square footage preservation ratio from the present 1:1 to 1:3 or even 1:5 (manufacturing footage to office footage) 71. This way a substantial amount of garment-related space will still be maintained, especially if the ratio is kept as close as possible to the original (if ambitious) 1:1. Unfortunately, though this seems advantageous to both groups, many landlords were not happy with this arrangement 72. Much to their chagrin, the new plan would entail much stricter enforcement procedures 73. The original 1987 zoning scheme had not been enforced for years, and because of the ease in flouting the rules, landlords have been using the aforementioned under-the-radar techniques to convert manufacturing space to office space without preserving anything 74. Regrettably, it could be more advantageous to landlords to maintain the present zoning scheme and its lax enforcement so that landlords and developers might continue to convert space illegally, driving manufacturing out of the SGCD with the least possible resistance.
In implementing new zoning, officials have proposed that a non-profit organization specially designed to strictly enforce protective regulations and help existing manufacturers find space within the SGCD could be a big part of the answer 75. This type of management has helped in other, similar situations. For example, in Brooklyn, the Greenpoint Manufacturing and Design Center maintains affordable real estate and provides useful services to almost 100 small woodworking firms, while the Brooklyn Navy Yard Development Corporation oversees the nearly 250 businesses that use the old navy yard as their center of operations 76. This non-profit model, combined with a slightly lower ratio of preserved manufacturing space to office space could ensure the continued survival of New York’s indispensable garment production industry while allowing landlords and developers a piece of the prime real estate they seek. Hopefully, discussions will resume before illegal conversions crowd out the manufacturing tenants. An outcome ensuring preservation while permitting economic growth and development is essential.
1 Garment Industry Development Corporation, Garment District Fact Sheet, available at http://www.gidc.org/enter.html (Follow GIDC Services and NY Apparel Industry; then follow GIDC Services; then follow Garment Center Zoning Enforcement; at the bottom of the page under Garment District Fact Sheet).
2 Garment Industry Development Corporation, The Garment District Still Earns Its Name: Joint Labor/Management Statement on the Garment District Zoning, available at http://www.gidc.org/enter.html (Follow GIDC Services and NY Apparel Industry; then follow GIDC Services; then follow Garment Center Zoning Enforcement; at the bottom of the page under Joint Labor/Management Statement on the Garment District Zoning).
3 Jennifer Bleyer, Pins and Needles, N.Y. Times, Dec. 2, 2007, 2007 WLNR 23781864.
4 Garment Industry Development Corporation, The Garment District Still Earns Its Name: Joint Labor/Management Statement on the Garment District Zoning, available at http://www.gidc.org/enter.html (Follow GIDC Services and NY Apparel Industry; then follow GIDC Services; then follow Garment Center Zoning Enforcement; at the bottom of the page under Joint Labor/Management Statement on the Garment District Zoning).
5 Elisabeth Butler, New fashion district: Zoning will legalize office conversions, use nonprofit to protect factory space, Crain’s N.Y. Bus., April 2, 2007, Volume 23; Issue 14, 2007 WLNR 6649569.
6 New York City: Department of City Planning – Zoning, available at http://www.nyc.gov/html/dcp/html/subcats/zoning.shtml.
7 Id .
8 Id .
9 New York City: Department of City Planning – Zoning History, available at http://www.nyc.gov/html/dcp/html/zone/zonehis.shtml.
10 Id .
11 Id .
12 Id .
13 Id .
14 New York City: Department of City Planning – Zoning, available at http://www.nyc.gov/html/dcp/html/subcats/zoning.shtml.
15 Id .
16 Id .
17 New York City: Department of City Planning – NYC Zoning Glossary, available at http://www.nyc.gov/html/dcp/html/zone/glossary.shtml. The Department of City Plan-ning defines “Use Group” as “uses that have similar functional characteristics and/or nui-sance impacts and are generally compatible with each other are listed in one or more of 18 groups that are ranked from residential uses (Use Groups 1–2), community facility uses (Use Groups 3–4), retail and service uses (Use Groups 5–9), regional commercial centers/amusement uses (Use Groups 10–12), waterfront/recreation uses (Use Groups 13–15), heavy automotive uses (Use Group 16) to manufacturing uses (Use Groups 17–18). Use group charts can be found in Chapter 2 of Articles II, III and IV of the Zoning Resolution.”
18 See Zoning Resolution of the City of New York, Article XII, Chapter 1, § 121-11 (amended Dec. 21, 2005), available at http://www.nyc.gov/html/dcp/pdf/zone/art12c01.pdf. (zoning ordinance - In the SGCD, permitted non-apparel use groups include establishments such as blueprinting establish-ments, musical instrument repair shops, printing establishments, automobile rental estab-lishments, parking garages, wholesale showrooms, needlework, book binding, hair prod-ucts, jewelry, and household appliance repair shops).
19 New York City: Department of City Planning – Zoning, available at http://www.nyc.gov/html/dcp/html/subcats/zoning.shtml.
20 New York City: Department of City Planning – How Zoning is Administered & Amended, available at http://www.nyc.gov/html/dcp/html/zone/zh_admin.shtml.
21 Id .
22 Id .
23 Id .
24 Zoning Resolution of the City of New York, Article XII, Chapter 1, § 121-00 (amended Dec. 21, 2005), available at http://www.nyc.gov/html/dcp/pdf/zone/art12c01.pdf.
25 The Garment Center: Still in Fashion – A Land Use Analysis of the Special Garment Center District, Executive Summary, New York Industrial Retention Network, Manufac-turing Policy Reports (April, 2001), available at http://www.nyirn.org/GarmentCenterShortReportForWebsite1.pdf.
26 Id .
27 Zoning Resolution of the City of New York, Article XII, Chapter 1, §§ 121-111, 121-112 (amended Dec. 21, 2005), available at http://www.nyc.gov/html/dcp/pdf/zone/art12c01.pdf.
28 Zoning Resolution of the City of New York, Article XII, Chapter 1, § 121-00 (amended Dec. 21, 2005), available at http://www.nyc.gov/html/dcp/pdf/zone/art12c01.pdf.
29 New York City: Department of City Planning – Hudson Yards – Approved, available at http://www.nyc.gov/html/dcp/html/hyards/proposal.shtml.
30 Zoning Resolution of the City of New York, Article XII, Chapter 1, § 121-113 (amended Dec. 21, 2005), available at http://www.nyc.gov/html/dcp/pdf/zone/art12c01.pdf.
31 New York City: Department of City Planning – Hudson Yards – Approved, available at http://www.nyc.gov/html/dcp/html/hyards/proposal.shtml.
32 Zoning Resolution of the City of New York, Article XII, Chapter 1, § 121-11 (amended Dec. 21, 2005), available at http://www.nyc.gov/html/dcp/pdf/zone/art12c01.pdf.
33 Id .
34 Id .
35 Garment Industry Development Corporation, The Garment District Still Earns Its Name: Joint Labor/Management Statement on the Garment District Zoning, available at http://www.gidc.org/enter.html (Follow GIDC Services and NY Apparel Industry; then follow GIDC Services; then follow Garment Center Zoning Enforcement; at the bottom of the page under Joint Labor/Management Statement on the Garment District Zoning).
36 The Garment Center: Still in Fashion – A Land Use Analysis of the Special Garment Center District, Executive Summary, New York Industrial Retention Network, Manufac-turing Policy Reports (April, 2001), available at http://www.nyirn.org/GarmentCenterShortReportForWebsite1.pdf.
37 Zoning Resolution of the City of New York, Article XII, Chapter 1, § 121-113 (amended Dec. 21, 2005), available at http://www.nyc.gov/html/dcp/pdf/zone/art12c01.pdf.
38 The Garment Center: Still in Fashion – A Land Use Analysis of the Special Garment Center District, Part 3, New York Industrial Retention Network, Manufacturing Policy Reports 23 (April, 2001), available at http://www.nyirn.org/GarmentCenterFullReportForWebsitePart3.pdf.
39 Id at 23-24.
40 Id at 22.
41 Elisabeth Butler, New fashion district: Zoning will legalize office conversions, use nonprofit to protect factory space, Crain’s N.Y. Bus., April 2, 2007, Volume 23; Issue 14, 2007 WLNR 6649569.
42 Id . The two recorded landlords who followed through with the Resolution’s procedural requirements waited nearly 18 months and 12 months, respectively, for certification by the Chairman of the City Planning Commission before they could proceed with an appli-cation for a building permit, setting aside equivalent protected space and registering the use change legally.
43 Elisabeth Butler, New fashion district: Zoning will legalize office conversions, use nonprofit to protect factory space, Crain’s N.Y. Bus., April 2, 2007, Volume 23; Issue 14, 2007 WLNR 6649569.
44 Id .
45 Id .
46 Id .
47 Id .
48 Garment Industry Development Corporation, Land Use Survey Results, available at http://www.gidc.org/enter.html (Follow GIDC Services and NY Apparel Industry; then follow GIDC Services; then follow Garment Center Zoning Enforcement; at the bottom of the page under Complete Survey Results).
49 Id .
50 Sharon Edelson and Rosemary Feitelberg, The Future Is Uncertain: Garment District Woes Stir Debate Over Zoning, Women’s Wear Daily, Sept. 6, 2007, 2007 WLNR 21392107.
51 Garment Industry Development Corporation, Land Use Survey Results, available at http://www.gidc.org/enter.html (Follow GIDC Services and NY Apparel Industry; then follow GIDC Services; then follow Garment Center Zoning Enforcement; at the bottom of the page under Complete Survey Results).
52 Id .
53 The Garment Center: Still in Fashion – A Land Use Analysis of the Special Garment Center District, Part 3, New York Industrial Retention Network, Manufacturing Policy Reports 24 (April, 2001), available at http://www.nyirn.org/GarmentCenterFullReportForWebsitePart3.pdf.
54 Id .
55 Id .
56 Garment Industry Development Corporation, Garment District Fact Sheet, available at http://www.gidc.org/enter.html (Follow GIDC Services and NY Apparel Industry; then follow GIDC Services; then follow Garment Center Zoning Enforcement; at the bottom of the page under Garment District Fact Sheet).
57 Id .
58 Elisabeth Butler Cordova, Garment district rezoning plan stalls
Landlords balk at new rules meant to save manufacturing, Crain’s N.Y. Bus., August 13, 2007, Volume 23; Issue 33, 2007 WLNR 16023383.
59 New York City: Department of City Planning – Hudson Yards – Approved, available at http://www.nyc.gov/html/dcp/html/hyards/proposal.shtml.
60 Id .
61 Id .
62 Elisabeth Butler, New fashion district: Zoning will legalize office conversions, use nonprofit to protect factory space, Crain’s N.Y. Bus., April 2, 2007, Volume 23; Issue 14, 2007 WLNR 6649569.
63 Viewpoint, How to Save Garment District, Crain’s N.Y. Bus., February 19, 2007, Volume 23; Issue 8, 2007 WLNR 3580709.
64 Id .
65 Elisabeth Butler, New fashion district: Zoning will legalize office conversions, use nonprofit to protect factory space, Crain’s N.Y. Bus., April 2, 2007, Volume 23; Issue 14, 2007 WLNR 6649569.
66 Id .
67 Id .
68 Elisabeth Butler Cordova, NYC's cutting edge: Fashion Week spotlights key role of garment district; area's future in doubt, Crain’s N.Y. Bus., September 3, 2007, Vol-ume 23; Issue 36, 2007 WLNR 17582758.
69 Viewpoint, How to Save Garment District, Crain’s N.Y. Bus., February 19, 2007, Volume 23; Issue 8, 2007 WLNR 3580709.
70 Elisabeth Butler Cordova, Garment district rezoning plan stalls: Landlords balk at new rules meant to save manufacturing, Crain’s N.Y. Bus., August 13, 2007, Volume 23; Issue 33, 2007 WLNR 16023383.
71 Id .
72 Id .
73 Id .
74 Id .
75 Elisabeth Butler, New fashion district: Zoning will legalize office conversions, use nonprofit to protect factory space, Crain’s N.Y. Bus., April 2, 2007, Volume 23; Issue 14, 2007 WLNR 6649569.
76 Id .