how did 111 Mercer Street get some kind of one-off exemption from Artist in Residence requirements?

inquiring minds want to know
Fascinating piece in the The Real Deal today, In rare instance, Soho building has Artist-in Residence requirement waived, stating that the 4-unit condo residential loft new development at 111 Mercer Street will not have to comply with the Artist in Residence requirements that, at least as a formal matter, apply to nearly all residential lofts in prime Soho.

The article quotes one of the sales agents, and then relies on a statement from the developer, to the effect that

“[the exemption] process took 18 months and involved numerous city agencies with approvals at every level.” The Landmarks Preservation Commission and Department of City Planning required developer Veracity Development to complete a Class A renovation of the building in support of the application, incorporating historically accurate materials, a spokesperson for Veracity said

This, despite the fact that the building has been zoned M1-5A (the manufacturing use that, like M1-5B, prohibit residential use that does not meet the A.I.R. requirements), at least per Property Shark.

I am totally unaware of how a one-off exemption like this could work, and will make some inquiries to find out. [UPDATE 11.14.12: see comment below about Special Use Permit] I went through the various agencies at the state and city level that are involved in my first piece on A.I.R. in response to that seminal New York Times article, in my November 12, 2010, did the NY Times just write a front page obituary for the Soho real estate market?. See that long post for details, but in broad strokes, city zoning (that M1-5A designation) prohibits residential use, but state law provides an exception that can permit residential use if (among other things, such as residential building code compliance) a city agency (literally) ‘certifies’ that the occupant is an artist using the loft for his/her art.

Unless the zoning designation was changed for this single building, I don’t see how this works at only the city level. State law is the source of the exemption for Joint Live Work Quarters for Artists; NYC Department of Consumer Affairs certification is the mechanism for that exemption.

For example, when the political compromise was reached for new developments on open lots in Soho to be developed as non-A.I.R. buildings, I believe that the mechanism for that agreement was a formal change in zoning for those lots by the City. (Examples include 311 West Broadway [Soho Mews] and 40 Mercer Street.) Absent the rezoning of those 12 or 13 open spaces, the units could legally be sold only to artists; in exchange for (and as part of) the re-zoning, the developers agreed to restrictions such that, among other things, ground floor retail is prohibited in these buildings (did you ever wonder why none of the Soho Grand restaurant and bar spaces are on sidewalk level? that’s why).

However this exemption was finagled, I suspect that the building had not been occupied by residential tenants before the recent condo conversion; if there were people living there this would have been controversial much earlier. (If you followed the comment threads on my A.I.R. pieces, you know that is a reference to Team Sweeney.)

I still can’t prove that A.I.R. impacts value
A real estate agent with a listing near 111 Mercer Street is relied on but not directly quoted on a fascinating topic. I am not going to repeat his name here because it is possible that what he said was more impressive than the reporter’s paraphrase, so I will give him the benefit of the doubt. This is not a very interesting (or precise) thing to say:

the AIR waiver, in addition to the new construction and high-end finishes, could be contributing to the difference in price [between his listing and the 111 Mercer lofts].

Yeah, the fact that these brand new lofts will probably be built for the uber-deluxe part of the market just might explain their premium. And “the AIR waiver” for 111 Mercer might also be related to that premium.

Let’s just say the attributed statement cannot be proven wrong, and add that the attributed statement does not make any of us any better informed than we were before reading it.

(For the difficulties in proving the economic impact of A.I.R., see my March 7, 2011,  it is impossible to prove that the Soho artist in residence regulations are a resale problem unless ‘victims’ come forward.)

© Sandy Mattingly 2012