Due Diligence for NYC Residential Developments

Before embarking on a property development you need to do your due diligence on the property.

 

NYC Residential Developments Due Diligence Checklist

The following are things we usually check for when doing a feasibility study or predesign for a residential property development. They may not necessarily be a problem but you need to be aware. These are the most common things I have found my clients are not aware of before they purchase a property.

• Zoning
• Small Zoning Lots
• Sliver Law
• Special Districts
• Inclusionary Housing Program
• Easements
• Environmental Issues
• Don’t Believe Everything You Read On The Internet
• Don’t Believe Everything A Salesperson Tells You

 

Zoning for NYC Residential Developments

We get many clients who hire us to do a zoning report before they purchase a property. When purchasing a property for a residential development you should have a good understanding of the zoning. Zoning will affect every aspect of the project. Architectural zoning services are an essential part of due diligence for purchasing a development property. The zoning code is thousands of pages it is complicated and you need professional help to assess a properties zoning requirements.

One example of something people do not realize is that zoning not only dictates the shape and size of a building like the floor area ratio but also how many apartments can be developed on the property. The zoning density factor will determine the maximum number of apartments. Density factor is a big issue for people doing micro apartments because they can max out the unit count without maxing out the allowable floor area.

 

Small Zoning Lots for Residential Developments

By far the most common problem I encounter for residential properties are small zoning lots. A small zoning lot is a lot who’s width and or square footage is under the minimum requirement specified by its zoning district. The problem is that if you have a “small zoning lot” (as defined by NYC zoning) you are not allowed to develop multifamily buildings on the property. Small zoning lots are only allowed to have 1 or 2 family homes. I have had many people who came to me after they purchased a small zoning lot thinking they could build an apartment building. We are currently developing a Townhouse in Brooklyn that is on a small zoning lot. In this case we are building a four story 2 family house.

 

Sliver Law Height Restrictions for Developments

There is a zoning code known as the Sliver Law that cause problems for a lot of developments. I find that most first time property developers don’t know about this one. The sliver Law restricts the height of buildings on properties less then 45 feet wide in certain zoning districts.

 

Special Districts

New York City has may special districts. Make sure to check if you are in a special district that may have particular rules you must understand before developing. For example Riverdale has a Special Natural Area District, or Downtown Manhattan has the special Lower Manhattan zoning district. Also NYC has landmark districts.

 

Inclusionary Housing Program for Multi family Residential

The Inclusionary Housing Program is an incentive program to help develop affordable housing and promote mixed income residential developments. There are areas in NYC that have mandatory Inclusionary Housing requirements and areas where it is optional. If you are in a designated area (optional) you may incur a zoning penalty for not provided any affordable units.

 

Property Easements

Easements are the right of one person to gain access to the property of another. Some examples can be a driveway easement or parking easement. If you are purchasing a property make sure to do a full title search on the property and see if there are any easements existing o the lot. Also you want to make sure there were no air rights deals done previously that may impact you.

 

Environmental Issues

There are many environmental issues that could affect you property. There could be contaminants in the soil, or perhaps you are in a flood zone.

 

Don’t Believe Everything You Read On The Internet

I am not going to name names but there are several websites on the internet that list zoning regulations and property statistics. DO NOT TRUST THESE. First thing on websites that list property square footage and building square footage, do you think the websites are verifying this information? I doubt it. I have seen many instances where properties are listed online (on presumably reputable websites) with square footages that were way off the actual amount. You need to get a survey to verify these things especially if you have an irregular shaped property.

There are also multiple websites listing zoning requirements. Zoning is complicated. Don’t always assume these things are as straight forward as they seem.

 

Don’t Believe Everything A Salesperson Tells You

I recently had a potential client send me a PDF with information on a property he was looking to purchase. This document was prepared by the broker selling the property. They listed the amount of square footage allowed to be developed on the property but their numbers were off. I easily could see where the broker made the mistake in their calculations and it was completely based on not understanding zoning code. Brokers are sales people don’t take their word for anything. No offense brokers.

You need to verify all the information provided on a property you are looking to purchase or develop.

 

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Thank You for reading our blog post on Residential Developments and Common Problems

Please leave questions or comments below. If you would like to speak with an Architect you can contact us directly to discuss a specific project. We wish you the best of luck with your upcoming projects.

 

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