Air Rights Purchase Agreement

Incentives to acquire air rights are also strong for the developer. Airspace provides the opportunity to secure an important location in a transaction and eliminates the laborious process of multi-plot composition, demolition of existing structures and relocation of existing tenants. Second, it offers the opportunity to get a prime location in or near the central business district, where cheap conventional sites may no longer be available. Finally, the airspace is often cheap enough that the land is free in the same way to further offset the additional construction costs. As is currently the case, changes in air rights are costly and, by their very nature, limited to a small number of sites. Most of the past experiences and most new ideas come from New York, due to the peculiarities of the New York environment. Few other cities would tolerate the dense highs of Manhattan, and their land is not high enough to absorb the additional construction costs, except perhaps in the central business districts. Chicago expects its lakeside development to increase urban property tax revenues by $12 million. Massachusetts legislation stipulates that the improvement of air rights on public lands must be taxed in the same way and to the extent that the lessor would own the land, and that the value of the land must be included in the assessment. The City of Hollywood, Florida, leases flight fees over municipal parking lots and requires the tenant to pay all taxes on the land and against any improvements added by the tenant.

A proposal for Louisville, Kentucky, recommends that the city condemn the countryside and structures for the construction of multi-storey parking lots. The city would then lease the air rights to the area through garages for private development – apartments, hotels, offices, shops. Recognizing that space on the highway could be used for purposes other than traffic, the Federal Aid Highway Act of 1961 provides for the leasing of air rights on intermediate roads. Special provisions to prevent interference with the use and safety of highways were issued in 1962 by the Office of Public Roads14. The regulations contain restrictions on support columns, evacuation, ventilation, building access to the highway, etc., and state that no federal funding can be used for such work, nor for the costs added to the construction of roads as a result of such construction.