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Monday, March 9, 2009

Air Supply

A few weeks ago we received a question about land ownership. While researching that question, I found some interesting information. Did you know that you can own air? I had no idea!

As I began to look into this further, I realized that it can get pretty complicated. So, I’ll just give you a bit of the basics that I’ve learned so far.

According to the book Real Estate Principles, the original thought was that when a person (let’s call him Burly Bob) owns land, he also owns all the land below the surface of the earth down to the center of the earth. Even better, Burly Bob also owns all of the space above it, out into the universe and beyond.

Today, things can get a little bit sticky. If Bob sells the mineral rights of his land, he no longer owns the land beneath the surface of the earth. Someone else (Sassy Sally) could buy the rights to the oil or coal found on Bob’s land, for example. In addition, airplanes can fly over space wherever they want without interfering with Bob’s air rights. However, if the plane flies too low, Bob could try to get compensation for the use of his property.

Air rights are generally mandated by city ordinance. Here’s where it gets really interesting.
According to the University of Michigan, air can be bought and sold. Cities will sometimes grant land owners a certain number of air credits. If you don’t use all your air credits, you can sell them.

For example, let’s say Burly Bob owns a little gas station, and Tycoon Tammy wants to build a high-rise hotel next door. Bob can sell Tammy his air credits. Then, Tycoon Tammy can build the hotel much higher than the original zoning height ordinance. Here’s a nice illustrated explanation from the University of Michigan: The University of Michigan also notes that the city of Philadelphia created its Transfer of Development Rights Program in 1991. Previously, there was an “…old gentlemen's agreement…not to build a downtown building higher that the hat on the sculpture of William Penn on the City Hall.” But as the city grew, this agreement became more difficult to enforce. The TDR was written to help keep the historic feel of downtown while allowing for growth.

Here’s an interesting article from the New York Times. A church in Manhattan sold its air rights to an apartment complex developer. How much? Oh, just a measly $430 per square foot!

I don’t know how they do it, making money out of nothing at all. (My apologies to the 80's power- ballad band Air Supply.)

Floyd, Charles. Real Estate Principles. Chicago: Dearborn Real Estate, 2002.

The New York Times 30 Nov. 2005.

“Transfer of Development Rights.” University of Michigan. 9 Mar. 2009

1 comment:

  1. Hi Judy, Good blog. How can you pay for nothing and it be the most important thing in the world? Mind-bogging. magraw


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