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NEW YORK CITY-Financial services giant Lehman Brothers will ask the City Planning Commission today to permanently amend the zoning regulations in its new neighborhood. If it gets its way, the Theater Subdistrict’s western border will effectively expand from Eighth Avenue clear over to 10th Avenue and all the way down to Herald Square. The immediate beneficiary of such a change would be the Alvin Ailey American Dance Theater, which stands to gain $5 million of Lehman cash for its new building at 55th Street and 9th Avenue in exchange for assuming Lehman’s entertainment-related-use obligation.

When Lehman bought the 38-story office tower at 49th Street and 7th Avenue from Morgan Stanley, it also took on the zoning responsibility of designating a portion of its space–roughly 38,000 sf–to entertainment-related enterprises. But while new buildings within the Theater Subdistrict core that are larger than 60,000 sf must devote roughly 5% of their available floor area to entertainment uses, owners need maintain only 25% of that space onsite; the remaining 75% can be located anywhere within the Theater Subdistrict.

Lehman, however, says Morgan Stanley looked high and low for offsite space within the designated area and came up empty handed. Its answer, which Lehman wants to adopt, was to expand the receiving area–the space within the Theater Subdistrict core where it is allowed to offload entertainment space. Currently, building owners who want to take their properties’ entertainment space offsite are bound by a rectangular area that runs from 40th Street north to 57th Street and from Avenue of the Americas west to Eighth Avenue. Lehman wants to expand the district south to 34th Street and West to 10th Avenue.

The newly described district would give Lehman plenty of room to maneuver. But if it prevails at today’s hearing, Lehman’s house-hunting days are over. Alvin Ailey is more than happy to accept Lehman’s $5 million and Community Boards Four and Five have already recommended the plan–after adding a few amendments of their own–to Planning Commission chairman Joseph B. Rose. The community boards’ main changes are to place the northern and southern borders at 57th Street and 42nd Street, respectively, and to place the western boundary 150 feet west of Ninth Avenue, thereby including the Alvin Ailey property without expanding the district all the way to 10th Avenue. They also restrict the entertainment-related usage within the proposed expansion space, mainly to rehearsal and performance space. (The Planning Commission is in no way bound by the boards’ recommendation. Community boards in New York City are strictly advisory in nature.)

But opponents call the Lehman/Ailey plan an end run designed to dodge important zoning regulations, not in the Theater Subdistrict, but in neighboring Clinton. The zoning amendment Lehman is proposing would tear a stadium-sized loophole in Clinton’s carefully crafted residential-retail-commercial mix, watchdog groups say. In fact, a stadium–albeit a relatively modest one with a maximum capacity of 2,500 patrons–is exactly the kind of development Clinton residents fear could result from Lehman’s thin-end-of-the-wedge approach to urban planning.

“It’s bad public policy to change the character of neighborhoods,” says John Fisher, president of the Clinton Special District Coalition. “The zoning was originally made to enhance Broadway as the Great White Way. It is embodied as public policy. But Clinton is a residential area, not an entertainment zone. This is not about keeping theaters out of Clinton. It’s about targeting Clinton as an entertainment zone.”

One local broker who asked not to be identified says the Lehman plan could backfire, undoing the years of work spent cleaning up Times Square by opening up its western borders to the adult theaters and strip clubs that once dominated the area. “By increasing the geographical [receiving] area you are creating the opportunity for less desirable entertainment uses outside the Theater Subdistrict.”

And while opponents of the amendment generally point to a worst-case scenario popping up down the road when a developer sneaks an adult club onto 9th Avenue by calling it a theater, Fisher sees a more immediate threat in the recently shuttered Food Emporium site, coincidentally located across the street from the Alvin Ailey property. “You could put in anything that a savvy zoning attorney could pass off as a room with a stage or performing area…a nightclub, a roller rink or even a small stadium,” Fisher tells GlobeSt.com. “The Planning Commission should revisit the obligations within the Theater Subdistrict, not dump it on Clinton.”

Lehman spokesman Bill Ahearn counters that his firm is just stepping into a deal already forged between Morgan Stanley and Alvin Ailey. “This is a solution the two of them came up with. But it seems like a pretty good solution to us,” Ahearn tells GlobeSt.com “We’re trying to replicate the space we lost downtown and we would like to have all that space in one facility. This fits the bill. It seems like a win-win solution.”

Ahearn says Lehman has no intention of expanding its commitments further than the Alvin Ailey deal and that the amendment is likely nothing more than a one-time legal maneuver necessitated by the city’s complex zoning laws. “We don’t have any building plans [in Clinton],” Ahearn says. “We’re looking at this for one time only. Our view is not to use this multiple times.”

Calls for comment on the proposed amendment to the Planning Commission and Alvin Ailey were not returned.

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