It’s Z-Day for East Midtown. The stakes couldn’t be higher for the proposal to rezone the iconic but declining Grand Central-area office district, which is expected to begin the city’s formal land-use review process on Tuesday after years of false starts.

Rezoning to allow large, modern new buildings to rise is critical to saving the 73-block district from galloping obsolescence. Existing buildings, hobbled by ancient infrastructure unsuited to today’s digitally attuned companies, are an average 70 years old, mainly because 1961 zoning rules made replacing them near-impossible. Freeing the area from the straitjacket could restore its allure to companies needing 21st-century bells and whistles.

“It’s critical for East Midtown’s viability,” said law firm Fried, Frank’s real estate chairman, Jonathan Mechanic. “It will no longer deteriorate, but will again become the central business district that New York City needs.”

If the Department of City Planning measure survives the seven-month Uniform Land Use Review Procedure, which requires approval by the City Council and the mayor, it will bring a net increase over 20 years of more than 6 million square feet of office space to the district’s current 90 million square feet, the DCP projects.

But the area will gain more than 15 million square feet of modern, state-of-the-art space because some old buildings will be torn down for new ones.

Rezoning’s fate is being closely followed by landlords who want the option to redevelop older properties — among them, publicly traded SL Green, Vornado and Brookfield; privately held Rudin Management and the Durst Organization; and companies that own their office towers such as JPMorgan Chase and Pfizer.

City planners say rezoning will add nearly $800 million of upgrades to subway stations and above-ground streetscapes without costing taxpayers a dime.

That’s because, in order to put up larger new buildings, developers in designated “transit zones” must pay for and build the subway improvements at six Midtown stations.

Plus, sellers of air rights must donate a portion of sale values to a “public realm” fund that will pay for sidewalk-level upgrades.

The old zoning is so restrictive that East Midtown buildings that were constructed before 1961 can’t legally be replaced by new buildings even of the same size.

An overdue but unpopular attempt to rezone the area under former Mayor Michael Bloomberg was yanked in 2013.

It failed to spell out what transit upgrades developers would have to deliver.

Owners of landmarks such as Grand Central Terminal and houses of worship couldn’t sell air rights except to next-door sites that weren’t suitable for development.

The new plan gets rid of those weaknesses.

City Planning Commissioner Carl Weisbrod led the team effort, but a source noted, “It couldn’t have happened without enthusiastic participation by [Manhattan Borough President] Gale Brewer and [Council member] Dan Garodnick” — both of whom opposed the earlier proposal, but recognized the need for change.

The city rezoned one important but small slice of the area in 2014 — Vanderbilt Avenue, where SL Green’s One Vanderbilt is rising next to Grand Central Terminal.

But the new, much more ambitious proposal covers roughly from East 39th to East 57th streets, and from Third to Fifth avenues.

A draft environmental impact statement posted online over the weekend spells out its key provisions.

It would increase permissible new building size from today’s mostly 12 to 15 “floor-to-area ratio” (FAR) — the measure of how much floor space can be built on a lot of a particular size — to as much as 18 FAR in some parts of the district and up to 27 FAR in others.

However, the current “base” FAR limits won’t change. To add to them, developers in the “transit zones” can only gain additional FAR by paying for, and constructing, new facilities specified by the MTA at six subway stations.

At the Fifth Avenue/53d Street E and M stop, for example, they include a new Madison Avenue street entrance and a new mezzanine.

In other parts of East Midtown, developers could raise FAR only by buying unused air rights from owners of landmarks throughout the district, not only from those next door. Sellers would donate 20 percent of the sale price to a “public-realm fund” for sidewalk-level improvements, to be run by a panel of mayoral appointees and community stakeholders.

The city must receive a minimum $78 per square foot on each transaction — a figure that values the average prospective air-rights sale at nearly $400 per square foot.

The public-realm fund would also collect a fee from owners of older buildings wishing to replace them with new ones of the same size, but larger than 1961 rules allowed.

Change can’t come too soon. “Important companies have been relocating to areas that are able to have modern, 21st Century buildings — especially to Hudson Yards and the World Trade Center,” warned CBRE tristate CEO Mary Ann Tighe.

BlackRock, Wells Fargo, Point72 and several major law firms have already moved out or plan to.

Rudin Management Company co-vice chairman and CEO William Rudin told The Post, “The prospect of passage of rezoning in 2017 is critically important to maintaining New York as a global capital and will send a message to the world regarding the development potential for Midtown.”