Thursday, December 4, 2008

Will It Come? What the Bloomberg Administration Wills at Willets Point (Part III)

(Continued from Part II)

Should a Slow Moving, Poorly Defined Project Still Be a Priority? Yes, Says the Mayor

With the project so poorly defined or flexible and its benefits so slow in coming perhaps Mayor Bloomberg would consider that a period of economic downturn is not a good time to make the wiping out the 250 businesses and thousands of jobs in Willets Point a priority. Not so. It is recently reported that he believes the opposite:

The mayor added that projects like the redevelopment of Willets Point should not be avoided during tough economic times, pointing out that the ambitious undertaking is expected to generate 18,000 construction jobs and more than 5,000 permanent jobs if approved.

“Just because we’re in an economic downturn doesn’t mean we’re going to walk away from our long-term responsibilities,” Bloomberg said. “The city did that in the 70s and it was a near disaster.”
(See: The Iron Triangle Tracker: Monserrate, Katz push for Willets approval, housing deal announced, Tully close, by Stephen Stirling, November 12, 2008)

Battle of the Job Figures: Why the Administration’s Should be Discounted

Of course, future job figures such as those issued when the administration is pushing for projects are untrustworthy. Though most recently the city has said the development will create 5,000 permanent jobs, not too long ago it was asserted that 22% more permanent jobs, 6,100, would be created. (See: Bloomberg Unveils Plan to Redevelop Willets Point, By Anahad O’connor and Terry Pristin, May 1, 2007.) Very likely the 3,000 figure given by the Willets Point Industry and Realty Association as the number of current jobs is high and that the actual number of current jobs is between 1,300 and 1,800, but those jobs, however disputed their count, are bird-in-the-hand. One needs to suspect the 5,000 permanent jobs predicted by the city is still too high and needs to be lowered again. That 5,000 figure also needs to be further discounted because those future jobs that will fully materialize only upon the project’s completion. As reviewed above, the indicators are that the full completion will be a number of years out perhaps as many as 30 or more. With the downturn in the economy, the present value of existing jobs gains comparative weight because the replacement jobs will take longer to materialize.

Obviously, whatever job figures one assumes, job creation figures should net out the number of jobs lost.

Why the Administration May Want to Proceed, at Least to a Point, Despite Economic Downturn

Given that the first steps toward the elimination of the Iron Triangle were undertaken a long time ago, it may understandable if the Mayor thinks that it is important to follow through. A process such as this can take so much time that when begun there is no telling when it can assuredly be completed or at what point in an economic cycle that might fall. Conceivably, the Mayor thinks it was important to get the approval from the City Council while he could. It may be unlikely, but it is possible that he envisions that the approval now obtained will not actually be utilized until the economic climate swings again. There is also the possibility that, having been resisted up to a point, the mayor is now interested in proving that the Iron Triangle can be eliminated for the sake of proving that he is able to do so. Eliminating it may say something about his administration and what it can accomplish where others have failed. Willets Point, after all, is famous for the its past successful survival despite effort of the powerful to put it out of existence.

Willets Point History; Stories of Visits by the Powerful and Wealthy

Depending on whose math you pay attention to, the neighborhood is 65- or 75-years-old, having been settled by some of the businesses now occupying it in the 30s or 40s. The first infrastructure was built in the 30s. The Willets Point area was not paved over when Robert Moses paved over adjoining property for the 1939 Wold’s Fair. The paved property was the ash heap or “valley of ashes” watched over by the eyes of the “Dr. T. J. Eckleburg” billboard in F. Scott Fitzgerald’s The Great Gatsby. (The triangle includes or abuts the location of George Wilson's gas station where, in Fitzgerald’s book, Myrtle Wilson was run over by Daisy Buchanan. The incident is pivotal for one of the book’s themes, that separated by their wealth, the characters of Tom and Daisy Buchanan are carelessly and insensitively destructive of other people’s lives: “They were careless people, Tom and Daisy–they smashed up things and creatures and then retreated back into their money or their vast carelessness or whatever it was that kept them together, and let other people clean up the mess they had made…”)

New York’s next World’s Fair in 1964 with Robert Moses again in charge was on the same site during Mayor Wagner’s administration. Moses wanted to clear the Willets Point land for a parking lot in time for the fair. Successfully resisting Moses is credited with starting the career of a young lawyer named Mario Cuomo. After that, Mayors Koch and Giuliani both tried and failed to pout stadiums on the triangle site. (See: Willets Point, A Development Waterloo? Moses, Wagner, Koch, Giuliani—all have tried to redevelop the scrappy yard next to Shea. Now, it’s Bloomberg’s turn and it’s tough already, by Eliot Brown, February 19, 2008.)

Viewing Willets Point Demolition as Just Another Cost of New Citifield Stadium

Is the new Citifield stadium the reason the Mayor now wants to banish the Willets Point community into history? The Citifield replacement for Shea Stadium is closer to Willets Point than Shea was (by about the distance of a stadium). While we may think that the Willets Point is a perfectly acceptable neighbor for the spanking new stadium, Mayor Bloomberg appears to have other ideas. Willets Point property owners pay city taxes and the stadium owners do not, and yet the construction of the stadium may be bringing about the demise of Willets Point. If so, it will be an extra indirect cost of the stadium. Field of Schemes has used figures from public sources, including Good Jobs New York, NYC Independent Budget Office, and NYC Parks to calculate the total public cost of Citifield stadium as $484.99 million. Perhaps a cost for removing the Willets Point businesses should be added to that total.

It could be that Mayor Bloomberg doesn’t like the aesthetics of “junk yards” car parts or scrap businesses next to a new stadium. In terms of an economic argument, the Mayor has expressed a desire to build retail and entertainment space across from Citifield to lure visitors to the stadium. Years previously, the plan had been to build a “a massive entertainment complex” on top of Willets Point when the new stadium was built. (There are about 80 home games a year.)

Another Example of Bloomberg Administration’s Strange Non-Community Focus When it Comes to Stadiums and Parking Spaces?

It could just be that this is another example of the strangely misplaced focus the Bloomberg administration can have when it comes to stadiums (and their parking lots). Recent news stories mined newly unearthed e-mails concerning the administration’s negotiations concerning Yankee Stadium. They show that in lieu of those things that might be of most concern to the public and local community like restoration of seized parks and saving money, the Bloomberg administration was preoccupied with giving the Yankees an inordinate and undeserved amount of parking so that the administration could procure a theoretically “free” twelve-person luxury suite for its own use (together with “free” food). For more on this see: Mayor’s Focus on City Planning Matters: Some Quantified Analysis, Wednesday, December 3, 2008.

Predicting the Future of Willets Point (All Things Being Equal)

If one were to predict, one would probably say that one day, one way or another, the businesses at Willets Point will probably be replaced by other development representing higher and better uses. All things being equal this would probably naturally come to pass in due time without the use of eminent domain. But, when it comes to eminent domain, all things are not equal. Eminent domain is a tipping of the playing field that makes the unnatural happen. You are putting your faith in planners or government officials to know why the course of events should be taken away from Adam Smith’s guiding invisible hand. It therefore becomes incumbent upon those involved to ask whether eminent domain condemnations make sense given the alternatives or what would more naturally happen without the use of eminent domain. Eminent domain takings are done in the name of the public, so it is incumbent on the public (all of us) to ask these questions.

If eminent domain were not being used, the existing uses in Willets Point would assert their value economically. The existing uses would not be displaced unless other uses could out-compete them. Other uses would not bother to try to out-compete them if they could more economically go elsewhere.

Achieving Highest and Best Use: The Upzoning Alternative of Eminent Domain

For most people, upzoning is what probably first comes to mind as an alternative to eminent domain to stimulate an upgrade of property to a higher and better use. Upzoning without eminent domain allows change to proceed when it makes economic sense for property to change hands or use. It tends to naturally compensate departing businesses in much the same way that the divide- and-conquer deal the city’s EDC negotiated allows the three large individual land owners in the eastern part of Willets Point to benefit from the upzoned value when they sell their land. With upzoning, individual parcels would change hands or use in the sequence that made sense; the first parcels to upgrade being the ones where there was the greatest profit to be made. The speed with which a changeover would happen would depend on the economic climate, but land would not be likely to lie fallow because a change of use was artificially forced before the time was ripe. Change would be less controlled: If the economics were more attractive in Downtown Flushing or on land where businesses did not need to be displaced, change might occur there first instead of at Willets Point. Therefore, we might see the development there spearheaded by the local Chinese and Korean developers who are currently so active, rather than by through “big- developer” style development by the larger firms.

Upgrade of Infrastructure and Services if You Want Highest and Best Use: Lawsuit on the Subject

Another way to encourage a higher and better use of property is to upgrade the services and infrastructure in the area. The current situation at Willets Point is essentially the opposite. The city now provides minimal services to Willets Point. The area lacks sewers. There are no sidewalks. It has been so long since roads were paved that to say the area is spectacularly potholed would be a severe understatement. The potholes are lakebeds. The owners there have brought a lawsuit claiming that the level of services is discriminatorily low. The Daily News summarizes the allegation of neglect in the suit as follows:

The suit says the city has withheld services such as trash and snow removal and police surveillance; refused to maintain drainage, roadways and sanitary sewerage lines, and allowed curbs, gutters and fire hydrants to deteriorate beyond repair.

(See: Willets Point property owners sue city, by Jess Wisloski, April 10, 2008.)

Withholding services can be a strategy to, among other things, foster blight and pay a low price for land upon condemnation.

The Having-it-All-Plus-More Alternative to Today’s Proposed Willets Point Destruction

There is a way of having all the benefits of the Willets Point redevelopment plan plus more. There are alternative areas to build, even in the immediate vicinity of Willets Point. The parking lot for the new Citifield stadium involves an expanse almost as large as the Willets Point triangle. The world is quite familiar with ways that parking can be incorporated in other city structures. Building could begin in the areas immediately next to the subway and train station stops. In addition, also immediately next to the subway and train station stop there are rail yards that could be built over. There are obviously other areas in the city where our current priority is to build over train yards, Hudson Yards and Atlantic Yards providing examples.

Multiple Advantages

There would be significant advantages to building in these alternative areas, in addition to the fact that it would not involve the elimination of the existing private-sector-created Willets Point jobs and businesses. Initially, these areas would have a clearly defined and unique marketing appeal that would be comfortably consistent with developing the area at whatever speed unfolding economic conditions turn out to dictate. The buildings would attract people who wanted the pronounced convenience of being close to the subway. (The #7 train is actually one of the few subway lines whose capacity is recognized to be currently underutilized.) They would also be right next to Flushing Corona Park which apartments in the complex would overlook.

The problem of living in an emerging neighborhood not yet large enough to sustain supporting services would be greatly obviated by the immediate proximity to mass transit, which for commuters would make the neighborhood a near equivalent to an extension of the city they were commuting from. It would also mean that people moving in would be as little as one stop away from other neighborhoods like Downtown Flushing.

Rather than being hemmed in by problematic infrastructure like highways, the new development complex would make a substantial amount of problem infrastructure go away by building over it.

The retail that is supposed to be built to attract stadium patrons wouldn’t have to try to lure them in an unfamiliar direction away from the subways: It could instead present itself to patrons as they were walking to and from the subways and trains.

The housing could, and probably would, have all the same affordability components now talked about as being part of the administration’s Willets Point redevelopment plan. It might even be possible to do more affordable units. Buildings in this area are far enough west that they are not in the LaGuardia flight path; they could be built taller and, if otherwise appropriate, there could be greater density in this park side area.

Preparation of a Site and Proceeding in Parcels

The first phases of development could proceed immediately, far faster than the current Willets Point plan, because the impediments of an existing population, litigation included, would be avoided. In all likelihood, site preparation would be easier.

There would be site preparation costs, particularly for building over the rail yards, but there are also site preparation costs associated with building in the Willets Point triangle area. In the case of building over the parking lots and train yards, all of site preparation costs would constitute positive addictions to the city’s social capital whereas the cost of removing Willets Point businesses involves a partial subtraction of social capital. Rather than being out of pocket on the transaction, the city and the MTA might actually make money when the property to be built upon is put out to bid.

The development could be built in multiple chunks bid out over time to multiple developers following the model used in Battery Park City. Unlike building in the Iron Triangle, it would be relatively easy to phase development here.

Escalating Jobs

Presumably, development would grow out from the public transportation stops. It would grow out toward the Willets Point triangle. Jobs it created would be in addition to rather than sacrificing the private-sector-created Willets Point jobs. If the city’s figures are not inflated, when construction in the alternative area is half complete in perhaps 10 or 15 years, there would be 2,500 permanent jobs associated with the new development plus the 2,000 or so jobs at Willets Point would exist alongside those jobs. There is every reason to suspect that there would be more and better jobs in the Iron Triangle by that time.

By the time the development was all built out and reached the borders of Willets Point, there would be 7,000 or more jobs, a net increase of 5,000 or so versus the only 3,000 net increase in jobs in the area under the city’s current plan.

Probable Eventual Changeover for the Triangle

One would still expect that Willets Point would change. It is still predictable that the area will eventually graduate to higher and better uses. Some change might come gradually over time, but the complete changeover in uses might not happen until much later. Changes would happen through the private sector rather than being dependent upon subsidy. Presumably Willets Point development would respond, over time, to upzoning and an upgrade in services and infrastructure.

In time one might still predict a complete changeover in use that would probably come when the new development reached the borders of the triangle. But by the time the new development reached those borders the situation would be different. When the borders of the newly developed neighborhood reached and began to blend into the area of the Iron Triangle, be it 15, 20, 30 or 35 years out, the new complex spreading out from the transit stops would be a full-fledged neighborhood. Erecting residential buildings in the triangle thereafter would not involve the risky building of an isolated outpost. Anything built there at this later point would immediately have the services available because of the complex that had already been built, a neighborhood that the triangle could then become a part of.

Building in this alternative fashion would mean there would be no chance of the city being saddled with an unwanted mistake created by a public-sector, private-sector partnership. When ill-considered partnerships fail, the public faces clamorous lobbying for remedial corrections in the form of after-the-fact piling on of additional public subsidies.

We could be wrong about an eventual changeover of Willets Point from industrial use. Admittedly, there is a certain amount of crystal ball work involved in looking so far out into the future. The Municipal Art Society has submitted that:

Given its adjacency to other industrial sites, its relative proximity to the College Point industrial park, and its accessibility to major transportation routes as well as the airport, the site may be more appropriate for strategic investment in industrial uses.
MAS also suggested that the site has another rare characteristic making it a good candidate for continued industrial use; the site could be easily accessed by barge; such water transportation is especially energy-efficient. The advantage of proceeding in the fashion we are advocating is that the future need not be irrevocably dictated until future economic conditions have begun to better assert themselves.

A Win-Win? For Whom Could this Be Bad?

It seems like a win-win proposal that makes sense for the city. Shouldn’t the City Council, if it exercised leadership, be leading the city in this direction?

If this is not the direction in which the city is headed, one should ask why. For whom would such a proposal not be good? For whom is the Bloomberg administration’s proposal better?

The Bloomberg proposal is better for the one big developer that would get to have monopolistic sway over a multi-decade development project. The Bloomberg single big-developer proposal stands to be good for that single big developer for all the reasons such a proposal stands to be bad for the public.

Among other things, the alternative of building on the parking lots or over the train yards would mean that bidding developers would have to bid maximum value for the land to be built upon. The use of eminent domain to acquire land in the triangle pushes down the amount that developers might have to pay. According to one city document (the implementation strategy), the price would not be bad given the number of acres involved: “The total site acquisition estimate is $131.5 million.” According to the Municipal Art Society’s August testimony, “The city has already set aside close to 389 million dollars to support the redevelopment of Willets Point; and as part of this plan the city will be using public monies to either buy out the owners or to pay fair market value via eminent domain.” The problem that MAS points out is that since so much of the investment is public money for which the city, not the developer, is at risk, the private sector’s incentive to proceed on schedule is drastically minimized.

It is possible to speculate that the single developer chosen might be Muss. It is possible that Muss Development might prefer that the city develop the Willets Point triangle area first over other areas because it is closer to the development they have already begun on the other side of Flushing Creek. Arguably, it might have a potentially greater synergistic effect. (For more on the perspective of Muss see the next section.)

Returning for a moment to the recent Yankee Stadium stories and what we noted about the Bloomberg administration’s misplaced focus when it comes to stadiums and their parking; it is quite possible that the administration can be somewhat oblivious to community goals when it focuses on delivering a substantial quantity of parking to meet the demands of stadium owners.

Some Relevant Perspective on the Alternatives

The subject of the Willets Point redevelopment came up just recently in a December 2, 2008 panel discussion, On the Waterfront: Finding the Balance for Development and Communities, sponsored by the Center for New York City Affairs and Milano The New School for Management and Urban Policy.

New York Needs Industrial Waterfront: Rethink Willets Point

Carl Biers, Education Director for International Longshoremen’s Association Local 1588, noted that some of the available wisdom being offered asserts the that the current national economic crisis has some of it roots in policies that subsidize housing and residential real estate at the expense of the “productive” sectors of the economy. Not disputing this, the panel discussed with general agreement the related theme that a balance is needed between industrial and other uses of the waterfront such as housing and recreation. Joshua Muss, President, Muss Development Company, which, as noted, is developing the project on the other side of the Flushing River and is a candidate developer for Willets Point, said that as a New York City housing developer he might prefer that all the New York harbor’s industrial uses be in New Jersey, but that he realized that couldn’t be the case and that some of the New York waterfront needed to be industrial.

When the panelists were asked for specific suggestions for what should be done differently on the waterfront Mr. Biers said he thought the Willets Point redevelopment should be rethought.

Relevant Thoughts from a Relevant Developer, Muss

Mr. Muss offered a number of other thoughts during the course of the evening that we found relevant to the Willets Point redevelopment. Early on he was asked about the effect of the financial crisis on ambitious waterfront development. “Ambitious has a way of being redefined,” he said. He said that the downturn in the economic cycle would have an effect on overall development, but that the effect would be more pronounced for waterfront development in part because environmental factors and things like ground water level and water tables came into play as well as the fact that properties were zoned for industrial use. He said that no developers were going to be putting projects into the ground in the near future. He said this was true unless they “had all the money in the world” because financing was not available. He said that developers would not be proceeding because they “are not dumb.” He pointed out, however, that development takes a very long time: 3 - 10 - 25 - 33 years and that this was a good time to “seek approvals.” He explained it was a good time to get the government officials’ attention. He said it was also a good time to take a “slow look” at development “without actually building.” He noted that the project on the Flushing River had taken him 28 years to get to it current point and that he had been working on another project for 33 years.

Mr. Muss also offered the following observation relative to convention centers. He said that 25 years ago he had worked up a plan that proposed to put a convention center in Sunnyside Yards in Queens “rather than at the edge of the city.” Earlier we noted the consideration that had been given to moving the Javits Center convention center in toto to Willets Point. From time to time consideration has been given to moving the Javits Center to the Sunnyside Yards location. If Javits is torn down, its Hudson River waterfront can be put to a higher and better use. Manhattan (See: Expansion of Javits Center May Shrink to a Renovation, by Charles V. Bagli, December 10, 2007.) While the suggestion of moving Javits to Sunnyside is not currently in fashion, such a new location would be about the same distance from LaGuardia as Willets Point. The location is also probably a more central-city location, while Willets Point is more “at the edge of the city.” Sunnyside is, however, father away from Kennedy International Airport.

From Mr. Muss’s remarks you might assume that he would agree with Mr. Biers that the Willets Point redevelopment should be rethought. Not so. Before the evening was out he gave his opinion, saying he thinks “Willets Point is so warranted” and observing that it could not have been done without government involvement.

EDC Official, Lannon: the City Needs Time If Wants To Avoid Making Mistakes

Whose perspective, Mr. Biers or Mr. Muss’s, should win the day? Should Willets Point be rethought? Another member of the panel, Venetia Lannon, a Senior V.P., Maritime Division, NYC Economic Development Corporation, offered some general guidance that could easily apply. Ms. Lannon said that the good news about development slowing was that there was an opportunity to “reexamine where we are.” She stated that there are problems when things are rushed, when there are questions about what the right answer is. In this regard she cited the IKEA built on the shores of Brooklyn. We previously wrote about the IKEA mistake to which Ms. Lannon was almost certainly referring:

Industrial Assets Decommissioned and Carelessly Sacrificed

We don’t want to sidetrack into the question of whether so much land associated with the industrial sector of the city’s economy should have been decommissioned. Certainly it was important to make a shift, but it is important to do these things intelligently and not reflexively. The elimination of a sorely needed graving dock (dry dock) in Red Hook to create an IKEA parking lot was a mistake. It eliminated high-paying jobs while replacing them with a similar number of much lower-paying jobs. If it was essential to have IKEA (with its parking lot), we could have had both IKEA and the graving dock. The city is now looking at spending a billion dollars to replace the sacrificed dry dock.
(For this and links to the background articles see: Saturday, October 25, 2008, More Discredit of Bloomberg as Qualified Financial Crisis Leader)

Several times when Ms. Lennon was speaking about setting a proper balance in waterfront usage, she was feistily interrupted the moderator, Greg David, Editorial Director, of Crain’s New York Business who told her with debatable jocularity that he did not think she was properly representing the Bloomberg administration’s point of view.

(Continue to Part IV)

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