Friday, April 1, 2011

Highway Removery: Bloomberg Says “My Way Is the Highway,”- Private-Public Partnership Finally Bridging a Gulf

(The open scar of the BQE Bloomberg announced he will soon cover over via a newly announced private-public partnership.)

The Bloomberg administration just announced intentions to accelerate materialization of an intriguing part of Mayor Michael Bloomberg’s PlaNYC 2030, (which plan was announced during his second term) in order to bring about, before the completion of Bloomberg’s third term, the platforming and building over the Brooklyn Queens Expressway that separates Brooklyn’s Red Hook and Carroll Gardens. Nine new blocks of residential housing will be created. Perhaps even bigger news is that the Bloomberg administration has, with some hoopla, unveiled its intentions to implement the construction via an ambitious new form of private-public partnership, supported by charitable dollars, that it says will create a windfall for the public.

Return of the Prodigally Lost Value

Carroll Gardens and Red Hook were once just one neighborhood, formerly both together being considered the neighborhood of "Red Hook." It was only years after they were separated by Robert Moses' building of the deep, gashing trench of the BQE that now separates them that a new distinct name, Carroll Gardens, was found for what then felt like a separate neighborhood.

When the highway sliced through, property values on each side of it plummeted. The windfall of public benefit the Bloomberg administration says it is about to bring about is to reverse that precipitous decline that occurred in 1945. It is expected that by virtue of covering over the highway the value of properties on both sides of the highway will rise astronomically.

It has been noted that the Alfred Tredway White buildings alongside the BQE, built for a lower-income population (before the building of the BQE), were already being sold off as up-scale condominiums even before this announcement. Those buildings were busy going up in value before the BQE was built and went way down again in value for an extended period after Moses put through the road. As the Alfred Tredway White structures were already back to selling for nearly top dollar, local real estate brokers are projecting that these and other properties have nowhere to go but to skyrocket up stratospherically.

(Below: Alfred Tredway White buildings as they currently stand beside the trench and drawn as originally conceived before the trench sliced through.)

Value that Might Be Parked

Jumping with sharp-eyed alacrity into the unfolding events, State Senator Daniel Squadron has co-authored a proposal with Assemblywoman Joan Millman: They are urging that the envisioned windfall increase in values be captured with tax increment-financing to divert the resulting increased property taxes to pay expenses for the Brooklyn Bridge Park. Noting that the building over the BQE will be taking place just blocks away from the park, Squadron observed that the new structures being erected will greatly expand the population accessing and benefitting from the park every day. Squadron pointed out that, in all probability, the reason the Bloomberg administration now found it attractive to accelerate this proposed development was because of the world-class contributions the park would be making to neighborhood aesthetics and amenities.

Bloomberg immediately took issue with the Squadron/Millman proposal. Caught off guard when he was at a City Hall Press conference he was holding about raising money with Beyoncé for Haitian earthquake relief, Bloomberg said that people should be reminded that he gained exclusive control over the park as a result the recent deal he made with Governor David Paterson when Paterson was a beleaguered lame duck (albeit Bloomberg’s control is through an obfuscating tangle of authorities created by the state’s Empire State Development Corporation). Bloomberg said he didn’t want anything interfering with his plans to have development in the park pay for the park and criticized Squadron and Millman, saying that it should be inconceivable that property taxes from any valuable properties within city border should be diverted from the city’s general fund where they can be used to pay for police, fire and public (and privatized) charter schools. Contacted afterward for comment Squadron retorted with a combative query: “Isn’t that exactly what Bloomberg is doing with development in the park; creating lots of residential towers that will be off the official tax rolls and diverting monies from the city’s general fund?”

For many, the platforming over the BQE is considered long overdue. Although it was included as an element of the mayor’s 2030 plan, the idea had been urged long before that, including some serious discussion in 1980. Above is an image from architect Susannah Drake from her DLANDSTUDIO, whose proposals preceded the mayor’s adoption of them into his plan (the above envisioning is only a park- no buildings). Ms. Drake is also proposing that the BQE trench be covered in South Williamsburg. Ms. Drake, President of the New York Chapter of the American Society of Landscape Architects, is also responsible for spearheading the creation of sponge parks along the Gowanus Canal, that would clean up that waterway with the construction of planters and remediation basins alongside the canal — underneath pedestrian esplanades . (Video here.)

Density Needed

Not everyone in the community is in favor of the new housing the mayor just announced: Some only favor platforms without housing to connect the neighborhoods (perhaps interspersed with substantial open gaps to vent car exhaust- see image below). While it is agreed that either plan would create the envisioned substantial benefits of rising property values in the adjacent neighborhoods being reconnected, Robert K. Steel, the mayor’s Deputy Mayor For Economic Development, said that only the housing plan would pay for the platforming over the ditch and that would be only if the housing is built at a super high density. “Ideally,” said Mr. Steel, “we’d like to be building at a density that pays for about 297% of the platform's cost.” Mr. Steel emphasized that in determining the appropriate density at which to build over the ditch, external benefits (or detriment) to the surrounding neighborhood would have to remain out of consideration as part of the equation to justify whether to proceed. Mr. Steel said that, failing to proceed with the increased density housing proposal, the city would be back to its recently “retrenched” proposal (pun intended) where the city would just plant more nearby tress and perhaps hang a few planters along the infamous urban auto gorge.

(Architect Susannah Drake's image of an only partially covered highway.)

Mayor Bloomberg Leads Private-Public Partnership to Effect the New Development

In order for the public to get the proclaimed windfall without delay the Bloomberg administration has announced that Mayor Bloomberg will himself undertake to be in charge of the new development. Bloomberg made emphatically clear that this does not mean that he no longer believes in development of the city via the award of control over major swaths of the city to private developers in private-public partnerships. Quite the contrary, according to Bloomberg, who noted “this will be an outstanding example of exactly the kind of private-public partnership I believe in. You will see this because I will be leading by example.” Bloomberg explained that he will not be taking responsibility for the new development via the mayor’s office, which according to Bloomberg, “would involve working with a lot of civil servants.” Instead, he will be taking charge through Bloomberg, L.P. as Bloomberg, L.P. will be the private developer part of the private-public partnership.

Bloomberg noted that, among other things, this approach will take advantage of the efficiencies of organizational structures already in place. He noted that the mega-project would be headed up for Bloomberg L.P. by Daniel Doctoroff, Bloomberg’s former Deputy Director for Development who, after moving to Bloomberg L.P., has continued to work on other key city projects such as Moynihan Station and the Hudson Yards. Bloomberg and Doctoroff informed reporters that the waiver Doctoroff got from the city’s conflict of interest board would also apply to these activities so there was no need to check.

A Duck Tape Substitution

Bloomberg L.P. was not always the first choice to be the private developer side of the private-public partnership. The city originally leaned toward selection of Forest City Ratner. Seth Pinsky, President of the mayor’s New York City Economic Development Corporation said that a lot of people viewed the Ratner organization merely as a professional subsidy collection organization. “That underestimates Ratner,” said Mr. Pinsky, “by the time Ratner has completed the Atlantic Yards project it will have learned a lot about platform construction. The superior expertise garnered at taxpayer expense should not be discounted or wasted.” Nevertheless, Mr. Pinsky said the city had problems with the Ratner organization leading to the decision to switch to the expertise available if things are managed under Doctoroff and his people.

“First,” said Pinsky, “there are the Ridge Hill and Kruger indictment tapes concerning Forest City Ratner’s participation in bribing government officials. We are not sure all the tapes made have surfaced yet.” Secondly, said Pinsky, there is a question of good government: “When you are NOT taking bids it looks bad to keep handing out swaths of the city to the same real estate development firms. It looks like the mayor is playing favorites. It is better to take turns and hand out deals on a rotating basis.”

Pinsky said this would also provide better options in the future: “When the time comes to platform over and build upon 192 acres acres of Sunnyside Yards, with 18,000 and 35,000 (maybe even 75,000!) housing units on the site, it won’t be just the Ratner organization that has acquired this expertise on the taxpayer’s dime: We’‘ll be able to give the work to Bloomberg, L.P.!”

Notwithstanding the switch from Forest City Ratner, Daniel Doctoroff, the man now in charge of this development, says he is prepared to learn a few tricks from the Ratner organization, “in the best sense of that term,” said Doctoroff. “Ratner has figured out how to reduce the cost of high density housing by using modular construction. We will be doing the same thing. And there will be less criticism since we will then BOTH be doing it.”

What Will It Look Like?

Nevertheless, Doctoroff assured the press that this housing will be "beautiful." He said he had a surprise in store for everyone in terms of what it will look like. “The neighborhood is historic and low-rise townhouse and brownstone. Therefore we are planning to do something very retro that fits right in.” A great fan of Robert Moses, Doctoroff plans to resurrect a Moses design that was intended to fit in and replace a major segment of Brooklyn Heights (see below), “except that it will have to be a lot taller.” He says the building will have to be more than twice as tall to pay for the platforming plus desired profit. Though the building will run the entire nine blocks its design will still connect the neighborhood with street-level portholes through which people of average height will be able to pass.
(Above, of the left, the building with which Robert Moses planned to replace a significant portion of Brooklyn Heights. On the right, a scaled up version of that building Doctoroff hopes to emulate with modular construction. The new building would also be nine blocks long.)

In a concession to pleasing everyone, Doctoroff said that the design would not just be a “retro-simplicity” arrangement of the modular units. He also plans to spice things up with some ultra-modern flourishes. To this end, architectural artist Richard Serra, famous for his large-scale assemblies of sheet metal and particularly “Tilted Arc” (removed from the front of the Jacob Javits Federal Building), has agreed to contribute his minimalist talents.

In a recycling coup that Doctoroff says will help this building qualify as one the greenest Doctoroff will every construct, Serra will be recycling the steel from Tilted Arc in adornments to the building he plans to make. He says he also hopes by the shape and arrangement of those adornments to preserve some of the original sculpture’s essence: A metaphor for unfeeling, insensitive, bureaucratic government. And Serra says he hopes the adornments, by tilting up in an arc shape, will remind people of the sculpture’s original shape.

(Above, the structure before the Serra gew gaws. Below, the structure after the Serra gew gaws are added. Community groups are complaining that the rendering below deceptively uses tricks of perception and inaccurate photo-shopping to show the Serra additions minimizing- click to enlarge- the apparent scale of the project. Bloomberg said he will hold a Charrette for the community to get used to the scale of the new "Arc" building being billed as the "Char-Arc.")

Reduced Cost Through Charity

Bloomberg expects to reduce the overall cost of the project (and boost returns to investors on the equity side of the transaction) by directing into it charity funds that are under his control. To that end, funds Bloomberg collected through the Mayor's Fund to Advance the City for the victims of the recent Japanese disasters may be temporarily rerouted or “reutilized.” “In the end the Japanese will get these monies with interest,” said Bloomberg, “we will be setting the whole thing up with long-term zero-coupon capital appreciation bonds. Right now I consider it best to hold these monies in trust so that they can later be reserved to restore economic activity in the hardest hit areas needing assistance after radiation dies down. The half-lives of cesium and strontium mean that could be as much as 300 years and the bonds will need to long-term enough to cover that but, boy, will this capital be appreciated.”

Bloomberg became almost contemplative for a minute and then sighed, “you know, Ratner pulled a pretty mean one getting the Chinese to invest in his project interest free with that EB5 thing. At least, whatever we do, we’re paying an internal rate o finterest at a LIBOR rate set by Barclays.”

Bloomberg’s Equity Partner Easy to Find

As for investment on the equity side, Bloomberg had to look no further than Vornado, landlord for Bloomberg L.P.’s Bloomberg Tower, which among other things, houses the Charlie Rose show. Referring to the way that he was able to get approval for Vornado's 15 Penn Plaza, the proposed very fat skyscraper near Penn Station that will, because of its extra bulk, blot out view of the Empire State Building from New Jersey, Bloomberg said: “We’ve proved that we can work well together.” That much at least was confirmed by commentators such as former Parks Commissioner Henry Stern, who said of the set of variances obtained to build that Vornado building 56% bigger than permitted for any other building around the heavily congested Penn Station: “It is a top-down decision, clearly made at City Hall and not by the Planning Commission,” made possible by the tricks the Planning Commission then had to turn for the mayor.

Low- And Moderate-Income Tenants With Equal Access to Quality Amenities

In order to get tax exempt financing and other grants from the City’s Housing Development Corporation (and possibly the state agencies as well) the new residential housing will be 20% low-income for at least a while. Conscious of the conspicuously high level of amenities he intends to provide, Bloomberg is adamant that all the low- and moderate-income tenants will share in comparable amenities. Included in these amenities all tenants in the complex with cable TV will get “Bloomberg Business Television” for free (conveniently located on Channel 30), and each apartment will also come with a reduced-cost Bloomberg terminal (paid for by a bump in rent).

Noting that the low- and moderate-income units would be occupied by unfortunate pre-big job Wall Street interns, Bloomberg said, “these guys have just as much need for our business services as those who are going to be in the luxury units so they better start getting used to it.”

Endorsement From ACORN

Citing Bloomberg’s commitment to provide these low- and moderate-income units, ACORN’s Bertha Lewis enthusiastically endorsed the unveiled project and said she also felt vindicated by the plan to exclude from occupancy families whose income is in the 51% to 59% of Area Median Income band, noting that this was precisely what she had negotiated for the 22-acre Ratner mega-monopoly.

Inking Later This Week

Bloomberg’s deal is being inked later this week with Environmental Impact statements to follow “someday, eventually,” said Bloomberg. Bloomberg promised to use two sets of different colored "" and "" pens when signing in order to keep track of his two different roles in the transaction, both as mayor and head of Bloomberg, L.P. (and to avoid issuing any invalid pen “certificates” for the unprecedented transaction). He will likely even use a third colored "" pen set at the closing for supply of the charity funds.

Completion Date Specified

The contractual completion date for the project is July 04, 2013, so as to be (with a reasonable buffer) a date falling prior to the last day of Bloomberg’s third term, December 31, 2013. The contract, however, includes extensions exercisable at the developer’s option that could allow construction to be completed perhaps as late as April 1, 2073. AKRF, which is preparing the environmental impact statement, said that if the option to extend to this date were exercised it should be especially easy to deal with via a minor correction to the EIS since it would only involve an anagrammatic shuffling around of a few relatively meaningless digits (07/04/2013 to 04/01/2073). Lee Gold Standardstein, a spokesman for AKRF, quoted ESDC’s attorney Philip Karmel on this: “Construction is construction” adding “what does it matter if something is finished in 2013 or on April 1st WHATEVER? There will be parking available to those waiting.”

Bloomberg-Enhanced Accountability

Bloomberg said, unlike other private-public transactions, this one will provide citizens of New York with extra protection since he will be accountable on both sides of the transaction. Among other things Bloomberg said it gives the public the extra control in that if they are unhappy with what he is doing they will be able to “express their displeasure” by not voting for him for his fourth term or for president (against Obama), whichever he next decides to run for. “You can’t do that with a Forest City Ratner!” said Bloomberg.

(For historically related coverage see: Wednesday, April 1, 2009, City Hall’s Call: Why Forest City Ratner’s Gehry Beekman Tower Will Only Be 50% of Originally Planned Height- It’s Structural.)

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