Island Magic

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A rendering of the proposed redesigned Pier 55. Heatherwick Studios

The decades-long saga of Hudson River Park recently took another twist when prominent philanthropists withdrew their promised gift of as much as $250 million to the park for a new facility citing prolonged litigation as making the project no longer viable (https://www.nytimes.com/2017/09/13/nyregion/diller-hudson-river-pier.html). The Park’s story began with a proposed sub-surface Westside highway topped by commercial development and a park. The plan was opposed by a historic lawsuit challenging the environmental impacts of the project (https://openjurist.org/732/f2d/253/sierra-club-v-united-states-army-corps-of-engineers-c). The most recent episode ended, at least in part as a result of litigation (involving some of the same individuals, half a century later) citing the process by which a proposed replacement for the decaying Pier 55 was approved.

Like many recent disputes about the development of public space, the issues arose in large part out of attempts to generate income to support the operation of a new park. Considering itself stretched for resources to manage its portfolio of existing properties, the New York City Department of Parks and Recreation (DPR) is loath to take on continuing responsibility for new public space without a dedicated income stream for maintenance and operations. Most of the largest recent park development projects have called for economic activity generated on parkland to pay for their operations (i.e., Brooklyn Bridge Park). The City’s inability/unwillingness to dedicate sufficient resources to maintain operate and program its parks is essentially a political problem of prioritization, and to some degree of imagination of what the benefit of a fully funded parks program might be like. The DPR budget is almost $500 million out of an $82 billion total city expense budget. Given the political forces involved, most people concerned with New York City’s public spaces take the existing level of funding more or less as a given. In the twenty-five years I have been involved in public space management in New York City I have never heard a serious discussion of a material increase in DPR operating funds. This leaves new facilities like the High Line, Governor’s Island and Hudson River Park (HRP) scraping around to find sufficient money to maintain their physical plant as well as for operations and programming.

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Hudson River Park pathway.

HRP faces particular challenges, because of the history and geography of the real estate occupied by the park. Much of it is comprised of piers and seawalls, which are unusually expensive to maintain. HRP owes its existence to the success of the original lawsuit challenging the proposed Westway highway/development/park project. The resolution of that litigation included the scrapping of the new highway, the improvement of the existing above ground roadway, and the creation of a riverside park from Tribeca to West 57th Street between the highway and the water, including the remaining piers, to be operated by an independent state authority, The Hudson River Park Trust. The billions of Federal dollars for the Westway project were redirected to mass transit.

The subsequent construction of the park was the result of years of advocacy by local elected officials for capital appropriations by the State (and to a lesser degree, the City) for the capital costs of the project, the development of which has also taken decades. About 70% of the planned worked is now complete, at a total cost to date of around $500 million. And then, of course, along came Hurricane Sandy causing extensive damage to the relatively new park infrastructure and more stress on the finances of the Trust.

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Map of the Hudson River Park

The plan for the park was for it to be self-sustaining based on concession income from various waterfront related activities in the park. In 2017 that amount is projected to be about $30 million. This has not been sufficient to fully fund the park’s capital, operating and programming plans. The leadership of the HRPT has been relentless and creative in attempting to secure other sources of funding for it. Recently, an agreement was reached to turn the value of development rights from a major underdeveloped site adjacent to the park over to it for its use. The Pier 55 plan was proposed to provide the Trust with sufficient funds to replace the decaying structure with a new high design facility (at no cost to HRPT) and that would include revenue-generating capacity from which the Trust would benefit.

The opponents to the plan for Pier 55 (pejoratively called “Diller Island” after one of the donors) had legal and related philosophical objections to the project. The legal case was primarily built around alleged failures in the process by which the plan for the project was approved. As a casual observer to the proposal, it seemed to spring forth fully formed from the Bloomberg Administration, the HRPT and the donors in the pages of the New York Times. Reportedly, what can only be termed a huge potential gift was the result of conversations among Barry Diller, Diane von Furstenberg (the donors) and Diana Taylor, the Chair of HRPT, who has the confidence of former Mayor Bloomberg, and Marilyn Wils, the President of the Trust, who came to it after a stint at Mayor Bloomberg’s Economic Development Corporation and many years as an effective member and high-profile chair of a local Community Board. Much work on the design and conception of the Pier seemed to have taken place before its public announcement and its being submitted for the usual tortuous process of environmental, planning and design review.

The philosophical objection of the City Club, which led the opposition to the proposal, was what they saw as the privatization of public space – with which they have a general problem – and what they saw as the limited and inadequate ability of “the public” to participate in and comment on the plan.

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Westway protesters

[It is important for me to note that the current “City Club” is a group of individuals who took over the corporate shell of a dormant but formerly robust civic organization, most of whom were members of the then recently disbanded Law Committee of the Municipal Arts Society, of which I was a long-time member. As I enjoyed my participation in the MAS’ committee, and considered the City Club organizers as valuable and well-informed contributors to civic life, and a couple of them as very close friends and professional colleagues, I regarded my initial participation as an easy decision to make. Michael Gruen, the moving force behind the Club is a dedicated, public-spirited person of substantial goodwill and a talented attorney.

But there came I time early in its young life when I left the group because the City Club came to view its purpose as using litigation as a tool to stop private development in publicly owned spaces (rather than a group to review and comment on legal issues affecting the public realm – with litigation as a last resort – which had been the charter of the MAS committee). As I told the leaders of the group when I resigned, my career has attempted to work toward building new high-quality public amenities – which in New York City today is much more difficult than putting up road blocks to them. Having spent years as a litigator, I regard courtroom battles as a wasteful and blunt instrument for shaping public policy – as I believe it proved to be in the case of the Pier 55 proposal. The failure of the public to receive the benefit of a handsome nine figure gift grew directly out of the City Club’s lawsuits against the project – however flawed the project’s gestation might have been.]

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Pier 55 current conditions

In any event, I have been convinced for years that there is a better way to provide a sustainable funding source for the Park (as well as for the High Line, and perhaps other new public spaces), and that is to tap into the tremendous increase in real property values to adjacent parcels created by the park, by annually assessing properties benefiting from its existence for it’s capital, programming and operational requirements. The Business Improvement District (BID) model that has been so successful in transforming Bryant Park could be easily transferable to the HRP if the relevant stakeholders could be brought together to approve such a structure.

At the beginning of the century I was included in a group convened by the Regional Plan Association to model a study of the impact of the HRP on adjacent property owners. Leading the group was Al Butzel who was the lead counsel in the original Westway litigation, later the head of the Friends of Hudson River Park (a non-governmental park advocacy group chaired by developer and property owner Douglas Durst [also a serious and thoughtful civic leader who was later reported to have bankrolled the Diller Island lawsuits] which was the sponsor of the study), and was involved in the resurrection of the City Club. The report was created by an RPA staff member, Nic Ronderos, who conducted what I believe to be the soundest study of the economic impact of public space improvement of which I am aware (and I would be glad to know of other such studies; as demonstrating the economic impact of public space improvement and BID services is a need that often arises and is generally unmet). The report can be found here: https://www.hudsonriverpark.org/assets/content/general/Property_Values_Full_Report.pdf. The purpose of the study was to make a case to local property owners of the benefits they had received from the park’s development, in order to persuade them, and the relevant public officials, of the value of the creation of a BID to fund the continued development and operation of the park.

Shortly after the study was issued, the High Line proposed a BID to support its work, which ran into considerable political opposition. As a result, the idea died, and reportedly, Mayor Bloomberg’s staff soured on the idea of using BIDs to support public spaces (although they did put in place a similar structure to support borrowing to create the public space now underway for the Hudson Yards project). The RPA study got no traction.

There continue to advocates who object to using funds from property owners and commercial activity to pay for park operations. Such efforts have been characterized as the “privatization” and “commercialization” of public assets. These same objections were raised during the revitalization of Bryant Park thirty years ago. But what do they actually mean, as a practical matter? In what way have Bryant Park or Central Park been made worse as a result of the private support they have received? As a result of their restoration using private funds they have been made more, rather than less, accessible to the broad public. The range of activities that take place in both parks have proved to be appealing to a wide swath of both residents and visitors. The not-for-profit entities that are responsible for the operation of Bryant and Central Parks have proved to be responsive both to the requirements of elected officials and of the local communities. So what exactly is the problem? I would argue that there isn’t one. While I agree that it would be better public policy if sufficient tax levy dollars were appropriated to DPR to provide the highest quality experience to park users – that isn’t likely to happen any time soon. In addition, highly used parks in dense neighborhoods require a higher level of resources than those outside the urban core. Given the political pressures on city council members and other local elected officials, it is difficult to allocate the higher level of funds required by highly used parks then is appropriated to less intensively used neighborhood parks. Therefore, it has proved practical to assess local property interests for support of downtown urban spaces.

If the High Line, for example, were to find itself unable to maintain the highest standards of care for it’s physical plant, hundreds of millions of dollars of investment in private development would be threatened. The new residential development in the Meatpacking District and West Chelsea depend to a large extent on the continued attractiveness of the High Line for their economic viability. It therefore is in the essential business interest of those property owners whose values are driven by the park, to make sure that its maintenance and operations are generously funded. A property-based assessment is an effective means towards that ends.

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The Hudson River Park bike path, with the West Side Highway on the left and the Hudson River on the right

I have suggested in my posts, anecdotally, that the economic impact of public space revitalization is order of magnitudes larger than any related investment in public space improvement. The RPA study is hard evidence of such an effect. It is adjacent property owners who reap the benefit of increased rents and values from the improvement of public space (and are most damaged by their decay). It makes good economic sense for them to contribute to its upkeep as they do in Bryant Park. Perhaps the time is now right, with the demise of the Diller/von Furstenberg gift, to again explore this idea. With the support of the HRPT, the Borough President and the local council members this is an idea that would not be technically difficult to implement. It would give the Trust the ability to indefinitely provide high quality maintenance and programming and to plan for its future based on a reliable source of funding.

3 thoughts on “Island Magic

  1. Albert Butzel

    Great piece, Andy. Needless to say, I agree 100 percent. Now all we have to do is find the magic wand.
    all my best
    Al

    Reply
  2. Andy Manshel

    Douglas Durst raised the issues below in a message to me:

    1. It is not true that “The plan for the park was for it to be self-sustaining based on concession income from various waterfront related activities in the park”. HRPT likes to make that claim to avoid going to the City and State for additional funds.
    The enabling legislation provides that “It is intended that to the extent practicable and:
    “consistent with the intent of subdivision (c) of this section, the costs of the operation and maintenance of the park be paid by revenues generated within the Hudson river park and that those revenues be used only for park purposes. Additional funding by the state and the city may be allocated as necessary to meet the costs of operating and maintaining the park.”

    2. As Mr. Diller said the main cause of his withdrawal was the increased costs. This amount grew from $35 to $250 million not as a result of the lawsuit, but more from a lack of oversight and control. The Times has reported that Mr. Diller and the litigants had agreed to a settlement that allowed the Pier to proceed as designed, but the agreement also required HRPT to agree to comply with the law and the original park plan in the future.

    3. Pier 55 would not have provided income, but would have added to costs.

    4. Friends of Hudson River Park funded an effort over 4 years to create a BID, with little help from HRPT, and was within in months of succeeding. The BID would have provided $8 million /year. The effort was abandoned when the Trust passed the zoning transfer legislation – as a result of the availability of funds from the transfer and with the prospect of tall buildings lining the waterfront.

    Reply
    1. Brendan Sexton

      Thanks for bringing these issues forward, and for reminding people of the great and sadly abandoned effort that was poured into creating an Improvement District to support the Park (funded largely by Douglas Durst), but I have a concern that the words “philanthropists withdrew their promised gift of as much as $250 million to the park” is over-interpreting what was promised or what was at risk here. In fact the cost estimates had climbed to over $250 million and were on their way higher (maybe much higher), but the promised gift was not pledged to follow this upward trend. The public –either the City or State–or the Park was going to absorb cost overruns. As just one interested citizen I’m sure I never heard what the last pledged gift was, but in public documents, it was less than $100 million. A generous start for sure and wonderful in itself, but not a cost-free gift to the public.
      The amount the Park or other public bodies would have to contribute to building this performance space outside Mr. Diller’s front door at IAC added to the City Club’s opposition. Even a procedure-violating (law-breaking?) deal would be hard to oppose if it were entirely a net benefit to the public. This project was not that.

      Reply

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