by Sebastian Kahnert
Volume 20, Number 32 | The Newspaper of Lower Manhattan | December 21 – 27, 2007
"Support businesses and organizations that support Downtown Express"
CampGroup and Urban Dove is now considering adding a pedestrian bridge to make it safer to get to the pier.
Pier 40 group says non-profit operator is the only answer
Creating a non-profit conservancy with access to tax-free bonds is the only feasible way to save the Pier 40 fields from big developers, a new report concludes.
The Pier 40 Partnership study, released Dec. 19, estimates the pier is in need of at least $125 million worth of repairs — a figure far higher than the $30 million estimate of the Hudson River Park Trust or of the two development teams bidding to redevelop the pier.
One of the bidders, Related Companies, also unveiled traffic and other changes to its $625 million plan for an entertainment center Wednesday, although it did not eliminate any of the major uses that have raised community objections.
Chris McGinnis, a member of the Partnership, a high-powered parents group, said he pressed their engineering consultants to find possible Trust cost exaggerations, but he found just the opposite — that the pier’s repair needs were much higher than he feared.
“I said you have to tone it down, don’t accept the Trust’s assumptions,” McGinnis said at a Pier 40 Working Group meeting Wednesday morning. “They said the Trust is right. They’re telling you the truth. The pier needs an overhaul.”
Trust officials had previously warned that their estimates of the pier’s needs were based on engineering surveys done a few years ago and the actual costs could change. The two estimates are also not necessarily in complete contradiction since the Trust’s estimate is for repairs needed within the next three years, and the Partnership acknowledges that some of the repairs may not have to be done right away, or at all.
The report was prepared by HR&A Advisors, an economic consulting firm, which worked with Langan Engineering, Ehrenkrantz Eckstut & Kuhn Architects and Denis Molner Design, a parking consultant.
The Partnership’s $280 million plan (which the group prefers to call a study even though members occasionally slip and use the p-word) includes keeping the playing fields as is, expanding the park walkways and green space, increasing the parking to 2,800 spaces, adding a public school or university facility and an arts center with small, for-profit galleries.
Daniel Fuchs, an HR&A analyst, said the Dept. of Education is “very enthusiastic” about a 100,000-square-foot school, and that both New York University and the New School University have expressed interest in as much as 300,000 square feet.
A D.O.E. spokesperson said the city does not comment on school sites that may be under consideration, and N.Y.U. declined to comment. But Caroline Oyama, the New School’s spokesperson, confirmed that “we’ve had discussions and we are interested.”
The Partnership, which includes millionaire members, has said previously that it could raise as much as $30 million to fix the pier and the report says a Pier 40 conservancy would need $30 million in private donations. The bulk of the needed money, $206 million, would come from tax-exempt financing that would be done through the city. The Trust, which was created out of the old Hudson River Park Conservancy, is legally prevented from issuing bonds. The rest of the $280 million — $8.5 million in equity and $34 million in taxable loans — would come from a private developer interested in either the arts center or additional university space.
The group estimates it will cost about $130 million to build out the pier space once it is stabilized. Bob Townley, executive director of Manhattan Youth, which is currently building a recreation center in Tribeca, said the fit-out costs sounded too low. “I think you are looking at $100 a square foot,” he said. [$130 million] seems low.”
After the meeting, McGinnis referred questions on the Partnership report to his fellow member, Rich Caccappolo, who declined to comment Wednesday.
The Partnership estimates it will generate $24.5 million in gross revenue, with the most being $13 million from parking for an expanded 2,800 spaces, $4.8 million in rent for the non-school uses, and $4 million for the school. A source with one of the competing proposals suggested the parking revenue estimates — which are over double the current parking revenue — seemed to be too high. The Partnership estimates the conservancy would have $15.3 million a year in net operating income to pay off its debt after paying $4.2 million a year to operate the pier, and $5 million a year to the Trust to meet the agency’s minimum rent requirement.
The Partnership argues that a private developer interested in the whole pier needs a 15 percent return on a risky investment in a decaying pier. McGinnis, without naming the developing teams, said Related overcompensated for the risks with too many large revenue sources and Urban Dove and CampGroup is underestimating the pier’s cost needs.
Jai Nanda, Urban Dove’s founder, said the Partnership’s numbers sound way off. “If all of those numbers are correct, we’d have to go back and look at our financials…The Dept. of Buildings will judge it. Nobody knows for sure, but we’ve backed it up with some pretty good evidence from engineers.”
He said the Partnership’s pile repair estimate of $51 million sounds to be extremely high, particularly since Related only plans to spend $35 million to make the pier stable enough to withstand the weight of large entertainment venues, restaurants, retail and 2,800 parking spaces. Nanda and the Partnership agree that $43.5 million for a “seismic upgrade” to secure the pier in for an earthquake or other disaster may not be necessary. The Partnership, which acknowledges using cautious estimates, says repairing the roof could cost $21.5 million and the deck and fender repairs would be $8 million.
Urban Dove is a non-profit and Nanda said he spoke to the Partnership, the Trust and attorneys about using tax-free bonds. He thinks it’s a good last resort idea that Urban Dove could do if the skeptics prove to be right.
“People think we can’t do it. Well, give us a chance and if it turns out we can’t do it, then go another way,” Nanda said.
He said he’s confident his group can raise the $160 million needed to implement their plan to add day camps and indoor recreation to the pier’s existing uses. He said CampGroup and Urban Dove have provided the Trust with financial documents proving their case. If the Trust picks them on Jan. 31, the targeted selection date, Nanda said they would have six months to finalize the lease and if the effort failed, tax-free bonds could be pursued then.
Related acknowledged its own financial uncertainties Wednesday in a presentation to the Working Group, made up of members of Downtown community boards, waterfront advocates, and representatives of local elected officials. When one member asked Related’s Anthony Fioravanti, if the firm was committed to going forward with its current plan with a 30-year lease, Fioravanti said they were still not sure.
The Hudson River Park Act forbids leases longer than 30 years and Assemblymember Deborah Glick, whose district includes the pier, said in an interview several weeks ago, that she would do everything she could to block a change to the state law that would allow Related to get a 50-year lease.
Arthur Schwartz, chairperson of the Working Group, noted that a year after Related submitted its proposal, it does not have a plan that can comply with the law, yet the Partnership was able to put together what appears to be a credible plan in just five weeks.
He did acknowledge Related “improved the traffic flow issue,” but he and others at the meeting focused on the fact that the firm did not eliminate any of their revenue generators and was still looking to draw roughly 2.7 million visits to the pier a year.
Related did make several changes in line with what their plan’s critics asked for and they were more substantial than the “cosmetic” changes that Partnership members, who had met with Related, described in interviews last week.
Related increased the amount of interior space for community groups and art galleries by 440 percent (it identified many local groups it could accommodate); increased exterior community use space by 28 percent; increased parking space by 23 percent; while reducing the Cirque du Soleil space by 16 percent, the retail space by 17 percent and the restaurants’ space by 37 percent.
The amount of field space would increase by 82,500 square feet under the plan. In response to community concerns about Little League players being overwhelmed by the entertainment crowds, Related has separated the uses more. They have moved the entertainment lobbies mostly to the second floor and their presence on the first floor has been reduced substantially. Youth league players would have several ground floor entrances to the roof top fields and if parents wanted, these could be made much more secure than the current situation where any stranger can easily get up to the fields without being noticed, said Jay Kriegel, a Related executive.
Related proposes using the pier’s existing fenders to surround the field and grow ivy to protect it from the wind. Fioravanti, said they are open to using any number of materials the community may favor instead of ivy including metal or fabrics.
Related has changed its plan to extend Houston St. into the pier by allowing car traffic and relieve the pedestrian-car competition that was in its original proposal. Under one option, Related could move the street extension to the south allowing the roof top fields to expand more. The firm is also considering replacing the 3,000-seat music hall with a museum to reduce the nighttime crowds.
Kreigel, a Soho resident, said by knocking down the south end wall of the pier, it will open up great waterfront views of the Statue of Liberty and allow for plant life to make an industrial-looking parking garage look like it’s part of the park.
Before the Partnership formed a few months ago, the Working Group and the local community boards recommended the Trust reject both plans and start again. Schwartz said the group has to meet more and look closely at the three proposals before coming to a new decision. But he said in his view, Related did not change its plan nearly enough and that it will be hard to evaluate the Urban Dove plan unless the Trust turns over its financial statements. He said if both plans are rejected, the Trust would be free to adopt the Partnership’s approach, which Schwartz thinks is financially sound.
Connie Fishman, the Trust’s president, attended the Working Group meeting Wednesday and declined to comment on the plans. She did ask the Partnership a few questions including whether the Trust would be charged rent for its pier offices (no) and whether the group knew that a school was not “as of right” in the park as they asserted in their report.
“It doesn’t mean you can’t do it, just that you have to go through some process” to get it approved, she said.
The Partnership hopes to have its lengthy report in a downloadble form for the public soon and the Trust may soon post the latest changes to the two development plans on its site.
With reporting
