By Julie Shapiro
The Lower Manhattan Development Corp. offered a rare peek into its finances this week, revealing an estimated $295 million pot of money that is not formally committed to any specific project.
The L.M.D.C. could wind up with even more money left over as other projects finish over the next few years, and the corporation is beginning to consider what to do with the extra cash, although it is suggesting the final number may not be as high as it looks.
“There are small amounts of money which are left, which can be swept up and, in theory, reallocated by the board,” said L.M.D.C. President David Emil.
Emil gave few other specifics and no timeline in his presentation to Community Board 1 Monday night. But based on Emil’s comments and documents on the L.M.D.C.’s Web site, it looks like the city-state agency still has about $1 billion in the bank.
Most of that money is earmarked for major projects underway — like $140 million for the city’s reconstruction of the East River Waterfront or $23 million for the construction of the Spruce Street School — and will almost definitely be spent. But some of this contractually obligated money — like the $10 million that would build a new home for the Drawing Center at an as-yet-undecided location — appears unlikely to be spent anytime soon, if ever.
“All of the funds have been allocated to something,” Emil said. “Some of those somethings are more detailed than others.”
And then there is the roughly $295 million that the L.M.D.C. board has never formally assigned to any project via a subrecipient agreement, though the L.M.D.C. has broad plans to spend all of it. Included in that money is $14 million that the L.M.D.C. set aside to pay for its future administrative costs. If the agency ceased operations quickly as Mayor Bloomberg wants, much of that money could immediately be spent on something else.
Bloomberg, who called the corporation a “patronage mill” in a Downtown Express interview last fall, has long been calling on Gov. Paterson to agree to shutter it and transfer its functions to the city and the Lower Manhattan Construction Command Center, a subsidiary. But Emil said a few weeks ago that he expects the L.M.D.C. to stay open to finish demolishing the Deutsche Bank building later this year and complete its financial oversight role before 2015. And on Wednesday morning, in a speech at the Downtown-Lower Manhattan Association, Paterson said the L.M.D.C. still has an important role to play.
“We are still aware that there’s more to do,” Paterson said. “Through the Lower Manhattan Development Corporation, we are bringing resources to the area.”
One of the most vocal advocates for the closure of the L.M.D.C. has been Julie Menin, chairperson of Community Board 1 and an L.M.D.C. board member. But now that it is clear that the L.M.D.C. has so much money left, Menin said it might be worth continuing the L.M.D.C. to ensure that the community has a voice in how the money is spent.
“Since we do have a seat at table, it may make sense to continue that,” Menin said after Monday’s meeting. Avi Schick, corporation chairperson, last month appointed Menin to a subcommittee to oversee a fund for community and cultural enhancements. Emil revealed Monday that the fund has $10.5 million, and he said Wednesday that the subcommittee hopes to “pull together enough money that will be meaningful.”
The L.M.D.C. also has about $30 million left in the $291 million housing fund that was mostly used for the residential grant program, which encouraged people to stay or move to Lower Manhattan after 9/11.
Menin said one of the biggest needs Downtown is a community center on the East Side. The leftover money could also go toward new school seats to ease overcrowding, she said.
At last month’s L.M.D.C. board meeting, Menin wanted to know what the plan was to sunset the agency. Emil said he would present budget documents revealing how the agency will wind down at the L.M.D.C.’s next board meeting, April 8.
After 9/11, the federal government charged a newly created group, the L.M.D.C., with rebuilding Lower Manhattan using $2.783 billion in federal funds. Menin, city officials and other community leaders have frequently asked for an accounting of how much money the L.M.D.C. really has spent, how much is committed, and how much is available for new projects.
Emil provided the first taste of that information at Monday night’s community board meeting, but he did not give C.B. 1 members the full data they wanted and would not release the presentation he prepared for the public meeting, saying some numbers may be slightly out of date.
“It doesn’t make any sense whatsoever,” Menin said afterward. “Why can’t we have a copy of it?”
Menin said L.M.D.C. board members have not received any more information about the corporation’s finances than the community board.
The L.M.D.C. also declined to provide a copy of their presentation to Downtown Express and declined to answer financial questions this week. Downtown Express has submitted a freedom of information request.
Emil’s presentation to the community board focused on the first $2 billion chunk of money the L.M.D.C. received from the federal government. Of that $2 billion, about $135 million has not been formally allocated to a specific project by the L.M.D.C. board, Emil said.
In addition to the $2 billion, the L.M.D.C. also received an additional $783 million from the federal government for utility repairs and compensation to firms that lost a large number of employees in the attack. Of that, about $159 million had not been formally allocated as of last September, according to the L.M.D.C.’s Web site.
In all, the L.M.D.C. has a total of about $295 million that has not been committed to a specific project via a subrecipient agreement. The actual figure of leftover money could go down, as previously uncertain projects come to fruition and require money, or it could go up, as projects that have been allocated money do not use it.
One example of a group that may not need its L.M.D.C. money is the Drawing Center. Emil told Downtown Express Wednesday that he had not heard from the Drawing Center in months. At the C.B. 1 meeting Monday, he said the L.M.D.C. would not wait forever for groups like the Drawing Center to spend their grants.
“There may come a time at which our board says, ‘Enough, we can’t wait anymore, we want to spend it on something else,’” Emil said.
The Drawing Center left the W.T.C. site plan in 2005 when former Gov. Pataki asked them for guarantees not to offend 9/11 family members with exhibits, and subsequently tried unsuccessfully to move to South Street Seaport with the L.M.D.C. money. The group did not return a call for comment.
Until recently, L.M.D.C. board members had not even considered spending the agency’s leftover money because they wanted to reserve it for the Deutsche Bank building, a project that is far behind schedule and over budget.
But after a recent $102 million settlement with the building’s prior insurers, Emil said he is confident that the L.M.D.C. has all the money it needs to finish the job. At the community board meeting on Monday, he revealed that the total cost to buy, clean and demolish the building would likely be $400 million, about $100 million higher than the most recently reported cost. The corporation believes it has overpaid Bovis Lend Lease for the cleanup and demolition and hopes to recover some of the money when the deconstruction is finished.
Community board members were pleased Monday night to get some information about the L.M.D.C.’s finances. Tom Goodkind, a C.B. 1 member and an accountant, had been asking the L.M.D.C. for numbers nearly every time they appeared before C.B. 1 in the past several years. The breakthrough apparently came when he asked the same question of the L.M.D.C.’s leaders at a meeting held by Assembly Speaker Sheldon Silver last Friday. Goodkind said that with Silver at the table, Emil and Schick promised to give the information to the community board on Monday.
Even after the L.M.D.C.’s presentation, Goodkind said it was “not at all” clear how much money the L.M.D.C. has left, but he is glad the L.M.D.C. has started releasing information.
“They’ve given us half of what we’ve been asking for the last five years,” Goodkind said after the meeting. “We’re extremely happy they’ve done this…. Their job is to be transparent.”
With reporting by Josh Rogers
