By Lincoln Anderson
One day after the Pier 40 Partnership publicly unveiled its feasibility study for a nonprofit, conservancy-run Pier 40, two of the fledgling organization’s leading members sat down with The Villager to explain their report in detail.
The study was first presented to the Pier 40 Working Group on Wed., Dec. 19.
A group of local parents, the Pier 40 Partnership members’ common denominator is that they all have children 11 or 12 years old who attend local schools and play sports on Pier 40, which spans 15 acres off W. Houston St. In an open-space-starved neighborhood, the pier’s large artificial-turf fields inside a protective courtyard quickly became a treasured resource for local families after being built only a few years ago.
“There’s not a lot of space for kids. I think that’s why the Pier 40 Partnership has embraced this so strongly,” said Rich Caccappolo, who, along with Chris McGinnis, presented the plan to The Villager at the office of Creative Commerce, Caccappolo’s investment company in Soho.
Caccappolo is the Greenwich Village Little League’s president. McGinnis, also an investor whose family has owned real estate in Harlem for about 85 years, is on the board of both G.V.L.L. and Downtown United Soccer Club.
Spurred by their concern about the potential impact Related Companies’ $626 million Cirque du Soleil plan would have on the pier, the Partnership formed after a May 3 hearing at P.S. 41 attended by 2,000 local parents and kids anxious about the pier’s future.
In mid-October, the Hudson River Trust agreed to give the new parents group till Dec. 15 to come up with a feasibility study for an alternative Pier 40 plan. The Partnership retained top planning firm HR&A Advisors, paying them $120,000 to crunch the numbers and find low-impact uses for the pier.
HR&A’s just-released report reveals that the pier needs far more repair work than previously estimated by the Trust. In addition, the report shows how private development and low-impact uses are incompatible on the pier. In short, the community wants a low-impact use at Pier 40, but developers like Related want high profit — at least 15 percent on their investment — which only comes from high-impact uses, the report states.
“Low-impact uses are not really high revenue generators. That was the challenge,” Caccappolo said. “Our conclusion is no private developer can make it work.”
Conservancy and bonds
Instead, HR&A and the Partnership hit upon a novel idea: To form a nonprofit conservancy for Pier 40 that would float municipal, tax-exempt I.D.A. (Industrial Development Authority) bonds at 5.5 percent, a very conservative rate.
“The I.D.A. financing is a beautiful structure for Hudson River Park,” stressed Caccappolo.
Under the Hudson River Park Act, the Trust itself is prohibited from taking on debt, which is why the nonprofit conservancy would be needed.
“It would be like the Central Park Conservancy,” Caccappolo said, though quickly adding, “That terms raises…” but not finishing the thought.
Caccappolo and McGinnis said they have no idea what Related and CampGroup/Urban Dove — the two respondents to the Trust’s request for proposals, or R.F.P., for developers for the pier that the Trust issued last year — are proposing to pay in annual rent for the pier. However, the Partnership would pay the minimum required, $5 million.
Unlike Related’s plan, the Pier 40 Partnership study does not recommend a major transformation of the pier. No circuses, movieplexes or music halls would be added. Rather, new construction would be at a minimum, keeping down costs.
The Partnership’s study proposes three main revenue generators: parking, an educational institution and a visual arts space. These uses would secure the tax-exempt bonds financing and cover the annual rent to the Trust.
“This is the solution,” Caccappolo said. “If you put a circus in there, that’s not tax-free funding.”
Parking on the pier would be increased from the current 2,150 spaces (2,000 long-term parking spots and 150 short-term spots) to 2,800 (2,500 long-term spots and 300 short-term spots). Better use of parking space would be made by adding stackers and valets.
“We like the parking and we think it’s a major driver of revenue,” said Caccappolo.
They propose a parking rate of $375 a month, including valet service. Right now, the pier offers rates of $330 to $365 a month “for the self-parked, leaky structure,” Caccappolo noted, referring to the porous roof over the mezzanine-level parking. Nearby parking rates are as high as $700, he claimed. The pier’s parking would bring in $13 million per year.
For the education component, which would be 100,000 square feet and rent for $4 million annually, the Partnership has been speaking to the city’s Department of Education about a high school, as well as The New School and New York University. They are ruling out elementary schools, though.
“We think of it as an older kids’ thing,” Caccappolo said. “We don’t want young kids crossing the highway or falling in the water. If the community wanted to do a middle school, we would be O.K. with it, too,” he said.
Strong school interest
Caccappolo said the Partnership’s Gary Ginsberg has been the point person in their efforts to lure a public school to the pier. Ginsberg — News Corporation’s vice president for investor relations and head of global marketing — is on the board of New Visions, a nonprofit group that helps the city build schools, on whose board Schools Chancellor Joel Klein also sits.
The Pier 40 school would likely have a special theme, perhaps sports — or even journalism — Caccappolo said.
The New School also is bullish on Pier 40, Caccappolo said.
“We have a letter from [New School President] Bob Kerrey saying that they would be very interested in about 150,000 square feet of indoor space for basketball or volleyball and studio space for Parsons,” he said.
Caccappolo said that, in an unusual move expressing The New School’s keen interest, Kerrey has indicated he would be willing to pay 30 years’ rent upfront, or about $120 million, which would fund about half of the Partnership’s initial costs of fixing up the pier.
Unlike N.Y.U., The New School has no indoor athletic facilities. Jane Crotty, a New School spokesperson, said Kerrey had spoken to the Partnership. She said the new building The New School plans at 14th St. and Fifth Ave. won’t have a gym per se, just a workout room with exercise machines.
Alicia Hurley, N.Y.U. associate vice president of government and community affairs, confirmed the Pier 40 Partnership had reached out to her to see if N.Y.U. has interest in their idea.
“This comes at a time when we are engaged in across-the-board planning,” Hurley said, “so we sat with them to hear their plans and were interested to learn that there might be a chance for the university to become involved. There are some clear challenges ahead as all interested parties contemplate Pier 40’s future, but the university is glad to be invited to the table to be a part of a community effort.”
The Partnership study also proposes a Visual Arts Market of 238,000 square feet, housing galleries and artists studios, with assumed revenue of $4.7 million per year. Given West Chelsea’s gallery scene and the fact that their studios would rent for below market-rate rent, they don’t foresee problems attracting galleries and artists, Caccappolo said. Though they’re calling it a Visual Arts Market, Caccappolo said he could see other types of arts there, such as dance, for example.
The pier’s annual total revenues from tenants would be $24 million. After expenses, $15 million would be left, which would cover the annual $5 million rent payment to the Trust, plus the rate of return on the I.D.A. tax-exempt bonds. Any “positive cash flow” above that amount would go to the Trust, Caccappolo said.
Fixing up the pier
But before the tenants come in, the pier would need an overhaul.
Pier 40 has 1.2 million square feet of enclosed space in its pier shed. The Partnership would refurbish this space — with electrical, plumbing and heating and cooling systems — to create a so-called basic “white box” for tenants. The tenants would then fix up the space however they like.
“For a studio, you might not need much more than that,” Caccappolo said of a basic “vanilla box” space.
HR&A estimates it would cost about $100 per square foot to fix up the pier shed’s interior and $26 million to improve the parking, totaling $130 million to get the pier’s revenue-generating superstructure into shape.
Meanwhile, HR&A determined that the pier needs up to $125 million in repairs to its substructure. For its part, Related Companies has said it would spend $30 million to repair the pier’s metal support pilings, and would rebuild the pier’s northern half as part of its plan. But the HR&A report says the piles need closer to $50 million worth of repair.
The pier piles are most decayed in what is known as the splash zone, McGinnis said, the part of the piles around the waterline. The piles above the splash zone and underwater are in good shape, said McGinnis. Within the next two years, the splash zone parts of the piles must be protectively wrapped, or the pier will be seriously compromised, he said. About one-third of the pier’s piles need immediate repair, according to the report.
The pier’s roof needs a $21 million fix, HR&A concluded. The debris that currently leaks from ceiling “stalagmites” on Pier 40’s mezzanine level causes “new chemical compounds” on the cars parked below, quipped McGinnis.
A surprise major expense for Pier 40’s infrastructure HR&A found would be $43.5 million for a seismic upgrade, or earthquake-proofing the pier.
Design improvements
While not doing a major redesign of the pier, the Partnership study proposes some modest structural modifications. A glass atrium would be inserted into the pier’s West St. wall to open up the pier visually to passing strollers and bikers. Caccappolo said he’s always disliked how the pier is walled off from the outside, preventing passersby from appreciating the activity going on inside the pier’s courtyard.
Similarly, the pier’s southwest corner would be opened up on the ground floor to create another view corridor in a space the Partnership is calling “The Green Room,” since it would be covered with artificial FieldTurf, like the courtyard field. To help fundraise about $2 million annually for the pier, about a dozen events would be held in The Green Room each year, such as, for example, an appreciation night for Greenwich Village Little League volunteers, Caccappolo offered.
Some of the ideas in HR&A’s report resulted from outreach, such as from a meeting with block association members last month convened by Assemblymember Deborah Glick, who wanted to make sure the Partnership was consulting sufficiently with the community.
The community likes the long walkway around the edges of the pier building — which is 800 feet long on each side — for jogging and strolling, Caccappolo said. The Partnership study, as a result, calls for widening the walkway from 18 feet to 33 feet by removing the exterior walls around the pier’s ground floor, leaving an overhang above half the expanded walkway’s width.
Community members also said they’d like tennis courts on the pier. Caccappolo said the Partnership thinks tennis bubbles might work on the pier’s northern and southern rooftops.
“We’ve had people who said they’d be interested in building a tennis facility,” he said.
In addition to a $130 million renovation of the pier’s interior space and parking space and $125 million worth of repairs to the pier’s piles and roof, other construction costs would bring the total investment in the pier to $280 million.
The lion’s share of funds to offset this investment would come in the form of $206 million in tax-exempt financing, plus $30 million that the Partnership has pledged it can raise privately from the community. The Pier 40 Conservancy would be able to accept this $30 million charitable donation.
Moving Forward
They calculate the pier’s annual operating cost would be $4.2 million. This figure would cover the $1 million payment to the parking operator, plus a salary for an executive director for the conservancy, attorneys and other staff, among other expenses.
Both Caccappolo and McGinnis, each a successful businessman, said they definitely don’t want to be executive director of a Pier 40 conservancy.
They say all the numbers in the HR&A study are conservative.
“This is a study. It’s not a proposal,” Caccappolo emphasized of the HR&A report, which was whipped together in just five weeks. “If you want us to create a proposal, we’ll do it.”
The Trust’s board of directors will meet Jan. 31 to decide whether to select either the Related plan or the competing “The People’s Pier” plan, or — the Partnership’s hope — neither.
“Related — the community would probably never let through,” McGinnis stated. “CampGroup — the Trust would probably never let through.” While the community fears the impact from Related’s plan in terms of traffic and how it would turn the pier into an entertainment zone, the Trust feels CampGroup/Urban Dove’s proposal is not financially viable.
Added Caccappolo, “What we’re saying to the Trust is, we’re offering the alternative that is the most likely to succeed. One way or another, we are the best chance — and if they don’t go with this, in two years, the pier will be in really bad shape.”
Assuming the Trust ends this current R.F.P. process without picking a Pier 40 developer, but is interested in the Partnership’s idea Caccappolo suggested that the Trust could then greenlight the Partnership to create a full-fledged proposal, plus a plan for the next year, for which he said they would work up a budget by Jan. 7. Cost is no obstacle for the high-powered parents group.
“If it’s a million dollars, it’s a million dollars,” Caccappolo said.
Based on this proposal, the Partnership’s thinking continues, the Trust would then issue a new R.F.P. targeting groups — which could represent nonprofit organizations or a conservancy — to be a master-leaseholder for the pier. The Trust would run the R.F.P. process and designate an organization to develop and operate the pier.
Meanwhile, the Partnership would continue to finance and help out the process, Caccappolo said. The Partnership would hire staff to launch the capital campaign to raise the $30 million, as it has pledged to do.
“We are willing to continue to help the Trust with this effort,” he said. “We want to continue in this role performing tasks such as raising money and working with the community and the Trust to come to a clear picture of the acceptable uses for a new R.F.P., paying for consultants to work on financing and legal issues, hiring staff to promote the pier to potential users as a location for the right kinds of uses, and getting the conservancy up and running — including hiring an executive director for the conservancy — while the Trust handles the administrative tasks of issuing the new R.F.P., in keeping with the uses the community and elected officials will have bought into.”
Trust’s response
In a statement released Mon., Dec. 17, Connie Fishman, the Trust’s president, said: “The Hudson River Park Trust received a copy of the Pier 40 Partnership report today and is now reviewing it. We appreciate the hard work that the Partnership undertook to prepare this report in a very short timeframe,” Fishman said. “The Trust’s board and staff will be evaluating it thoroughly, along with the two development proposals currently under consideration, in the weeks ahead.”
Another recent Pier 40 idea, to park some city garbage trucks on the pier to generate revenue, briefly generated a bit of buzz — some positive but mostly negative. Tobi Bergman, president of Pier Park & Playground Association, which runs youth sports programs on the pier, had expressed some initial support for the garbage truck idea as a way at least to keep Related off the pier, but has since drawn away from it.
‘Seize the moment’
Asked his thoughts this week on the Partnership’s new study, Bergman was enthusiastic.
“We have all learned that redevelopment of Pier 40 is a difficult problem,” he said. “And we are all fortunate that a small group of people has made an extraordinary offer to help find the best approach to moving forward in a way that provides sufficient revenue for the Trust without harming the park or the community. With prior buy-in from the community and elected officials, a new R.F.P. based on the HR&A report will produce better proposals than those now under consideration. This moment when everyone is ready to work together presents an opportunity that should not be missed.”
On the other hand, Bergman warned, “Selection of Related would likely be the start of a protracted political and legal battle with a long-term negative impact on the public perception of the Trust and the park project.”
