August has been a pretty slow news month in terms of our primary issue, the construction of a new Penn Station. No news on who will be taking over the construction of a New Penn Station. No news on the scope of the new plan.
But there’s been other, related news that’s important.
Paterson has announced a new head for the New York State Economic Development Corporation, the agency that currently oversees the Moynihan Station development, Marisa Lago. Lago is a global head of compliance at Citi Markets and Banking, to be president and chief executive; and he named Dennis M. Mullen, the chief executive of Greater Rochester Enterprise, an economic development company, to oversee the agency’s upstate operations. According to the Times,
The economic development corporation has been beset with geographic rivalries as downstate and upstate interests within the agency fought. Mr. Paterson said Friday that he hoped his nominees would bridge the longstanding divide between upstate and downstate interests.
“We’re one state,” he said. “What I would like to do is send the signal from Albany that we want the most efficient way of saving money and creating the revitalization of our upstate economy and the return to New York City as a financial capital with the right people. And I think that’s what we chose.”
There have been a lot of national stories about the overcrowding of AMTRAK and the potential for increased Federal Funding. Today's Boston Globe describes
AMTRAK’s struggle to expand Acela service, which they may accomplish through adding extra cars. According to the article, any expansion “would require more funding for Amtrak, a "political football" that has struggled for aid in President Bush's administration.”
Maybe all the attention Biden is getting for commuting on AMTRAK every day will help increase the funding. Yesterday, Eliot Brown, in the New York Observer, questioned whether the nation’s crumbling infrastructure will be a factor in the national presidential campaigns.
There's forces adding urgency to the infrastructure push: passenger rail is at or near capacity in much of the entire Northeast corridor, a condition exacerbated as high fuel prices push more people onto trains. And the gas tax (a flat-rate 18.4 cents per gallon) that funds highways and transit projects is taking in substantially less revenue as Americans cut back on their driving.
Mr. Obama supports a national federal infrastructure bank, where money would theoretically be divvied out in a methodical manner, as opposed to the earmark/pork-heavy process that characterizes many federally funded projects.
Mr. McCain is more silent on the issue, at least on his Web site, but last year's Minneapolis bridge collapse--which has become a national symbol for crumbling infrastructure--is sure to be an issue when the Republican National Convention begins across the river in St. Paul.
Read “Governor Names 2 to State’s Troubled Economic Development Agency” In the New York Times by Jeremy W. Peters.
Read “Infrastructure as Campaign Theme? Perhaps.” by Eliot Brown in the New York Observer.”
Read “Acela Trains May Expand to Meet Demand” in the Boston Globe.
Photo via flickr from Snowdog.
Atlantic Yards Report has a thorough recap of Assemblyman Richard Brodsky’s hearing on West Side development held last Friday. Brodsky, who chairs the Assembly Corporations, Authorities and Commissions Committee, used the opportunity to question Deputy Mayor for Economic Development Robert Lieber, ESDC’s acting president Avi Schick, MTA Chair Lee Sander and others about the public investment and current status of Hudson Yards, the 7 line extension, and, of course, Moynihan Station.
We’ve excerpted some Moynihan-related items below, but the entire recap is worth reading - especially an exchange about using eminent domain for MSG. The Observer has a brief article on Sander’s comments about bringing light rail to the West Side and WNYC focused on comments about expanding Amtrak service at Penn Station to obtain further federal funding for the Moynihan project (see our related posts on a federal proposal for NY/DC high speed rail).
Looking at Moynihan
When it came to the Moynihan Station project, which could involve a new rail station in the Farley Post Office, the relocation of Madison Square Garden, and new office towers and retail over the current Penn Station/MSG site, Brodsky had the same basic questions. “How do I know how the public investment should be made versus private--what’s the rule?” he asked.
You make what’s “necessary to maintain the infrastructure, to maintain the stature of the city” replied Avi Schick, acting president of the ESDC. “This is not a subsidy for economic development. It is maintaining and enhancing transportation.”
Brodsky asked the “value of 5.4 million in FAR.” (He was referring to Floor Area Ratio but meant, simply, development rights.)
It’s not a simple answer, Schick said, saying that the working number is $125/square foot--the figure Levin later disputed.
Brodsky again asked about the appropriate relationship between public and private investment.
“We take into account the nature of the project,” Schick replied gnomically.
Brodsky acknowledged he was facing a formidable rhetorical foe. “I’m going to get you, Mr. Schick, but it’s going to take a bit longer,” he said playfully.
(At the close of the hearing, he offered public thanks to Schick for service to the state, suggesting that this might have been Schick’s last public hearing. Schick is leaving in September, so that suggests that, at the least, Brodsky’s not planning to hold an Atlantic Yards hearing by September.)
Brodsky brought up the apparent effort by Madison Square Garden to get government to advance the cost of building an arena.
“To my understanding, it’s not for the Garden, it’s for the [Moynihan Station] project,” Schick said.
Has the Garden asked for such support, Brodsky asked.
No, replied Schick.
Brodsky amended his question: Has the joint venture--involving Related Companies and Vornado Realty Trust--asked for such funding.
Yes, replied Schick.
Lieber added the entire financing plan was under discussion.
In closing the hearing, Brodsky said the general question of whether we’re subsidizing projects at an appropriate level still remains. Still, he said he appreciated the government officials’ willingness to answer questions at a public forum, calling it an important part of the governmental process.
“I hope we can move forward on these [West Side] projects,” he said. “I fear we’re in more trouble than we’re letting on.” (He noted that it was news to him that the hearing brought out the city’s commitment to spend up to $3.5 billion on the #7 line, given that he'd previously criticized the city for committing to only $2.1 billion.) He said he was recessing rather than closing the hearing, given that he hoped Port Authority representatives would testify as well.
Does the legislature have any power, he was asked after the hearing. While it may not have direct oversight of such project, he said, in the long run the legislature has the power to pass laws restricting certain actions.
Again he criticized governance mechanisms to manage projects that bypass democracy. "What we've structured is a set of governance mechanisms that eliminate democratic institutions," he said. "And the net result is that anonymous people.... this is a set of Soviet-style bureaucracies that are acting without any public accountability, even when they’re right. They would much rather discuss whether they're right or wrong.... The reason we're in this problem with these projects is that the governance is secretive and out of touch, and we don't have enough money."
Doesn't Brodsky favor a new authority, however, to oversee the Hudson Yards project?
"A foolish consistency is the hobgoblin of little minds," riposted Brodsky, never at a loss for words. "The answer is, right now, I'm wrestling with a series of emergencies and the fact of the matter is that the Hudson Yards deal does not represent a thought-out economic development strategy or priority for what the city and the region need. In defense of that, we're scrambling for ways of gaining some control. It's not necessarily intellectually consistent."
"Having said that," he continued, "what today's hearing was about was bringing out into public view the realities of decisions, like on Moynihan, like, for example, the Garden is now seeking public monies." (He said he'd seen documents that have not been made public.)
"The Dolans have every right to seek public support," he said. "The public ought to deal with it intelligently. That's what this is about. This is about returning these things to the control of public agencies."
Agencies, perhaps, but not--as per his comments--public authorities.
Assemblyman Richard L. Brodsky plans to hold a hearing on Friday regarding West Side projects. During last Tuesday’s MAS program: “Moynihan Station: What Needs to Happen Next,” Brodsky described the plans for the West Side as a “stadium vision without a stadium” and called the decision-making process “bizarre and un-American.” (The Atlantic Yards Report has a recap here)
We will have more on last week’s panel, including several videos, soon.
In other news, on Sunday Charles Bagli reported on the state of ESDC: “For more than a year, the state’s main economic development agency, the Empire State Development Corporation, has been in disarray, plagued by turf battles, poor management and the political collapse of Gov. Eliot Spitzer, business leaders and state officials say.”
Now with the economy slowing, credit markets tightening and tax revenues shrinking, the agency must make some hard decisions about its priorities. But at this important juncture, it remains rudderless.
As for who will take over the agency, the list of candidates is said to include Alan H. Fishman, the former chief executive of Independence Community Bank; John Kanas, the former chief executive of North Fork Bank; Mark A. Willis, an executive vice president at JPMorgan Chase; and Sharon L. Greenberger, president of the School Construction Authority. A nomination is expected in June.
In today’s Observer, Eliot Brown reports that Governor Paterson “faces a host of uncertain economic development initiatives” in the wake of the Spitzer and Foye departures – and “eyes are turning to the Moynihan Station project above others.”
Avi Schick, the Chief Operating Officer of ESDC and former prosecutor in Spitzer’s AG office, has been named interim CEO of the agency. He is said to be friendly with Assembly Speaker Sheldon Silver and Governor Paterson’s relationship with Rep. Charles Rangel may help secure federal funding for the project.
Still, Brown thinks “inaction in coming weeks could deal irreparable injury to the projects, especially Moynihan Station, as Mr. Paterson settles into his role and the ESDC goes without a permanent leader.” Assemblyman Richard Brodsky said, “The level of uncertainty on both private and public sides is at unprecedented levels.”
For 14 months, Messrs. Spitzer and Foye had been attempting to lift the project off the ground amid a heavy load of government agencies and complex dealings with landowners, and had seen little concrete progress as they tried to round up between $2 and $3 billion in funding commitments. The clock was ticking, as Madison Square Garden, anxious to shed its second-oldest-arena-in-the-NBA status, indicated it was strongly considering a renovation of the existing facility, a move that would effectively cripple the plans for Penn Station and most of the surrounding development.
Now Mr. Paterson, who has signaled his support for Moynihan Station, faces many of the same challenges as the prior administration, and he will tackle them just as he takes on every other big issue in state government. For the next two weeks, the governor is likely to be spending much of his energy hashing out a budget with the Legislature as the search starts for a new downstate ESDC chairman.
“Without Spitzer there and his sponsorship, it does create a void, and we’d like to see the state continue to maintain a leadership role as it relates to shepherding that project through to fruition,” said Robert Lieber, the city’s deputy mayor for economic development.
While no agreement was on the table and financing was far from secured, Mr. Lieber said he believes the basic elements surrounding Moynihan Station have been advancing.
“We’ve made a lot of progress around the design and a lot of progress around the budget,” he said. “It’s still an incredibly complicated project—it’s going to take funding and it’s going to take commitments from the state and the feds, and having the governor’s support is going to be helpful.”
Advocates of the project also point to Mr. Paterson’s long history with Representative Charles Rangel, who is considered a key figure in obtaining hundreds of millions in federal funding desired for Moynihan.
The Observer is reporting that ESDC Downstate Chairman Patrick Foye – the state’s point person for Moynihan Station - has resigned.
ESDC Chairman Patrick Foye has announced that he will resign from his post as Chairman of the Empire State Development Corporation and return to the private sector. Chairman Foye joined the Spitzer Administration in 2007. As he noted in his resignation letter: "Given Governor Spitzer’s resignation and my belief that you deserve to work with a team of your choosing, I have determined that it is timely for me to resign and return to the private sector.” Mr. Foye will continue to work at ESDC to ensure an orderly transition process.
Yesterday, ESDC chair Patrick Foye told the State Assembly’s Committee on Corporations, Authorities, and Commissions that the state is running behind on public funding for Moynihan Station. According to a story in The New York Sun:
The largest commitments to date have come from the project developers, the Related Companies and Vornado Realty Trust, who have committed a combined $550 million to the project, according to Mr. Foye. The developers could reap profits from surrounding development, as the project agreement allows them to use an additional 7.5 million square feet of air rights nearby, the equivalent of more than two Empire State Buildings. In 2006, the chairman of Vornado, Steven Roth, said the project could create more than $1 billion in new value on his properties in the area, where the firm has significant holdings.
Mr. Foye said the state and city have committed $300 million, leaving a gap of slightly more than $1 billion.
Mr. Foye said the funding gap could be bridged through increased contributions from the developers — to the tune of $100 million — and through a request for federal funds.
"We believe that the city and state can make a case to the developers that they contribute more than the 550 that has been committed," Mr. Foye said, adding, "A project of this significance is deserving of federal aid."
It also appears that the state could be seeking an equity sharing agreement with the developers similar to that being proposed by the Metropolitan Transportation Authority in its bid to sell and develop the West Side rail yards.
The New York Post has a similar story.