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As Trade Center Plans Falter, City Could Have a Sense of Deja Vu


Photo (cc) StrahlemannBE

Once again redevelopment of the World Trade Center site is looking more like an epic struggle in a Greek tragedy. Even those characters who may be aware of their fate are locked into the logic of the post-9/11 hubris and are forced to play along as the saga reaches its ultimate consequences. Mayor Michael Bloomberg’s recent attempt to fix things could have been the miraculous deus ex machina of Greek tragedy, in which gods drop onto the stage at the end to avert tragedy and make a happy ending. But that didn’t happen and now Gov. David Paterson has volunteered for the rescue mission.

The latest turn in the drama suggests that it won’t be over any time soon. After the breakdown of negotiations with the Port Authority of New York and New Jersey, developer Larry Silverstein called for arbitration to settle a dispute over financing. Silverstein, the major leaseholder, wants $2.6 billion in loan guarantees from the authority to build two towers that it is estimated will cost $4.2 billion to build. The authority says it will guarantee $1.2 billion for one of the towers, but only if Silverstein raises $625 million privately.

Silverstein blames the authority for the financial deficit because it has fallen behind schedule in construction of the transit hub and the Vehicle Security Center on the site. For its part, the Port Authority says that it would be too risky to put so much money behind the construction of such a huge amount of new office space in the current market, where private lenders have withdrawn.

So while both public and private sectors are at an impasse, the press and public stand on the sidelines witnessing what may well be the second disaster at Ground Zero -- not just the failure to rebuild but the looming possibility that the whole plan will never be implemented and New York will wind up with a new set of twin towers on the site that will create for lower Manhattan many of the same problems that the World Trade Center once did.

Maybe it is time to go back to the drawing board, reconsider the original plan, buy out the private parties and start again by asking the question what’s best for both New York and world peace, as many civic groups did after 9/11.

The Failed Plan for Ground Zero

From the start, the logic of the World Trade Center plan was to put back on the site most of the 11 million square feet of office space that was lost on 9/11. After eight years of planning, disputes over insurance money and financing, battles among architects, and a regular drumbeat of assurances from the protagonists that things are moving forward, the market for office space has caved in. Crain’s reports a 44 percent drop in rents for Manhattan office space in the first half of 2009. Projects already in the ground face a troubled market and revenue shortfalls.

But the current market is not the only problem. The way the plan was devised has exacerbated the situation.

Short-term planning was in charge right from the beginning. "Rebuild the tower" was the rallying cry of Silverstein, who owned the largest long-term lease on the site, and it was raised to patriotic heights by then-Gov. George Pataki, with support from the Real Estate Board of New York. Despite reservations, the city’s new mayor, Michael Bloomberg, went along with that goal.

An initial burst of civic interest, discussion and debate following 9/11 produced many proposal for innovative alternative development of the site. In response, Pataki moved swiftly to approve a slightly scaled-down version of an office park with some 10 million square feet of office space. The international design competition managed by the Pataki-controlled Lower Manhattan Development Corp. was all about how to make it look good, with a memorial and cultural center thrown in to assuage the demands of the victims’ families to preserve the site as a memorial and the desire of the local neighborhood to make it a mixed-use development.

The reaction of architectural critic Ada Louise Huxtable to the first round of plans for Ground Zero was prophetic. She said they were dedicated to "the restoration of all the commercial real estate by dumping it back in the same place in a slightly different form." She concluded, "This is dĂ©jĂ  vu all over again for those who remember the urban renewal destruction of lower Manhattan in the 1960s.”

Back then, urban planners, architects, office workers and local residents objected to plan for the original Twin Towers because of the way the project was separated from everything else in lower Manhattan by its vast, barren and wind-swept plazas. While the latest design for the site features signature buildings by famous architects including Norman Foster and Richard Rogers, the recent collapse of the real estate market suggests that for the foreseeable future only two of them -- at most -- will be built.

The Revenge of the Twin Towers?

Only two towers? Are we looking at an historic repeat of the original Twin Towers? And the new buildings, with anti-terrorist design features including monstrous bases encased in steel and titanium, will make the pre-9/11 versions look like pastoral wonders.

With the rest of the master plan for the site postponed indefinitely, the towers could again be surrounded by vast empty spaces or, at best, a couple of lonely memorial sites and a small cultural center. And the office buildings could have lots of empty space. The original Twin Towers, which opened in 1973, had so many vacancies that public offices were brought in to fill them up. No wonder the Port Authority doesn’t want to subsidize Silverstein up front.

So after eight years of wrangling over exactly how to dump the office space back on the site, this may be a good time to stop and go back to the drawing board. Maybe the critics were right in the first place. Perhaps it would be better to look at the site as an opportunity to express the diversity of interests and needs of New Yorkers. Since most victims of the attacks were not New Yorkers and 9/11 had repercussions far beyond Ground Zero, the focus might appropriately move beyond those who happen to own the land. Maybe New York could learn from the leading examples of rebuilding on sites destroyed during war, like Hiroshima, Japan – a city that dedicated its plan to the cause of global peace and is today a destination for visitors from around the world.

Tom Angotti is Professor of Urban Affairs and Planning at Hunter College, City University of NY, editor of Progressive Planning Magazine, and a member of the Task Force on Community-based Planning.

Unlocking the Apartment 'Warehouse'


Photo by Joel Cook
Housing advocates and East Harlem residents rallied March 17 outside a vacant building on Madison Avenue. The action was meant to bring attention to warehoused property that could be used for housing, and to push for the City Council to adopt legislation to combat vacant property.

On a rainy June evening in the office of Rev. Billy Talen's mayoral campaign a group of New York activists, part of the Housing Not Warehousing coalition, discussed how to find housing for people who need it.

"What's the quickest way to get low-income people housing?" asked Rob Robinson, a housing organizer with Picture the Homeless, a grassroots group run by homeless and formerly homeless people.

Frank Morales, a housing activist, suggested direct action. Others agreed, saying they should take over vacant buildings. That is hardly surprising coming from a group who has taken "they say gentrify -- we say occupy" as a kind of slogan.

City lawmakers, though, are developing less confrontational ways to tackle the problem of vacant, or warehoused, property that could be used for affordable housing. The Housing Not Warehousing coalition, which consists of 30 organizations ranging from faith groups to anti-gentrification activists to public housing advocates, says that the legislation could be a major step in securing and sustaining affordable housing in the city.

Unused Space

In 2006, in tandem with Manhattan Borough President Scott Stringer, Picture the Homeless conducted a survey of vacant property in Manhattan, and found that 24,000 apartments could come out of the vacant buildings and lots they canvassed. The report noted that while the count only covered Manhattan, "highly visible clusters of boarded-up buildings in neighborhoods exist throughout the five boroughs." Picture the Homeless said that the vacant property could house the entire homeless population of New York City.

The vacant buildings found in Manhattan took different forms, the report explains. In wealthier neighborhoods, the exterior of vacant buildings is usually maintained, while in neighborhoods such as Harlem or the Lower East Side, vacant buildings tend to look dilapidated.

Why Warehouse?

Landlords keep property vacant for a variety of reasons, according to Frank Ricci, director of governmental affairs for the Rent Stabilization Association, a pro-landlord group.

Ricci said many buildings remain vacant because the property is tied up in an estate or the landlord might think that using the property would not be profitable. Other reasons include structural problems with buildings, or property owners who tire of managing, Ricci said.

Mario Mazzoni, an organizer with the Metropolitan Council on Housing, a tenants' rights group and member of the Housing Not Warehousing Coalition, sees another factor. According to Mazzoni, gentrification is the main motivator for landlords to warehouse buildings.

"Warehousing today is all about gentrification. That's all it’s about," he said. "If you're holding on to a building, paying and maintaining the cost of taxes, sitting on an investment you're not profiting from, it's for a reason, and it's because you plan on making more money in the future."

For decades, vacant property above 110th St. in Manhattan, where there is a high concentration of warehoused property, was taxed at a lower rate than properties elsewhere in Manhattan. That lower tax rate made it less costly for landlords to keep the vacant property. A bill proposed by state Sen. Jose Serrano and Assemblymember Herman Farrell Jr. that equalized the tax structure passed in June 2008 and took effect at the beginning of this year.

Legislative Solutions

The Bloomberg administration and City Council Speaker Christine Quinn have recently announced the Housing Asset Renewal Program, an initiative to turn vacant or stagnant condominiums into affordable housing. Other city legislators are looking for solutions to convert warehoused property into housing for low-income and homeless New Yorkers.

Councilmember Tony Avella, a Queens Democrat running for mayor, is working on a bill aimed at stopping landlords from keeping vacant property off the market.

Landlords "want to warehouse to [assemble] whole blocks for development," said Avella, a frequent critic of the real estate industry. "They don't want to be regulated. But they have to be, because if we're ever going to change the housing situation in this city, we have to regulate the real estate industry."

The legislation championed by Avella, currently in draft form, would empower the city Department of Housing Preservation and Development to fine owners who keep buildings empty and would create a fund to "provide capital for the rehabilitation of distressed vacant units." Half of the rental homes that come on the market as a result of this legislation would be set aside for homeless people.

The bill has not yet been introduced in the City Council, and, according to Avella's legislative counsel, has encountered potential legal problems raised by council staff. Avella's counsel said that these barriers may include the 1971 Urstadt Law, which prevents the city from enacting rent laws stronger than New York state's, and a 1989 decision by the New York Court of Appeals that struck down a City Council law that imposed a moratorium on the conversion or demolition of Single Room Occupancy hotels. According to the New York Times, the court ruled that the law was unconstitutional because it "deprived owners of the right to determine how their property would be used."

Avella plans to continue to work on the legislation and to introduce it as soon as possible to move the discussion forward.

Councilwoman Melissa Mark-Viverito, who represents East Harlem, Manhattan Valley and parts of Mott Haven in the Bronx, is working on a companion bill focusing on city-owned vacant buildings.

The Mark-Viverito bill would mandate a citywide census count of vacant property. In addition, Mark-Viverito indicated that, as part of her bill, city-owned apartments that become available would, in at least some cases, be set aside for low-income people.

Since Mark-Viverito's bill targets city-owned property, it has a better chance of passing than Avella's bill. The city, however, owns only 7 percent of the total vacant property stock, according to the Picture the Homeless survey. City-owned housing has dwindled significantly since the late 1970s.

Despite the relatively small amount of property involved, Mazzoni said, "It's strategically smart at this point to focus on city owned property. There's a great deal of ability to influence what the city does with property that it is controlling."

Mark-Viverito's bill "is a step in the right direction," Avella said. "Obviously, we need to do a lot more, but even if we take a baby step at this point, it's better than nothing."

Winning Passage

Andrew Doba, a spokesperson for City Council Speaker Christine Quinn, did not say whether Quinn would support either bill. "Affordable housing is a constant challenge in our city," Doba wrote in an email. "Warehousing is a complicated problem, and the Council is reviewing what can be done to ensure that decent and affordable housing is available to all New Yorkers."

At a meeting in April between Quinn, Mark-Viverito and members of Picture the Homeless, video provided by Picture the Homeless shows Quinn saying, "My goal is to get to a piece of legislation which Melissa [Mark-Viverito] will let me co-sponsor. ... And if I put my name on a bill, I'll do everything to move it. But I'm not going to put my name on it until I know that we can do it legally."

If the arduous legislative process does not produce anything, Robinson says the Housing Not Warehousing Coalition is prepared to take matters into its own hands by using direct action and civil disobedience.

During a period of economic distress, "the time is good for this type of thing to happen, but we really have to seize the moment," said Robinson.

Gold from the Faucet


Photo (cc) Shannon K

On the edge of Newtown Creek, which separates Brooklyn and Queens, eight giant egg shaped structures emit a blue glow into the night. But the complex is more than an architectural experiment. It is a wastewater treatment plant that extracts water from the sludge treated there and, as a result, helps improve the quality of surrounding waterways.

The plant's upgrade, already the largest wastewater treatment plant in the state, is one of the city's biggest long-term infrastructure projects ever. Although the federal and state governments ordered the upgrade, its expected final price tag of $4.8 billion will be almost entirely funded by the city.

To pay for projects like this as well as other components of a water system that delivers 1 billion gallons of drinking water and processes 1.3 billion gallons of wastewater daily, New Yorkers are charged for water.

Costs for that system are rising as revenue declines, so the price of water is likely about to go up once again. The Water Board will vote on a 14 percent rate hike on Friday. If approved -- as is all but certain -- the new rate will go into effect July 1. Together with past increases, the latest hike means the cost of water in the city will be 60 percent higher than it was four years ago. More increases are also expected.

But elected officials and activists argue that the water rate hike isn't fair and that the Water Board, which sets those rates, is in need of reform. They say the board could spend its money more efficiently. Furthermore, its efforts at recouping bills from those who have not paid have been condemned as anti-consumer by some. The board itself is also lambasted as insular and too close to the mayor.

"These water rate hikes have amounted to nothing more than a backdoor property tax increase," said Councilmember and comptroller candidate David Weprin.

The Water Board

The state government created the Water Board as a publicly owned, financially independent utility in 1984 when the city was still recovering from the 1970s fiscal crisis. "During the fiscal crisis, the State Legislature didn't want a utility as important as water to be subject to political pressures," explains Don Capoccia, a board member.

The board sets rates to support the system. It also creates rules and regulations regarding rate payments and access to water meters on private property. The board's seven members are appointed by the mayor for two-year terms. Rather than being financed by bonds backed by general tax revenues, the water system is funded mostly through the charges it sets on water usage.

While the board is supposed to be independent, critics charge it is accountable only to the mayor. "It's a sham. There's no independence," said Councilmember James Gennaro, chairman of the council's Environmental Protection Committee. "They get all the information they use to make their decisions from the mayor's office."

Last year, Jim Tripp, the board's chair at the time, was reportedly forced out because Mayor Michael Bloomberg viewed him as too independent.

The Rate Increase

A 14 percent increase in the water rate would translate roughly into an extra $100 per household annually. The board expects to raise an extra $330 million from the higher rates and new proposals to limit late payments.

The board argues that the rate increase is needed due to increasing costs and declining revenues. After a spate of construction, expansion and renovation -- most of it mandated -- the Water Board is now paying off bonds issued to pay for it all. The costs associated with the mandated projects are the largest driver of water system costs for this year and the next. Operating expenses -- such as electricity and chemicals to treat sewage, as well as pensions -- have also grown considerably. (See Gotham Gazette's features on the water and sewer systems.)

Added to all this, water consumption has dropped an "unprecedented" 6 percent, which the board blames on the economy, so less money is coming in. To make up for that, the board is raising rates and so, some say, penalizing people for conserving.

"Revenue has fallen in this recession because people are using less water and because residents are struggling to pay their bills as it is," said Councilmember Vincent Gentile. "I would suggest that raising rates in reaction to residents' proven financial hardship is not just nonsensical and insensitive. It's cruel."

Paying the Rent

Elected officials, activists and candidates contend the board could find other ways to solve its financial problems.

The biggest issue, some argue, is the rent paid to the city by the board for the use of its water infrastructure. Once debt service becomes large enough -- as it did starting in 2005 -- the Water Board pays the city rent equal to 15 percent of the money spent repaying debts.

This year, the rental payment – as it is called - was $160 million. Next year it is estimated to be $198 million. The idea is that the payment helps shore up the rating of the bonds used to finance the system's capital projects. The rent money goes into the city's general funds. Last year, $55 million of it went to reimbursing various city agencies, such as $30 million for the Sanitation Department to keep debris out of the sewers and $5.7 million to the Fire Department for hydrant inspections.

William Thompson, the comptroller and a mayoral candidate, has called for an end to the rental payment. Instead, he suggests investing half of that money back into the system, which he points out would save money in the long term. Thompson would use the other half to reduce rate increases.

The city says that the arrangement is common nationwide, like in Philadelphia and San Francisco, among others. "One of the things that the Water Board's ongoing rate study has determined is that most large water utilities make a similar payment to their municipalities," said Mercedes Padilla, a Department of Environmental Protection spokesperson. "In fact, many large utilities pay substantially more to their municipality than DEP does, and in most cases, they do not get as many services in return as we do."

But in Los Angeles, where the water utility there pays into the city's general fund, a state court issued a tentative ruling last month that called the practice unconstitutional.

New York City's Department of Environmental Protection will examine such arrangements, as well as alternative rate structures, in a study to be released at the board's June public meeting. The report itself has become a subject of criticism, with some officials saying it has taken too long to draft.

The rental agreement is not the only part of the board's operation that has sparked concern. The environment department, which operates and maintains the water system, has about $40 million in a holding fund to cover any unexpected water needs. The Independent Budget Office last year recommended cutting that fund in half.

At a recent hearing, City Councilmember James Vacca asked Steve Lawitts, the acting environment commissioner, what it was used for, he didn't get much input. "He had no answer," Vacca told the Observer. "I didn't think that holding codes were allowed in agencies"

Unpaid Bills

In 2007, a private consulting firm recommended the city place liens on property owners who don't pay their water bills. The move could collect over $400 million that had been overdue for more than a year.

The city began the process in December of that year. Property owners not paying their bills are now forced to settle up because the board places a lien on the taxes they owe, which, if unpaid, could eventually lead to foreclosure.

Although these efforts have brought in most of the missing funds and helped avert a mid-year hike, the prospect of putting thousands of properties -- many of them residences -- at risk of foreclosure during a housing crisis has become an issue.

To further pursue cheats, the Water Board has proposed two regulations to accompany the rate hike. It would impose large fines on customers suspected of stealing or barring access to water meters. But these have not been received kindly in some corners.

Hershel Weiss, president of the New York chapter of the American Society of Plumbing Engineers, called the proposals "two of the most anti-consumer documents ever written by the DEP." He says they will punish people with fees that could climb into the millions because the board suspects they are stealing. "There is no requirement for the DEP to prove that any theft is taking place."



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