A Battery Park Bargain
AS two of the officials who helped carry out Gov. Nelson A. Rockefeller’s 1967 mandate to build a Lower Manhattan community on landfill in the Hudson River, and considering the unquestionable success of what he proposed evident in today’s vibrant Battery Park City, we believe that New York City, which has a little-remembered option to buy the entire property for $1, should hand over that dollar bill. Let’s finally make Battery Park City, with its 10,000 or so residents and 92 acres of businesses, housing and beautifully maintained green spaces, a part of the city to which it really belongs.
Since its creation, the development has been overseen by the state-run Battery Park City Authority and the $200 million a year in rents and payments from developers in lieu of taxes is deposited into a fund controlled by the mayor, the city comptroller and the authority. The fund holds about $236 million and is growing daily.
It’s no surprise that in these financially difficult times, the question of what to do with this surplus has become an increasingly contentious matter. New York’s governor, David A. Paterson, has repeatedly proposed raiding the authority fund to plug holes in the state budget. Earlier this year, he even suggested that the authority should issue $300 million to $500 million worth of bonds to raise more cash for the state. But Mayor Michael Bloomberg, wrestling with his own budget shortfalls, has balked at such schemes: the authority’s generous contributions to the Housing Trust Fund already help pay for low- and moderate-income housing in the city.
To settle these disputes, New York City should simply take advantage of that obscure provision written into the 1979 agreement that transferred the title to the land from the city to the authority. With just $1, the city would reacquire the land; the authority would no longer control Battery Park City; and the development would become a neighborhood the same as almost any other in Manhattan. Its income would be New York City’s, solely.
The city would, of course, be obligated to assume the $1.1 billion in bonds issued by the authority. But these bonds could be satisfied by the sale of the income from the commercial leases at Battery Park City. The revenue from that sale would total at least $2 billion, leaving plenty left over after the bonds had been taken care of.
Here we come to another budgetary truth. The authority’s current operating expenses are approximately $30 million a year, even though the development has been virtually completed and the city already provides all police, fire, educational and sanitation services. Driving up the operating expenses of the authority even more are the ever-growing health insurance and pension contributions for a staff that is far larger than the authority requires.
We estimate that the work now done by the authority, including debt supervision, the collection of residential and commercial rents and maintenance of the property, could be accomplished for no more than $5 million annually. An additional $10 million from the city would allow the nonprofit Battery Park City Parks Conservancy Corporation to continue to maintain the parks there. (A similar arrangement works well with Central Park, and it’s the best plan for Battery Park City’s award-winning green spaces.) With the overhead thus reduced, that’s a $15 million savings the city could put to good use.
The city could also immediately benefit from an additional $1 billion in bonds sold against the remaining income, which includes the residential leases, and backed by the general credit of the authority.
In addition, the development’s unused South Cove could be filled in for $20 million; the resulting land could be used for an iconic 2-million-square-foot building that would both mark the entrance to New York Harbor and net the city what we estimate would be $480 million in land value and $20 million per year in additional payments in lieu of taxes.
This proposal to return Battery Park City to the City of New York may seem unprecedented, but in 2003 a payment of $1 gave much of Governor’s Island back to the city as well. And with New York City hard-pressed for cash in a time when other sources of money are drying up, the landfill project and reacquisition of Battery Park City would help finance many municipal services, including housing for the needy, education, police, fire, sanitation and health care. Better still, this Golconda mine of riches would not need to be fought over with the state.
Yes, in this day of trillion-dollar bailouts and stimulus packages, a dollar can still buy something.
Charles J. Urstadt, the chairman of a real estate investment trust, was the founding chairman of the Battery Park City Authority from 1968 to 1978. Avrum Hyman was the director of public information of the authority during the same period.
By CHARLES J. URSTADT and AVRUM HYMAN