New York City As Real Estate Developer

In September 1997, I moved to my current home in the West Village in Manhattan, and for exercise I took up jogging in the new park then being built along the Hudson River.  On weekends I would go all the way down to the very southern tip of the island.  At the point where I would turn around was located something called Pier A.  This pier juts out into the harbor right next to Battery Park.  It had been used for many years as the base of New York City's fire boats, and then fell into disrepair and was closed about 1992 for a planned renovation.

At the time when I first started running past Pier A in the fall of 1997, I noticed that the City had recently begun a reconstruction project.  Here from the Archives of the Mayor's Press Office is the announcement, dated July 8, 1997, of the ground breaking of the project, sponsored by the City, the State, and also by federal HUD.  The groundbreaking was attended by then-Mayor Rudy Giuliani as well as by then-HUD Secretary Andrew Cuomo (somehow the players never seem to change):

Mayor Rudolph W. Giuliani and U.S. Department of Housing and Urban Development (HUD) Secretary Andrew M. Cuomo . . .  announced today the commencement of renovations at Pier A, which will be converted into a tourist destination and retail facility. Pier A, located between Battery Park and Robert F. Wagner Park in Lower Manhattan, is listed on the National Register of Historic Places and is a New York City Landmark.

Well, I've continued to run by there all these years, and yes I can tell you that the construction is not yet finished.  Don't worry, they haven't actually worked on it continuously for the whole 17 years.  Construction has started and stopped multiple times, with long periods of idleness in between bursts of activity. 

But wait!  It looks like the pier is actually going to open in a few months as a tourist, restaurant and entertainment venue.  Here is an article from the Tribeca Trib on March 31.  The Poulakakos family has the lease, and has taken charge of finishing the work.  (For those unfamiliar with the name, the Poulakakos family has long operated some of the most successful restaurants in the downtown area, including the long-running Harry's at Hanover Square, which was literally the only upscale restaurant in the financial district in the 70s.) With the Poulakakoses in charge, I would have some confidence that the project may actually be finished on the current schedule or something close to it.

So the record at Pier A is: 22 years from commencement of planning, and 17 years from goundbreaking, to completion.  Can New York City really be this incompetent when it gets into the real estate development business?  Actually, there are far worse examples.  The worst I know of is the so-called Seward Park Urban Renewal Area, or SPURA.  That area of 40 or so acres, just off the Williamsburg Bridge on the Manhattan side, was cleared by the City of pre-existing buildings in the late 1960s, in anticipation of construction of then-trendy high rise housing projects.  That was almost 50 years ago!  Nothing was ever built, and the site still sits there vacant.  Today in a hot real estate market in downtown Manhattan, the SPURA site would promptly be filled with new upscale housing if the City simply sold it to the highest bidder.  The site is probably worth at least a billion dollars.  But in Manhattan we are way too cool to collect a billion dollars that is there for the asking.  Instead we pass on the billion and in addition hand out millions in tax breaks so that developers will come in to build "affordable housing."  On September 18, 2013 then-Mayor Bloomberg announced "that developers have been selected" to develop SPURA.  (Why do capitalism and collect a billion dollars for the taxpayers when you can do crony capitalism and the politicians get to "select" favored developers?)  But go by the site today and you will not yet see any construction activity.

So at SPURA we are about 47 years in and we haven't yet gotten to groundbreaking.  And will it take 17 years from groundbreaking to completion?  Based on the City's track record, that could easily happen.  There are many, many examples of "selected" developers simply walking away when political delays continue, the market turns, and the financing dries up.

All of which brings us to  Mayor de Blasio and his supposed plan to build 200,000 units of "affordable housing."  Yesterday he went to a groundbreaking for a new project in East New York that will supposedly have 278 units of affordable housing.  De Blasio was there to take the credit, although the project had actually been approved during the Bloomberg tenure.  If you assume that we give de Blasio his credit, that means we're 0.139% of the way toward that 200,000 goal!  Or at least we will be 17 years from now when the apartments are finished.  Meanwhile, though, it's a good photo op for de Blasio, plus the chance to put the squeeze on the "selected" developers for political contributions.