City Council Panel Okays Proposal to Convert Water Street Arcades to Retail

The City Council’s Subcommittee on Zonings and Franchises voted on Tuesday to approve a controversial zoning measure that seeks to convert to commercial, retail use more than 100,000 square feet of public space in arcades along Water Street. Tuesday’s vote will be followed today by a vote of the Council’s Land Use Committee, and another (on June 21) of the City Council as a whole. But multiple sources agree that these votes are largely a formality, and that Tuesday’s decision makes ultimate passage of the measure a virtual fait accompli.

The proposal, known as the Water Street Text Amendment, is controversial because the storefronts created by this move will be enormously valuable, but the building owners who reap this benefit will pay nothing for the additional space. Instead, these developers will be required to upgrade the open plazas in front of their towers, and invest in resiliency measures that would harden their skyscrapers against flooding. (Both the arcades and the plazas were created decades ago, when the buildings were constructed, in exchange for allowing the structures to rise higher, with more floor space, than otherwise would have been legally permitted.) Supporters of the Water Street proposal view this as a pragmatic and equitable quid pro quo. Critics decry it as a giveaway of public space for private profit.

The area covered by this proposal falls within the district of City Council member Margaret Chin. Although she does not sit on the Zoning and Franchises subcommittee, City Council procedure and tradition give deference to a member when considering a measure that falls entirely within his or her district. As a result, the Water Street Text Amendment would be unlikely to pass without Ms. Chin’s approval.

For many weeks, Ms. Chin’s position was that she opposed the measure in its original form.  In recent days, however, she negotiated several modifications to the Water Street Text Amendment that convinced her to give the measure her support. The changes include a caveat that requires arcades larger than 7,500 square feet to undergo the City’s standard land use review procedure. (The crux of the Water Street Text Amendment is that it allows building owners to avoid this process, and instead convert arcades to retail space after obtaining a sign-off from the City Planning Commission.) This will create greater oversight for six of the 17 buildings that will be eligible to convert arcades to retail use under the proposal. Other changes include limiting banks and drug stores to 30 and 50 feet of frontage, respectively, in the newly created retail space, and restoring compliance and reporting provisions that the original proposal sought to eliminate.

At Tuesday’s hearing, Ms. Chin addressed herself to the dozens of residents and community leaders who testified against the proposal at multiple City Council hearings, and argued against it for months at successive meetings of Community Board 1 (CB1). “I heard you clearly and sought to make this proposal stronger in terms of community input, sensible ground rules, and long-term oversight,” she said. “The modified proposal seeks to strike a balance of community input and public oversight with regard to the infill of public arcades, while providing flexibility to achieve the desired goal of improved public space, neighborhood retail, and pedestrian experience. “With this proposal, the future of Water Street is brighter than ever before.” She then recommended that the members of the subcommittee vote in favor of the Text Amendment — which they did, unanimously.

Ms. Chin later said, “this wasn’t an easy decision to make. There have been many passionate voices that wanted this proposal to be rejected outright, or conversely, wanted the Text Amendment passed as is. After much deliberation, I came to the conclusion that neither option would give our community what it desperately needs and deserves: Improved public spaces in plazas and arcades, small-scale neighborhood retail, and innovative indoor public spaces.”

She continued, “after considering all of the viewpoints expressed at numerous Community Board meetings, City Council hearings and, most recently, at last week’s Town Hall at Hanover Square, I have reached an agreement with the applicants that I believe meets the goal of enlivening the Water Street corridor while preserving vital community and City Council oversight.”

Ms. Chin added, “the modified proposal seeks to strike a balance of community input and public oversight with regard to the infill of arcades while providing flexibility to achieve the desired goals of improved public space, neighborhood retail, and pedestrian experience. Though some may not agree on the outcome of this process, I hope that all will understand that my decision is based on what is best for our community.”

Four members of Community Board 1 (from left: Susan Cole, Roger Byrom, Paul Hovitz, and Alice Blank) attended Tuesday’s City Council meeting, to voice their opposition to the Water Street Text Amendment.

Several members of CB1 who attended Tuesday’s City Council hearing voiced concern about the outcome. Paul Hovitz, co-chair of CB1’s Youth and Education Committee, said, “I believe that our Council member made an effort to modify the original proposal. It is laudable that the arcades larger than 7500 square feet require the land use review process. It is unfortunate that this pertains to only six of the 17 spaces. While the Community Board and Borough President will be ‘notified’ of plans for the others, there will be no opportunity for enforcement. With no requirement to ‘listen and act,’ the community voice is like shouting in the wind. My take is that the text amendment goes forward basically intact, which is unfortunate.”

Roger Byrom, chair of CB1’s Landmarks Committee, said, “I am pleased the Council Members listened to input from the community and residents. And it is encouraging that the larger spaces will be subject to the appropriate land use review process. However most of the spaces will be given to developers with minimal — and not meaningful — overview – which is a missed opportunity. The process remains entirely in question in my opinion.”

He added, “I can’t understand how Council Members did not focus on the unethical behavior of the applicant’s contractors, who felt it appropriate to steal the identity of Council Member Chin and use push-polling tactics to encourage support.” This was a reference to a consulting group, hired by the Downtown Alliance (one of the sponsors of the Water Street Text Amendment), which engaged a subcontractor to place calls to Lower Manhattan residents, and argue in favor of the proposal. These calls were later found to have been technically manipulated so as to appear that they came from Ms. Chin’s office. The Alliance disavowed this tactic, and apologized to Ms. Chin for the incident.

Susan Cole, chair of CB1’s Financial District Committee, said, “I know that Council member Chin tried hard to reach a workable compromise. However the Community still got shortchanged. The Downtown Alliance’s refusal to pull the Text Amendment is unfortunate. A much better solution could have been achieved.”

Alice Blank, co-chair of CB1’s Tribeca Committee (who is also an architect), said, “despite strong public opposition, the City Council’s Subcommittee on Zoning and Franchises voted to approve the ‘Water Street Text Amendment,’ which sets a troubling precedent for the elimination and giveaway of valuable public real estate in our City.”

“Under Mayor De Blasio’s watch,” she continued, “the City is on the brink of allowing developers to get away with breaking promises they made to the citizens of New York to preserve in perpetuity our precious public spaces. Indeed, the developers of 20 buildings Downtown received enormously valuable air rights to raise their buildings on Water Street beyond the governing height limits, in exchange for their commitment to maintain the open outdoor public spaces surrounding the perimeters of the buildings.” (Calculations by the Broadsheet estimate that zoning tradeoffs related to the creation of arcades and plazas increased the value of all the buildings affected by the Text Amendment by an aggregate $1.3 billion, and currently result in additional annual rental income of more than $144 million.)

“Now, in behind-closed-doors meetings with the powerful lobbyists for the developers, the City is giving away these public spaces without ever gauging their true value and without obtaining any meaningful commitment from the developers to equitably compensate the public,” Ms. Blank said. (The supporters of the Water Street Text Amendment never published any estimate of the value of the public space that building owners will be permitted to convert to private, retail use. Calculations by the Broadsheet indicated that the overall worth of the space may be approximately $250 million, and that it could be expected to generate more than $40 million per year in rental income once converted into retail space.)

In another reference to the phone calls that were engineered to appear as if they came from Ms. Chin’s office, Ms. Blank also asked, “if eliminating 110,000 square feet of public space along 13 blocks of the Financial District was something the community wanted, than why did the Downtown Alliance pay for questionable phone polling to garner support for the Amendment?”

She concluded, “it’s time for the citizens of New York to wake up and take a good, hard look at how the City’s powerful development forces are working with our political officials to give away our public land without any fair public process or compensation.”

Downtown Alliance president Jessica Lapin said, “we want to thank Council Member Chin for her leadership throughout this process and the Subcommittee on Zoning and Franchises for its approval of the modified Water Street text amendment earlier today. The Alliance is heartened that after many years, and a planning process that incorporated input from a wide range of stakeholders and government officials, we have reached an agreement on a revised proposal that will bring us one step closer to our shared vision of a more vibrant Water Street. This amendment should enliven the street, improve public plazas, and incentivize investment for the benefit of all those who live, work, or visit the area.”

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