Cuomo Vetoes Legislation Sought by HRPT to Allow Development on Pier 40
On New Year’s Eve, Governor Andrew Cuomo vetoed a bill passed earlier this year by both houses of the State legislature that would have allowed limited commercial development on Pier 40, the massive former cruise ship terminal on the Hudson River waterfront, adjacent to Houston Street, which covers 14 acres and now houses athletic and recreational facilities.
Such development would have helped to fund operations for the Hudson River Park Trust (HRPT), which oversees the four-mile-long riverfront park that stretches from the Battery to West 59th Street.
“Pier 40 is a very key element of the Hudson River Park,” noted Paul Goldstein, who chairs the Waterfront Committee of Community Board 1 (CB1), at an April meeting. “It not only serves many communities with recreational facilities, including our leagues down here, but it is also one of the designated sites to generate revenue for the Park, which is supposed to maintain itself and pay for future development.”
“Coming up with a plan to maintain that flow of cash and to continue to improve that pier is vital, but it has been a very difficult issue,” he continued. Community Board 2, which has jurisdiction over Pier 40, “has turned down at least two development proposals that they found inappropriate. Following that, there has been discussion with CB2 and some of the local elected officials about a tentative plan to put commercial office space on the Pier. That seemed to be the use that the different entities had some common agreement on.”
Connie Fishman, the executive director of Hudson River Park Friends (who previously served as the HRPT’s president and chief executive officer) added that, “Pier 40 is already a commercial development, with a large commercial parking garage, that has ballfields in the ‘hole of the donut.’ The proposed change to the Hudson River Park Act would modify the lease term and the uses allowed for future development.”
But Governor Cuomo disagreed. In a memorandum accompanying his veto, he wrote, “while the current bill would authorize additional commercial uses at Pier 40, there are proponents and opponents of the expansion of such commercial uses on what has been a largely recreational pier.”
He continued, “Pier 40 is a valuable asset to the surrounding community offering recreational space in an area of the City that is more and more congested, home to an increasing number of young families requiring recreation space. The pier also is a rare asset in its proximity to the magnificent Hudson River. The justification for development is to provide additional money for the Hudson [River] Park. Money is always the rationale to develop sites in Manhattan, hence the lack of open space, green areas, parks or recreation space. We have so few remaining parcels available for community use.”
In specific terms, the legislation that Mr. Cuomo vetoed would have increased the amount of permissible office space within Pier 40 to 700,000 square feet, with no part of the structure rising to a height greater than 85 feet. (Of this total, some 100,000 square feet would be set aside for offices and operations space for the HRPT.)
The language of the vetoed law also mandated that, “any proposal for development or redevelopment shall give preference to adaptive re-use of the historical structure located on the Pier,” and that, “any new structure erected shall maintain a public open perimeter waterside walkway surrounding the entirety of the Pier.” It also calls for, “playing fields no less than exist on the pier as of the effective date of this act.”
In another major change, the proposed legislative revisions would have increased the potential length of any lease that HRPT is authorized to give a developer at Pier 40, from the current maximum of 30 years, to a new limit of 49 years, along with the option of one 25-year renewal (for a total of 74 years). This has been a key sticking point in previous attempts to attract developers to Pier 40. In multiple rounds of negotiation over the past decade, several prospective partners have walked away, arguing that 30 years is not enough time to earn back the significant up-front investment that development at Pier 40 would require.
In lieu of these income streams, Governor Cuomo has offered the prospect of another financial lifeline. In his veto memorandum, he noted that, “there have been several attempts to move the tow pound currently used by the City of New York at Pier 76 [in the West 30s, adjacent to the Javits Convention Center] to allow for additional development. Indeed, the [Hudson River Park Act] currently states that the City, once it has vacated the tow pound, will transfer the pier to the State for use as part of the Park. It is wholly underutilized and has tremendous potential and the site must be maximized…. I will work on legislation that will ensure that the Park will finally have access to Pier 76, which will ensure Pier 40 reaches its full potential.”
Even without the legislation vetoed by Mr. Cuomo, the HPRT has other significant sources of revenue. A large new residential and retail complex will soon rise on the site of St. John’s Terminal, a former rail freight facility adjacent to Pier 40 (straddling Houston Street, stretching from Vandam to Clarkson Streets). This project would not have been possible without a transfer of 200,000 square feet of air rights from Pier 40, for which the HPRT was paid $100 million. This payout is expected to cover most of the cost of rehabilitating the underwater supporting structure of Pier 40, which has been deteriorating for decades. Work on shoring up the Pier (estimated to cost $104 million) began in late 2018.
But significant additional air rights remain within Pier 40. Although it would be difficult for HPRT to sell these to another developer outside of the Park (its enabling legislation bans transfers more than one block away from the waterfront), these rights could allow the development of new space on the Pier itself.
Apart from possible development at Pier 40, the Trust also expects to derive significant revenue from the imminent redevelopment of Pier 57, near 15th Street, where Google has signed on as an anchor tenant. The planned office-and-retail complex, which will encompass 480,000 square feet of space, which will eventually contribute several million dollars per year to the HRPT’s balance sheet.
At the Park’s southern extremity, HPRT officials have spoken publicly about the possibility of selling unused air rights from the Park’s Tribeca section to any possible redevelopment of the Borough of Manhattan Community College Campus.
Overall, the Trust estimates that is already has commitments for approximately $426 million of the $617 million it will need to complete the Park in the next ten years, or some 69 percent of the total. These have come from sources such as air rights sales, private donations, and appropriations from the City and State.
The remaining gap of $189 million, or 31 percent of the total cost, would be more than half bridged by a $100-million allocation that the State and City announced in 2018. But, with a remaining deficit of almost $90 million, this subsidy would not, by itself, quite live up to the billing of “finishing the Hudson River Park” that Governor Cuomo and Mayor de Blasio have boasted of.
Wherever the funding to complete the Park comes from, however, allocating resources to HPRT appears to be a sound investment. A 2016 analysis from the Regional Plan Association (RPA) concluded that the $720 million earmarked for the Hudson River Park since construction began in 1998 has yielded $1.121 billion in indirect economic benefits for New York City (as well as another $305 million in similar benefits for the State as a whole), while new building projects adjacent to the Park represent one-fourth of all the newly created square feet of property in Manhattan built between 2000 and 2014. During those years, RPA also concluded, property tax contributions within the Hudson River Park neighborhood grew 28 percent faster than in Manhattan as a whole. The same report also noted that the Park directly generates more than 3,000 full- and part-time jobs — a figure that is projected to swell to approximately 5,000 jobs over in the next few years.
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