Friends of Hudson River Park's Improvement District Funding Scheme Rears Its Ugly Head Again

Pay-To-Play. Prominent real estate developer Douglas Durst and the non-profit he runs, Friends of Hudson River Park (FHRP) want area residents and businesses to pay a special tax to pay Hudson River Park's upkeep instead of the City and State allocating funds. Last week NY State legislators refused to introduce a bill which would have allocated $15 million in emergency funds and approximately $7 million annually from cruise ships and water taxi fees. (Photos: Geoffrey Croft/NYC Park Advocates) Click on image to enlarge.

The tax proponents hope to generate $10 million annually from the funding scheme. The Park Improvement Area (PID) area could include 1,700 properties.

A similar Park Improvement District (PID) proposal supported by Mayor Bloomberg to pay for maintenance and operation (M&O) of the High Line esplanade in Manhattan was quickly scrapped after strong public criticism emerged. A similar scheme to fund Brooklyn Bridge Park was also not warmly received.

Mr. Durst is on the Board of Directors of the Bryant Park Corporation BID. His building, One Bryant Park, generates $150,000 of the BID's gross annual revenue. Bryant Park is a public park which the city allows to be run privately.

Dedicated funding streams from non-government sources create enormous disparities.

Durst is a director of the Real Estate Board of New York, The Trust for Public Land, and Project for Public Spaces. He is also the co-chair of Friends of the Hudson River Park. Durst Fetner Residential (DFR) hopes to begin building West 57, a 600-unit building on across the street from the park in 2012, and boasts, "courtyard open views towards the Hudson River." Mr. Durst's distinctive bright yellow New York Water Taxi fleet are a familiar sight along the park.

- Geoffrey Croft

Pier 40. Hudson River Park was never required to be self-sustaining according to the original law that established the park. Despite the fact that the park has generated billions of dollars in revunue for the city and state, they refuse to allocate the proper resources to maintain the park.

Manhattan

The Clinton/Hell's Kitchen Land Use Committee met last night to hear a presentation from the Friends of Hudson River Park, according to Curbed.

The gist: Hudson River Park needs a lot of money. Not that this is news or anything. The proposed Business Improvement District (BID) or, as it's now being called, Neighborhood Improvement District is, apparently, the largest-scale BID (or NID) ever proposed, and would tax residential properties 7.5 cents per square foot (median assessment: $99) and commercial properties 15 cents per square foot ($499) in order to raise a Total Amended First Year Budget of $10, 000, 000, which is around one tenth of what the park actually needs for day-to-day operations/development/integrating the park with the community/other things. And once the park is finished (it's currently at 70%) it will be generating more money from its commercial entities except maybe it won't and maybe those entities will even lose money because who knows? Not us. Confused yet? So were we.

Committee Member: So it’s unclear what the incremental increase in the operating revenue of the commercial entities will be once the park is complete.

Second Committee Member: It’s actually a little bit more complicated than that.

This is how the sausage gets made, people! Really confusingly. And expensively. It's like a one hundred million dollar sausage or something. This is a strategy that has already failed to come to fruition for the High Line and Brooklyn Bridge Park. It certainly seems like a desperation move, but then again, that's more or less what it is. And who knows—it could even end up working out. Maybe? Crazier things have happened. The BID is currently in the "Outreach Phase" and, if everything goes according to plan, will be voted on early next year.

Read More:

Hudson River Park Needs Money, Is Asking The People

Curbed - June 14, 2012 - By Jeremiah Budin

Durst & FHRP In BID To Create New Tax For Hudson River Park

A Walk In The Park - March 17, 2011

Legislation To Allow Housing In Hudson River Park Fails- Emergency Funding Rejected

A Walk In The Park - June 20, 2012

Fight Against Housing In Hudson River Park Heats Up

A Walk In The Park - June 7, 2012

Facing Deficits Hudson River Park Trust Looking For State Legislation To Loosen

Development Restrictions-Major League Soccer Hoping To Come To Pier 40

A Walk In The Park - April 5, 2012

Reliance On Self- Sustaining Hudson River Park "Model" Continues To Plague Project

A Walk In The Park - January 28, 2012

Hudson River Park - The Danger of Relying On Funding Schemes

A Walk In The Park - December 14, 2009

Inside the Brooklyn Bridge Park Housing Deal

The Watchtower Society’s headquarters on Columbia Heights will be turned into a sweet residential building to help pay for Brooklyn Bridge Park’s maintenance. (Photo: Bess Adler/The Brooklyn Paper)

Brooklyn

It’s the billion-dollar boondoggle!

The Jehovah’s Witnesses are poised to make out like moneylenders in the temple under the just-signed deal that allows the city to fund Brooklyn Bridge Park’s annual upkeep with tax revenues from the group’s properties, a Brooklyn Paper analysis reveals.

The deal calls for the Watchtower Bible and Tract Society’s holdings in Brooklyn Heights and DUMBO to be rezoned for residential use — a change that real-estate experts believe will send the value of the Society’s properties well north of $1 billion.

“If they put them on the market now, they’ll be sold very quickly,” said Downtown real-estate broker Chris Havens.

The deal between Mayor Bloomberg and state officials will reduce the amount of luxury condos inside Brooklyn Bridge Park by using new property taxes created after the Watchtower properties are sold and return to the tax rolls.

That money will go into the normal general fund, which will then cover maintenance of the world-class park.

The deal has green advocates seeing red.

“Tax money is supposed to go into the city’s general fund and it’s being diverted to one park,” said Geoffrey Croft, founder of watchdog group New York City Park Advocates. “These types of deals create enormous disparities. Other neighborhoods can’t pay for parks in this way.”

Under the deal crafted by state Sen. Daniel Squadron (D–Brooklyn Heights) and Assemblywoman Joan Millman (D–Carroll Gardens), the greater the number of Watchtower buildings that go on the market, the less luxury housing needs to be built inside the park at Pier 6.

Those buildings were projected to bring in roughly $6 million a year in property taxes earmarked for the park. If the properties don’t start yielding sufficient property taxes by 2014, the city, under a new mayor, can move forward with the controversial condos.

Watchtower owns more than 30 properties, but doesn’t pay taxes on any of them under federal laws that exempt religious groups from normal levies.

The religious order will either apply to rezone its properties to residential before selling them, or sell them to developers based on the inflated post-rezoning price. Either way, it’ll mean big bucks for the group.

Havens estimates that one of Watchtower’s most valuable buildings — 25 Columbia Heights, which is part of the group’s administrative offices — could go for $91 million as right now as commercially zoned. It will likely go for at least twice that now that the city is behind the rezoning.

Indeed, One Brooklyn Bridge Park, the former Watchtower property at 360 Furman St., was bought by developer Robert A. Levine for $205 million in 2004.

The city’s deal is the latest funding scheme for Brooklyn Bridge Park — but the only one to gain the support of the wealthy in Brooklyn Heights and DUMBO, who won’t have to pay anything to maintain the park.

In 2009, Squadron proposed siphoning off some taxes from nearby landowners to pay for the controversial park project’s upkeep. But that went nowhere.

A year later, a committee designated to find alternatives to housing inside the park suggested creating a “park improvement district” that would charge nearby property owners an annual fee. But that went nowhere.

Again, wealthy Brooklyn Heights objected to having to pay.

“Maybe this is all just kind of scheme so Brooklyn’s wealthiest residents somehow don’t have to pay higher property taxes,” said Roy Sloane, president of the Cobble Hill Association and longtime opponent of housing in the park. “Why shouldn’t the immediate adjacent property owners pay more for the park?”

That’s a question that has come up in various forms ever since the the 2002 agreement requiring that the $350-million park raise its own maintenance budget so it wouldn’t become a drain on city and state coffers.

City and state officials decided that luxury housing — in the form of high-rises at John Street in DUMBO, Pier 1 and Pier 6 — was the easiest way to generate revenues for the park. But that scheme has long been under fire from Heights residents — and, indeed, helped propel Squadron into office.

Opponents of housing inside the park joined the anti-tax crowd and hailed Squadron’s call to capture tax revenue from the Watchtower properties as the way to stop future luxury condos within the park.

But former Squadron allies like Sloane say that the deal is fishy and that the senator sold out the park.

“This whole thing feels artificial to me and like it’s all driven by real estate,” Sloane said. “The Jehovah’s Witnesses have been the immense beneficiaries.”

State planners have put out new renderings for the proposed Brooklyn Bridge Park waterfront condo and open space development along the Brooklyn Heights and DUMBO coastline. The new building on the right of the rendering is a hotel. (Michael Van Valkenburg Associates)

Read More:

Inside the Brooklyn Bridge Park deal

The Brooklyn Paper - August 11, 2011 - By Kate Briqeulet

Editorial: At Brooklyn Bridge Park, the rich get richer

The Brooklyn Paper - August 11, 2011

Squadron & Millman Sell Out In Deal With City To Bring More Housing To Brooklyn Bridge Park - Critics

A Walk In The Park - August 2, 2011

Durst & FHRP In BID To Create New Tax For Hudson River Park

Pay-To-Play. A prominent real estate developer, and an area non-profit he runs, want area residents and businesses to pay a special tax to fund Hudson River Park's upkeep. Douglas Durst, chairman of the Durst Organization and Friends of Hudson River Park (FHRP) - which he is Co-Chair - are spearheading a funding scheme in the form of a new tax to help pay for the City/State park's operations. Under the proposal, residential and commercial properties could be required to pay a special tax which tax proponents hope will generate between $5 million and $10 million annually. The Park Improvement Area (PID) area could include 1,700 properties. (Photo: Geoffrey Croft/NYC Park Advocates) Click on image to enlarge.

The Neighborhood Improvement District Steering Committee pushing the new tax includes a number of area landlords. The committee plans to meet in April to review the initial responses and then, by early June, create a draft district service plan for the area. The group hopes to submit a final plan to the City Planning Commission and New York City Council for approval by the end of the year. The highly controversial plan is expected to face strong opposition.

A similar Park Improvement District (PID) proposal supported by Mayor Bloomberg to pay for maintenance and operation (M&O) of the High Line esplanade in Manhattan was quickly scrapped after strong public criticism emerged. A similar scheme to fund Brooklyn Bridge Park was also not warmly received.

Mr. Durst is on the Board of Directors of the Bryant Park Corporation BID. His building, One Bryant Park, generates $150,000 of the BID's gross annual revenue. Bryant Park is a public park which the city allows to be run privately.

Dedicated funding streams from non-government sources create enormous disparities.

Douglas Durst, chairman of the Durst Organization. The company owns and manages more than 8.5 million square feet of office space and over 1 million square feet of luxury residential rentals according to their website. He is a director of the Real Estate Board of New York, The Trust for Public Land, and Project for Public Spaces. He is also the co-chair of Friends of the Hudson River Park. Durst Fetner Residential (DFR) hopes to begin building West 57, a 600-unit building on across the street from the park in 2012, and boasts, "courtyard open views towards the Hudson River." Mr. Durst's distinctive bright yellow New York Water Taxi fleet are a familiar sight along the park. - Geoffrey Croft

Manhattan

Property owners around Hudson River Park, which will ultimately stretch five miles from the southern tip of Manhattan to 59th Street, could be required to pay a special tax totaling million of dollars annually to fund the park's operations, according to The Wall Street Journal.

The Friends of Hudson River Park, a nonprofit, has begun the public process required for the creation of a business or neighborhood improvement district. Such districts have the right to assess a tax on property owners within their boundaries. By law, the district can't be formed if more than half of these property owners object.

While the formal boundaries of the improvement district have yet to be determined, they would loosely encompass all the property owners along what will ultimately be a 550-acre park, west of Hudson Street and 10th Avenue. The area could include 1,700 properties, and the tax assessment would apply to both residential and commercial properties.

A Hudson River Park neighborhood improvement district would likely rival the size of the Downtown Alliance, which has a $13 million tax assessment, the largest in the city. The Friends of Hudson River Park say it hopes to generate an assessment between $5 million and $10 million annually.

Although members of the steering committee say the assessment to any single property owner would be modest, they expect to face some resistance. "No matter what you do in New York, there's opposition," said Douglas Durst, a prominent landlord who is helping organize the improvement district.

Since the first business improvement district was established in 1984, 64 have been created in New York. All strive to supplement existing city services, be it through sanitation or programming.

On March 3, A.J. Pietrantone, the executive director of the Friends of Hudson River Park, sent a letter to the Department of Small Business Services announcing the first step in the public outreach process—the circulation of a district needs survey to area property owners.

Mr. Pietrantone sent the letter on behalf of the Neighborhood Improvement District Steering Committee, a group that includes Julie Menin, chairwoman of Community Board 1, and a number of area landlords, including Mr. Durst, chairman of the Durst Organization; Lisa Silverstein, senior vice president at Silverstein Properties; and Two Trees' head, Jed Walentas.

"I think we have come to accept the fact that because of the pressures on government funding, the private sector needs to play a role in maintaining parks the way we want them to be," Mr. Pietrantone said.

Hudson River Park is part of a new model for parks development, one that relies on revenues from privately run concessions within the park as well as tax assessments. It is an evolution of the sort of public-private partnership pioneered by the Central Park Conservancy and Prospect Park Alliance in the 1980s. Both are nonprofits that operate government parks relying, in part, on private donations.

The Friends of Hudson River Park maintains that because the park has bolstered real estate values in the area, it makes sense for those who have profited from those increased values to give back to the park. According to 2008 Friends report that used data analysis by the Regional Plan Association, "Approximately 20% of the value of properties within the first two blocks of the Greenwich Village section of the Hudson River Park can be attributed to the park."

"You've got all of these residential developers who have developed buildings all along the park…and when you look at their marketing brochures, they market access to Hudson River Park," says Ms. Menin.

The park was conceived following the 1985 demise of Westway, a controversial proposal to construct an underground highway off the West Side of Manhattan and build on top of it.

It was not until 1998 that the Hudson River Park Act was approved, allowing the city and state to appropriate $200 million toward the creation of a 550-acre park. The Friends of Hudson River Park took shape the following year.

According to Mr. Pietrantone, the park needs another $160 million for its completion, and is expected to be finished by 2018 at the earliest. The improvement district's assessment would also go toward improving access to the park, creating park-like areas in places where the park is narrower and perhaps augmenting the care of the city parks within the district's bounds.

Read More:

Special Tax Sought to Fund Hudson River Park

Resistance Expected From Owners

The Wall Street Journal - March 14, 2011 - By Dana Rubinstein

NY Post Editorial weighs in on the Friends of the High Line controversial

proposal to create a PID - Park Improvement District.

A Walk In The Park - August 4, 2009

High Line Eyes Tax On Its Neighbors

New York Post - July 29, 2009

Brooklyn Bridge "PID" Funding Scheme Dead In The Water

Home and local business owners would pay a new tax to maintain Brooklyn Bridge Park in a proposed tax zone (shaded in brown). This was one of a few revenue schemes released by a California consulting group hired to explore potential revenue in order to avoid building residences within the park's footprint. A similar Park Improvement District (PID) proposal supported by Mayor Bloomberg to pay for maintenance and operation (M&O) of the High Line esplanade in Manhattan was quickly scrapped after strong public criticism emerged.

The park's wildly inflated proposed $ 16 million dollar annual budget for M&O has long been seen as a transparent attempt to justify housing in the park. The park's 2009 Financial plan for instance includes a number of Capital expenditures such as maritime bulkhead and pile protection, vehicle replacements, and a capital reserve. Together these add up to more than $ 6 million annually, or roughly 40% of the proposed budget.

So far the City has refused to take responsibly to fund the park's annual upkeep. "The City does not have the money to have new parks and fund them," Mayor Bloomberg famously said at the opening of Brooklyn Bridge Park on March 22, 2010. - Geoffrey Croft

Brooklyn

Brooklyn Bridge Park could raise one-quarter of its massive maintenance budget through a new tax on local businesses and residents — but that idea is dead in the water, say critics, who think there are better ways to raise the money, according to the Brooklyn Paper.

A consultant hired last year to search for revenue to maintain the park without building residences within its waterfront footprint released a draft report on Tuesday that predicted that $1 million to $4 million towards the park’s $16-million maintenance budget could come from a new tax on residents and business owners within a quarter-mile of the park.

But the scheme — called a “Park Improvement District” — is so unpopular that before the ink dried on the study, the proposal was already being blasted as “insulting” and “a scare tactic.”

“The Park Improvement District they proposed is not going to happen,” said state Sen. Daniel Squadron (D–Brooklyn Heights). “There are viable alternatives to the current plan” to include housing in the park.

The construction of housing and other revenue-generating uses stem from a 2002 agreement between the city and state that the $350-million park raise its own maintenance budget so it would not be a drain on city coffers.

But the proposed 20- to 30-floor luxury high-rises have long been the 1.3-mile waterfront development’s most controversial feature, so last year, park planners created a Committee on Alternatives to Housing.

On Tuesday, the committee’s consultant issued a draft report that found $2.5 million to $7 million in new revenues, including the controversial new park improvement district, which would extend from Furman Street to as far east as Henry Street and as far north as Bridge Street in DUMBO.

The consultant, however, did not consider a proposal being pushed by Squadron that would capture tax revenue created when several currently tax-exempt Jehovah’s Witness-owned buildings are sold and return to the rolls.

Squadron is pushing the consultant to consider such revenue before the end of the report’s 60-day “public comment period.”

“The most-important alternative revenue source has not yet been studied: tapping into the 2.8-million-square feet of nearby Watchtower properties,” he said.

Like Squadron, other opponents of housing inside the park dismissed the park improvement district tax.

“We already pay our taxes,” said Judi Francis, president of Brooklyn Bridge Park Defense Fund, which has sued to keep housing out of Brooklyn Bridge Park and to maintain the open space in the same way that normal city parks are maintained: through the Parks Department budget. “Dedicate more of those dollars to parks and then we’ll talk.”

Despite the derision, the idea of creating a Business Improvement District for a park is not without precedent. The High Line and Hudson River Park, both in Manhattan, have considered BIDs to generate revenue, though neither did. Bryant Park is supported by a massive BID that manages more than $5 million a year to supplement city services.

In addition to the $4 million maximum revenue raised by the park improvement district, the consultant identified $3 million in revenues that could be raised by:

• Parking fees — $230,000 to $440,000.

• Creating more concessions beyond the soon-to-open wine bar at Pier 6 and cart food on Pier 1 — $40,000 to $365,000. It’ll likely be the lower number, the consultant admitted.

• Changing the proposed residential buildings to retail space — $250,000. Even that figure is unlikely because limited public transportation would make the park a poor location for retail.

• Charging sports enthusiasts more to use proposed recreation facilities inside the park — $600,000.

“The most-important alternative revenue source has not yet been studied: tapping into the 2.8-million-square feet of nearby Watchtower properties,” (Top Right) said state Sen. Daniel Squadron (D–Brooklyn Heights).

A public hearing on the report will be held at St. Francis College [180 Remsen St. between Clinton and Court streets in DUMBO, (718) 222-9216] on March 31 at 6 pm. For info, visitwww.brooklynbridgeparknyc.org.

Read More:

Park’ Foes decry Park ‘tax’ scheme, push for revenue from Witness buildings

The Brooklyn Paper - February 23, 2011 - By Laura Gottesdiener

Bloomberg Rejects Proposal For The City To Pay To Maintain Brooklyn Bridge Park - Taxes Eyed

A Walk In The Park - December 21, 2010

NY Post Editorial On Friends of the High Line Controversial Park Improvement District Proposal

"No reasonable case can be made for establishing another taxing entity in Manhattan, period -- let alone setting one up merely to finance yet another Manhattan park. Especially since many existing parks could benefit greatly from municipal funding remotely proportionate to the $1 million the High Line is getting."

A BID to Nowhere
NY Post - August 3, 2009

It's High Line robbery! City Controller Thompson rips park concession plan as 'back-room deal'

New York Daily News - July 8, 2009 - By Erin Einhorn

Related Articles:

High Line Eyes Tax On Its Neighbors
NY Post - July 29, 2009

High Line plan is too taxing, neighbors cry

The Villager - August 12, 2009 - By Patrick Hedlund

How Valuable Is It To Be Friends Of Friends Of The High Line?
Gothamist - July 9, 2009
"It almost appears to be some sort of back-room deal." Founders of the Friends of the High Line have already given endorsements to Mayor Bloomberg and board members have contributed over $100,000 to Speaker Christine Quinn."