Volume 78 / Number 18 - October 1 - 7, 2008
West and East Village, Chelsea, Soho, Noho, Little Italy, Chinatown and Lower
East Side, Since 1933

A rendering of the most-recent version of a plan for Pier 40 by CampGroup/Urban Dove, working with the Pier 40 Partnership, which the Hudson River Park Trust finally rejected last week.

Pier 40 plan sinks again; Trust seeks longer lease

By Lincoln Anderson

For the second time in five years, the Hudson River Park Trust’s efforts to find a private developer to renovate and operate Pier 40 have gone down to a watery grave.

At the state-city park authority’s bimonthly board of directors meeting last Thursday, Diana Taylor, the Trust’s board chairperson, and other Trust members made it clear they felt the latest $430 million plan for the pier by CampGroup/Urban Dove — working in conjunction with the Pier 40 Partnership — would not work financially.

The Trust’s next step on the supersized, 15-acre structure at W. Houston St., they agreed, would be to lobby to change the Hudson River Park Act to allow a longer-term lease for the pier — presumably of 49 years, rather than the currently permitted 30 years — to make it more attractive to potential developers and tenants alike.

It didn’t appear that the Trust’s board formally voted to close the latest Pier 40 request-for-proposals, or R.F.P., process. But Taylor, speaking immediately after the meeting, confirmed to The Villager that the CampGroup plan had been scuttled and the current process officially closed.

The Trust chairperson said her focus is now to try to lengthen the pier’s permitted lease term. However, she indicated she was concerned that “they” — referring to local state legislators and possibly also to park advocates — would work to insert restrictions into any Pier 40 amendment to the park act.

Taylor said she was sure the state Legislature “will extract its pound flesh,” and “might restrict uses” on the pier in return for changing the lease term. But she warned, “If there’s too many restrictions, we’ll be back at square one again.”

Asked if she expected The Related Companies would, at a future point, dust off its failed Cirque du Soleil mega-entertainment plan and make another play for Pier 40 — assuming, hypothetically, the lease term does get extended — Taylor replied she couldn’t say.

“I’m not going to speculate if some [version of the plan by] Related can come back,” she said.

Due to the R.F.P. process’s confidential nature, the Trust’s financial analyses of the proposals have never been made public. But Taylor assured the latest plan didn’t pass muster when the Trust crunched the numbers.

“It didn’t even come close,” she said.

Neither did the previous plans submitted separately by the CampGroup/Urban Dove and the Pier 40 Partnership, before the Trust asked the two groups to work together this spring, she said.

The pier needs uses that generate more revenue, Taylor stressed, and therein lies the dilemma.

“The problem is people in the neighborhood don’t want anything on the pier,” she said, adding she understands that point of view. “The problem is that someone has to pay for it. Nobody would be happier than me if someone from the community said, ‘Here’s a check for $100 million. Do what you want with it.’ ”

Five years ago, the Trust scrapped its first R.F.P. process for Pier 40 after proposals featuring the world’s largest oceanarium, a big-box hardware store and FedEx waterborne delivery service tanked with both the community and the Trust.

This second time around, only two viable proposals were submitted after the Trust issued a new R.F.P. two years ago: The Related Companies plan, featuring Cirque du Soleil and other entertainment uses, and CampGroup/Urban Dove’s “The People’s Pier” plan, featuring a day camp, a school and increased sports facilities. Related, however, couldn’t makes its plan’s financials work within the Pier 40 R.F.P.’s 30-year lease requirement, asking for a 49-year lease instead, and, as a result, was disqualified by the Trust this March.

At that point, Taylor asked CampGroup/Urban Dove to work jointly on a new plan with the Pier 40 Partnership, a local, ad-hoc parents group that formed a year ago to protect the pier and its sprawling courtyard ball field from megadevelopment.

This latest plan seemed to gain significant momentum in June when the city’s School Construction Authority expressed interest in developing three high schools on Pier 40. Last week, The Villager reported that a space in the plan was also being earmarked for a potential future home for the new, private Greenwich Village High School.

The plan’s other revenue-generating components included continuation of the pier’s current parking operation for about 2,000 cars — though compressed into a smaller space by using lifts — a fairly major event space, CampGroup’s eight-week summer day camp and some small-scale retail. In addition, a nonprofit Pier 40 conservancy — a key idea from the Pier 40 Partnership — was also part of the concept.

But the Trust board members made it clear last Thursday that they lacked confidence in this latest offering. At the same time, as they rejected the plan and effectively closed the R.F.P., several of them expressed serious concern about the pier’s dilapidated state. At a public hearing on the latest plan earlier this month, Paul Travis, a consultant with Washington Square Partners working on the CampGroup/Urban Dove/Partnership proposal, said the pier needs about $25 million to $30 million worth of repairs for its roof and metal support piles. Last week, however, Connie Fishman, the Trust’s president — or head of its paid staff — said it would cost closer to $40 million to $50 million to fix the pier’s most severely deteriorated piles.

In her report to the board before its vote, Fishman pointed out the main flaws the staff had identified in the latest plan after it was recently submitted to the authority for review: “Lack of equity,” “low returns on private investment,” “lack of rent security” and “weakness in some of the revenue projections” would translate into a “substantial risk” that the proposal wouldn’t float, Fishman said.

A key component in the latest Pier 40 plan — the School Construction Authority — Fishman noted, would have preferred a longer lease.

“The S.C.A. has an issue that the development of their portion of the pier is very expensive given the term of the lease they would get,” she said.

Chairperson Taylor said, while it wasn’t financially feasible under the latest plan, in general, “putting a school on the pier is a very good idea.”

A letter by former state Senator Franz Leichter, who was traveling, was read into the record, in which the Trust board member and co-author of the park act called for closing the Pier 40 R.F.P. Leichter suggested lengthening the term of the pier’s lease, as he noted was done at another Hudson River Park pier, Pier 57 at W. 16th.

Larry Goldberg, a Trust board member, said he was “very frustrated by how this process has gone. We cannot play with proposals forever,” he stressed.

Parks Commissioner Adrian Benepe, also on the Trust board, recalled he previously supported Related’s plan because he felt it would generate sufficient revenue. He said he backs lengthening Pier 40’s lease term.

The Pier 40 Partnership last year pledged it could raise $30 million for the pier from the community. But Benepe said that was wishful thinking. Private fundraising for the High Line park — which he called a “sexy, new park” — has pulled in even less than that, only $25 million, in five years, he pointed out.

Plus, Benepe noted, referring to the current financial markets meltdown, “People that have a lot of money might be out of a job. You can’t just hold a bake sale.” Pier 40’s plans, he said, have to be “a little bit more practical and not so pie in the sky.”

Former Parks Commissioner Henry Stern, a mayoral appointee to the board, threw out the meeting’s most unusual idea, asking, “What would happen if we just allowed nature to take its course,” and let Pier 40, as he put it, “return to the sea?”

“The park would be out $6 million in [annual] revenue,” Taylor retorted. Most of that sum comes from the pier’s parking operation. The 5-mile-long park is supposed to be financially self-supporting, and revenue from Pier 40, as well as from Chelsea Piers, is a key part of that equation.

Taylor closed the meeting by saying that over the next few days, she would sit down with the staff and “map out what our alternatives are. … Under any circumstances, I do not think there is an option for the pier that does not involve a lease extension,” she said.

Rich Caccappolo, a leading member of the Pier 40 Partnership, released a statement, saying: “We are disappointed that ‘The People’s Pier’ working with Washington Square Partners was unable to submit a proposal deemed financially viable by the Trust. While we respect the tremendous effort that CampGroup, Urban Dove and W.S.P. have put into this proposal, this result further demonstrates our position, expressed at the turn of the year, that a standard approach to development is not going to solve this complex equation.

“We were not going to disrupt their efforts or disregard the Trust’s request that we work with ‘The People’s Pier’ team,” Caccappolo continued. “But we still stand by our initial thoughts and the HR&A study we delivered in January that showed that a traditional, for-profit, private developer approach was not going to work. We still pledge our efforts to work with the Trust and to work with the neighborhood and to create a conservancy that can iteratively repair and improve the facility.

“It should be noted that ‘The People’s Pier’ effort has achieved many things which will allow the process to continue moving forward,” Caccappolo said. “They documented and received agreement that a seismic upgrade [for the pier] was not required, and they have identified the condition of the pilings and the cost of repairing them. Most important, working with us and other groups in the community, a great deal of progress has been made in refining and gaining consensus on appropriate uses for this community resource — playing fields and other recreational uses, schools, parking, pertinent retail and perhaps an event space. All of these outcomes are important building blocks in developing the ultimate use of this valuable and unique community resource. We remain as committed as ever to assisting H.R.P.T. as it continues to review viable options for Pier 40.”

Jai Nanda, Urban Dove’s executive director, said he agreed with the Trust’s thinking on the lease issue.

“A 49-year lease is better,” he said. “The problem with our plan was that in not having a lease extension, it was making it harder to give the School Construction Authority answers. But the financial model we have does work at 30 years,” he maintained.

Asked if she would support amending the park act to allow a longer-term lease for Pier 40, Assemblymember Deborah Glick said it would really depend on the pier’s use. She noted that the lease extension legislated for Pier 57 several years ago during its failed first R.F.P. process was done so the pier — which has a unique, floating-caisson foundation — could qualify for historic preservation funds.

“If it’s about enabling a megadevelopment, that is not in the interest of the community or consistent with park uses — that’s a problem,” Glick said of allowing a longer lease. “A school is one issue. Once you change the terms, they’re changed. They have to be use-sensitive,” she stressed.

Tobi Bergman, president of Pier Park & Playground Association, which runs youth baseball programs on Pier 40, and Arthur Schwartz, chairperson of Community Board 2’s Waterfront Committee, both backed what they called an “incremental approach” to repairing and redeveloping the pier.

“Let the School Construction Authority build out its part of the pier,” Bergman said. The Trust can then fix the pier’s piles bit by bit, starting with the most badly corroded ones, he added.

As for extending the lease term, Bergman said, “They shouldn’t change the lease until they know what the plan is — or unless restrictions are put in. The number-one restriction is the courtyard ball field has to stay. I think the other restrictions would have to deal with limiting commercial impact on the park and the bike path. I think you’re starting to get close if you say, ‘The pier must include a school and must include the courtyard field.’ ”

On further thought, Bergman said a new R.F.P. would be a bad idea. He suggested the Trust partner with a nonprofit developer, with whom it would restore and redevelop the pier, while the Trust would continue to operate the pier. Issuing another R.F.P. and asking for a lease extension would just lead to more losing fights with the community, “and we’re going to end up, five years later, with nothing again,” he said.

Echoing Glick and Bergman, Schwartz said he could support a lease extension for Pier 40 if it was for the right things.

“It has to be use-specific,” he said. “I would support it for a school, a museum or some other youth not-for-profit.”
In addition to an incremental fix-up for Pier 40, Schwartz said another idea that could help a Pier 40 plan to float is to amend the park legislation to allow the Trust bonding authority so it could borrow money.

On Tuesday, the Marino Organization, the P.R. company the Trust is now using, released the following statement by Taylor: “After six years and two separate requests for proposals, we are still unable to designate a developer for the reuse of Pier 40, despite the hard work of the Trust, the developers, elected officials, the Hudson River Park Advisory Council and the community.

“While the process generated some good ideas — even some that are universally supported, such as the inclusion of schools — neither of the proposals [by CampGroup/Urban Dove or Pier 40 Partnership] meets all of the criteria that were established by the Trust.

“In the near future, we will begin discussions with our finance committee, board members, elected officials and community representatives to re-examine baseline criteria and consider our course of action.

“As we complete the complex task of transforming the decaying waterfront into a great recreational facility enjoyed by millions of people from around the city and the world, we will continue to try to implement a development strategy for Pier 40 that meets our objectives of ensuring the structural integrity of the pier, maintaining consistency with the Hudson River Park Act and generating sufficient revenue to maintain and operate Hudson River Park well into the future.”

Meanwhile, as it closes one unsuccessful R.F.P. process, the Trust is taking a stab at a second R.F.P. for Pier 57, with responses due this month. According to a source, respondents include Vornado, Related Companies and Durst/C & K Properties. Unlike Pier 40 — for which the park act requires space equivalent to 50 percent of the pier’s footprint to be open and for public use — Pier 57 has no such requirement; it is also a much smaller pier.

Asked if Related’s Pier 40 Cirque du Soleil plan could be switched over to Pier 57, Taylor said no, since it “wouldn’t fit.”

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