Eliot Spitzer, Builder
January 1st, 2008, 11:51 am
Location: Can you talk about the West Side rail yard bids—are the financials in a range that you expected them to be? Mr. Spitzer: We are pleased with the bids as they came in—in terms of the magnitude financially, the scale of the proposals, the creativity, the involvement of some of our most prominent real estate companies and private-sector employers who want to site headquarters there. … It reflects and justifies our confidence that if we did an RFP [request for proposals] for that site, we could elicit great response. How is having an anchor tenant going to help a developer? Is it reasonable to expect that whoever is selected would have a tenant? I don’t want to say anything that would be deemed as influencing the analysis of the bids, just because not every one of the bids has a prominent anchor tenant yet; but I think, historically, if you look at major developments of that sort, having an anchor tenant certainly is viewed by financing entities as demonstrating the long-term success that makes financing a development such as that more possible. Does the state expect to merge some of the bids? Both too early for me to say and wrong for me to comment on, just because this is a process that the [Metropolitan Transportation Authority] will run. Which is your favorite based on design? Deep inside me I may have views on that, but it’s certainly wrong for me to pass judgment in any way. Generally, do you think you’re in a tougher position now to ask the Legislature for funding for initiatives than you were at the start of your term? To the extent that we are now facing a deficit that is portrayed against the economic uncertainty that we have staring us in the face, absolutely. It is one thing to feel confident that you can grow yourself out of momentary deficits; it’s another thing to be worried that if revenues this year are a bit softer, how will they look next year. And politically? It’s not so much a political decision; it’s really a numbers decision. You’ve pledged not to raise taxes, but do you think you will turn to raising fees around state government? Fees move up sometimes in areas where they are used to cover particular expenses of agencies that depend upon them to pay for their budget. That is usually part of the budgeting process, but that is very different than a tax increase, and fees move in a different way. Has progress come slower than you expected generally with economic development initiatives? No. Actually, we’re pretty much on track. I’ll give you some examples of policy shifts that have moved extraordinarily well: The 20 percent cut in workers’ comp rates, which was a billion-dollar savings to businesses every year in perpetuity. … The property tax cut we got done; some of the infrastructure development projects—Ground Zero, where we negotiated a $2 billion settlement to all the insurance claims, and that has been very important in terms of providing the capital for that rebuild. It got the JPMorgan Chase deal to Building Five [on the World Trade Center site, where the former Deutsche Bank building stands]. Building Five obviously has some problems that we’re dealing with in the deconstruction, but that has been moving very well. With Moynihan [Station]—we’re having great discussions. Hudson Yards, the RFP is out; we’re moving that at least as quickly as I ever thought we could. I feel there is a frustration within the industry at least about some projects, such as the proposed expansion of the Javits Convention Center and Brooklyn Bridge Park. Javits—sure, that’s been a tough analytical process. Brooklyn Bridge Park is a question of financing, but we’re moving forward on that, we have good leadership there, so we’re getting there. … Big projects are difficult to navigate sometimes. For Moynihan Station, developers Related and Vornado stand to make hundreds of millions, if not billions, on the Pennsylvania Station project and surrounding development. How much do you think they should contribute? I’m not going to put a number on the table. What I will say is that we’ve had good conversations with the development team. It is a project that we are all committed to getting built because, first, what we the public get out of it most fundamentally is a rebuild of Penn Station. Right now, as an entry point to the metro region, the existing Penn Station is certainly not what we would desire. It’s—the metaphors I use I’m not sure I want printed. … When you go down into the depths of Penn Station, you feel that you’re descending into one of Dante’s levels of hell. … We’re in the midst of a negotiation with the developers, and we’ll come to a middle ground that I hope is fair to everybody. They will do well on the development, and that’s great. If they weren’t going to do well, we wouldn’t get the millions of square feet of office, retail and residential space built; and if they weren’t going to do well, we wouldn’t be able to afford to rebuild Penn Station. It would be safe to expect a fair contribution from the state as well? This is the sort of infrastructure development that government should put funds into. And we’re hoping for federal assistance as well. The city has asked the state to be a 50/50 partner with Governors Island, but last year the state gave less money than the city. Will the state be matching the city’s commitments this year? The deal is a 50/50 partnership, and we will do that in due course. I think the time lag until now has been the failure to define with any specificity what we’re doing. We’re fully funded for the next two years in terms of our ability to do the design work, the environmental reviews that we need. We’re going to be there doing our part. We have a $4.3 billion deficit right now, but in the long haul, we’ll be doing our part. About the Javits Center expansion—is a renovation of the facility the most likely option at this point? [Editor’s note: On Dec. 20, the day after this interview was conducted, Governor Spitzer’s development chief Patrick Foye said at a State Assembly hearing that the state would scrap any large-scale expansion plans for Javits.] This has been a difficult analytical process, primarily because the cost structure turned out to be very different from what we were told and what we expected. … The numbers were not what we were led to believe they were, and I don’t say that to impute anything improper; but the numbers—when people went back and we said, ‘Check the numbers, make sure we’re dealing with data that’s good’—the cost structure came in in a very different place than we anticipated, so that required some reexamination of some of the premises and some of the financing decisions that had been made. Though isn’t an expansion a pretty strong driver of economic development? That’s actually something that’s been a topic of significant debate. I think for different cites, the role of [a] convention center plays a different role. … With hotel occupancy rates what they are, with the draw to New York what it is for people, tourists—44 million tourists a year, I think, is the number—it may be less critical that we actually have a convention center that is the largest in order to keep our hotels filled and to keep the tourists coming here. If you moved to not expand Javits now, would your administration push to have a more long-term plan, to perhaps build a convention center in Sunnyside, Queens? I don’t want to speculate about that right now. The city has tens of millions of square feet of commercial development planned, but we still have, overall, fewer jobs than in 2000. Do you think the city could be overdeveloping? I don’t want to quite say that if we build it, they will come; but, certainly, if we build the additional commercial space that we project we need, I have no doubt that it will be filled.