CHB has exclusive access to a letter that is being circulated to elected officials next week from the Cobble Hill Association. Seems like the January 29th public meeting about Brooklyn Bridge Park’s financial model left CHA President Jeff Strabone with quite a few questions. A large part of the debate surrounding the park stems from its self-generating maintenance budget. CHA’s letter pinpoints critical financial issues and ambiguities that remain after the meeting.
Re: Brooklyn Bridge Park, financial data, and the federal stimulus
On January 29, 2009, the Brooklyn Bridge Park Development Corporation released some financial data about the park’s construction and operations budgets to the public. We are grateful that, since its last public disclosures in October 2005, the BBPDC agreed once again to provide such data. (The appendix to this letter contains data and text taken directly from the BBPDC’s presentation of January 29, 2009.)
The Cobble Hill Association has been one of the strongest advocates for a Brooklyn Bridge Park for more than two decades. Continuing our historic role as park advocates, I am writing to you out of concern regarding both what the January 29 financial data reveal and what they do not.
We would like to ask your help in seeking answers to lingering, important questions about the financial disclosures. We make this request for the sake of transparency and good government. Putting aside for the moment controversies about the park’s design, we are concerned that the park’s finances are a mess. The worst-case scenario would be one where millions of dollars were ill-managed and ill-spent and the public wound up without a world-class park. No one wants that to happen. Can you help us in seeking answers to these Ten Unanswered Questions about Brooklyn Bridge Park? We are confident that greater transparency will make a great park more likely.
- Utilities for what exactly?
The financial disclosures for construction show a $61 million cost for utilities. That is so high a cost that we believe it includes the cost of providing utilities to the development parcels. The unique funding scheme for the park’s maintenance calls for the development parcels to pay for the park. If any portion of the park’s construction budget is spent to benefit the development parcels, then the reverse would be true: the park would be paying for the development parcels. That would be a theft of public moneys and must never be allowed to happen.
Question: Will any portion of the $61 million utilities cost provide utilities or utilities infrastructure for the development parcels?
- Construction or Operations?
The unique, controversial funding scheme for the park’s maintenance and operations budget designates certain items as “Maintenance and Operations” which would, in any other park financial model, be classified as “Construction Costs.” One such example is the pilings beneath the piers. Slide 26 of the January 29 presentation reveals that these “Marine Infrastructure Costs” are part of the Maintenance and Operations Budget. The annual amount of Marine Infrastructure Cost is $4,060,000, or 25% of the annual Maintenance and Operations budget of $16,104,000. These costs are obviously misclassified.
Question: By classifying traditional Construction Costs as “Maintenance and Operations,” isn’t the result that the M&O budget is artificially high and that, therefore, the development parcels will have to generate commensurately more revenue to pay for the park’s inflated M&O budget?
- Where will the money come from?
We have a second question about the marine infrastructure mentioned in question 2. Slide 26 of the January 29 BBPDC presentation reveals the following: “The cost of this work could be as high as $150 million, which must be performed over the next 15 years.” That is a lot of money without any apparent funding source.
Question: How can marine infrastructure costs be budgeted at $4,060,000 per year in the M&O budget yet also cost $150 million over 15 years? And where will the money come from to pay this unbudgeted $150 million cost?
- Soft costs?
The construction budget shows “Miscellaneous Soft Costs” of $13,100,000. That’s a lot of miscellaneous.
Question: Can we obtain a breakdown of this large miscellaneous cost?
- Architects and engineers?
The construction budget shows “Architecture and Engineering” costs of $20,400,000. In answer to a question of mine at the January 29 public meeting, Regina Myers of the BBPDC revealed that, so far, Van Valkenburgh Associates has been paid $18 million. That leaves only $2.4 million for all remaining landscaping design and architectural work, not to mention all past and future engineering.
Question: Since the architecture and engineering costs have almost entirely been spent already just on the landscape architect, how will the engineers’ and architects’ fees be paid as the project moves forward?
- How much development?
The acreage devoted to private development has grown from 7 acres in 2006, to 8 acres in 2007, to 10.2 acres at the January 29 meeting. We do not understand why the acreage keeps growing since the total park area has not grown.
Question: What accounts for the progressive growth in land area occupied by the development parcels? Can we see the development acreage broken down by building and surrounding private amenities?
- Alternative funding?
The unique, controversial funding scheme for the park’s maintenance and operations budget relies chiefly on housing, a revenue source that is subject to huge market swings. We know that there will also be concessions and automobile parking in the park, yet these were not included in the financial disclosures, nor was the revenue generated by the River Café.
Question: What amount of revenue is expected to come from park concessions and automobile parking, and might it be enough to allow reductions in the height of the development parcels? Will the revenue from the hotel restaurant and a possible grocery store at 360 Furman Street go to the park, or will it be kept by the operators of the development parcels?
- Furman Street Freeze-Out?
The building at 360 Furman Street is expected to generate annual revenue of $2,982,000 towards the park’s Maintenance and Operations budget through PILOTs and ground rent.
Question: If the developer of 360 Furman Street, Robert A. Levine, defaults on his loan, who will be responsible for paying the revenue that the site is expected to generate?
- Pop-up money?
We learned at the January 29 meeting that the BBPDC incurred costs to create the so-called “pop-up park” for the summer of 2008, but no other details were provided.
Question: Can we see a detailed breakdown of the costs to create the pop-up park and the revenue that it generated? We are particularly interested in itemized costs for design, construction, programming, security, operations, food, and liquor, as well as to whom the costs were paid.
- Old data or new?
The Final Environmental Impact Statement was issued in December 2005. Appendix C devoted many pages to explaining in detail the park’s Revenue Assumptions and Maintenance & Operations budget.
Question: Since the financial data released on January 29, 2009 are so different than the data that were the basis of the 2005 FEIS, would the BBPDC provide similarly detailed explanations of its Revenue Assumptions and M&O calculations in 2009?
One more point: the federal stimulus
We are aware that our elected officials are considering asking Governor Paterson to direct some of the state’s 2009 federal stimulus money to pay for the $150 million in marine infrastructure costs mentioned above. I myself publicly asked Senator Gillibrand on February 18, 2009 to consider lending her support to this idea.
We believe that the stimulus money should be used for this purpose but only on one condition: that in exchange for removing this massive cost, which the BBPDC classifies as Maintenance and Operations, the hotel and the new housing in the park should be eliminated forever from the park plans.
Why do we feel that this arrangement would be justified? The reason for the new housing has always been explained in terms of the park’s uniquely expensive operating costs. But consider this: With the annual $3 million from 360 Furman Street and without the need for the annual $4 million for marine infrastructure costs, the park would no longer be uniquely expensive to operate. With this combined $7,042,000 plus the unknown revenue from concessions, the park’s operating costs would be cut in half. Why then would we need new high-rise apartments at Pier 6 and a hotel at Pier 1?
Let’s find a way to use the federal stimulus money to knock out the housing and the hotel. Haven’t we all said that we do not want housing if it proves unnecessary to pay for the park?
Please let us know when we might be able to meet with you in person to discuss these questions and to ask your support in finding the answers.