In June 2016, the Brooklyn Bridge Park Corporation (the “Park Corporation”) announced that it would proceed with the two planned Pier 6 towers even though the Empire State Development Corporation had declined to approve the requested modification to the General Project Plan. As a consequence, the BHA filed an Article 78 Petition with the New York State Supreme Court in July that: 1) seeks to enforce the commitment in the Park’s governing General Project Plan to limit housing on Pier 6 to only that necessary to support the Park, 2) calls for a Supplemental Environmental Impact Statement in light of the significant changes in our community since 2006, and 3) challenges several of the procedures followed in the development of the Pier 6 project. A court hearing has been scheduled for March 6, 2017. The BHA is represented by Jenner & Block acting as pro bono counsel.
About This Issue
The BHA continues to work with neighborhood groups, primarily People for Green Space Foundation (PFGSF) and the Brooklyn Bridge Park Defense Fund, to ensure that the Park Corporation lives up to the commitments it made in 2005-2006 to build only that amount of housing in the park which is required to maintain the park. We take this commitment very seriously. We were among the groups that acquiesced to the reality that the Park had to be self-supporting and that some level of revenue-generating development on Pier 6 might become necessary. But our agreement was predicated on a firm commitment, memorialized in the Final Environmental Impact Statement and the General Project Plan, that housing on Pier 6 would be built only if it was demonstrated unequivocally that it was financially necessary to support the maintenance and operations of the park. We firmly believed then, and continue to believe today, that the piers we and others worked so hard to save from development should be parkland for Brooklyn.
A Rush to Build, A Lack of Transparency
As the Park Corporation prepared to move forward with the original plan to build two huge towers on Pier 6, one 15 stories and the other 30 stories, members of our community began to question whether that development was necessary. In particular, this question arose from the huge increase that has occurred in real estate values in this area in the past ten years that would necessarily mean that the already existing commercial projects in the Park, One Brooklyn Bridge, Pierhouse, John Street and Empire Stores, would generate far more revenue for the Park than was anticipated in 2005-6. Since the financial structure of the Park permits it to receive all property tax payments from development within its boundaries (known as payments in lieu of taxes, or PILOTS), the more valuable the property taxed, the more revenue the Park receives. The BHA, PFGSF, our local elected officials and the Park’s Community Advisory Council all asked the management of the Park for its financial model with its underlying data so that we could independently assess what revenue, if any, it would need from Pier 6. The BHA even filed a Freedom of Information Law (FOIL) request for that information. The BBPC staff refused to provide the model and data that underlies their position that Pier 6 housing is necessary to support the Park until the BHA filed its Article 78 petition in July 2016.
A Surprise Rise in Near-Term Expenses
As the community began to question some of the Park’s financial revenue assumptions, the Park Corporation also announced that its expense budget was higher than the one they had been relying upon for years. Its expenses had greatly increased due to its choice to use a new method of repairing the piles that support the piers. Whereas for the past decade the Park Corporation had planned to use a reactive maintenance approach that involved wrapping each pile in concrete when it had neared the end of its useful life, it now proposed a preventative approach that involved using an epoxy grout on many piles even before the end of their useful lives. Whereas the reactive approach spread the costs of pile repair over approximately 40 years, the new approach required the expenditure of $90 million in 2016—thus allegedly requiring the development of housing on Pier 6 to pay for it.
Affordable Housing Confuses the Issue
When the Request For Proposals for development of the Pier 6 towers emerged, it immediately became apparent that the City was violating its commitment to build only that amount of housing needed to support the Park. Instead of using the improved real estate market to reduce the scale of the towers planned for Pier 6, the City decided to keep the housing exactly the same and make approximately 30% of it affordable housing. Without seeing one number at that time from the Park, it was patently obvious that the housing could be significantly smaller than originally planned since at least 30% of the revenue from this project was not needed. While the BHA is not opposed to affordable housing, for more than a decade it has been opposed to any housing in the middle of desperately needed parkland unless it is needed to support the Park.
First Lawsuit Calls for a Supplemental EIS
Frustrated by the lack of disclosure and dialogue on the central question of whether Pier 6 housing was needed, PFGSF filed a lawsuit, primarily arguing that given all of the changes in our neighborhood since the preparation of the original Environmental Impact Statement (EIS), the Park Corporation should be ordered to prepare a supplemental EIS to reflect those changes. PFGSF asked the court to consider changes in school population, traffic, and flooding, as well as the changed economic conditions since the original conclusion that no alternatives existed to the proposed towers. The law firm of Jenner & Block, acting as pro bono counsel for the BHA, prepared an amicus brief in support of PFGSF.
Before any court decision, however, a settlement was reached with PFGSF. The defendants essentially agreed that their plan to build affordable housing on Pier 6 violated the General Project Plan which limited housing to only that financially necessary and that they would therefore commence a multi-step process to amend the General Project Plan to permit affordable housing. Amendments to the General Project Plan must be approved by the Empire State Development Corporation (ESD). To our shock, the amendment submitted to the ESD did not simply request permission to build affordable housing, but asked the ESD to eliminate the fundamental commitment that had been made in 2006—that financial necessity would be the pre-condition of any development on Pier 6.
The Failed and Futile ESD Proceeding
In accordance with the procedures established in the settlement of the PFGSF lawsuit, the BHA and others in our community provided hours of testimony and submitted thousands of pages in opposition to the proposed modification. The BHA and two local community group partners released three reports on February 29, 2016, in the continuing effort to demonstrate that real estate development on Pier 6 to fund Park maintenance is premature, at best, and very likely unnecessary at all. The first report was done by an expert appraiser who was tasked with calculating what the likely revenue will be from existing projects in the Park; the second analyzed the impact of the findings of the appraiser on the Park’s financial model; the third evaluated the Park’s new approach to maintaining the piles. The reports raise significant questions as to whether the Brooklyn Bridge Park Corporation (“BBPC”) has significantly understated the revenue it will receive from the existing projects in the Park (One Brooklyn Bridge, Pierhouse, Empire Stores and John Street) and whether it chose an inappropriate method of pile repair that would, at a minimum, increase its near-term expenses significantly. The letter to Board members of the Park CorporationBBPC and the ESD Empire State Development Corporation which summarizes the findings of the three reports, as well as the three reports, can be found below in “Learn More.” This lengthy and time consuming procedure ultimately led nowhere. The ESD declined to rule on the request for a modification and the City announced that it would proceed with its plan anyway. In June the Park CorporationBBPC Board approved the Pier 6 towers. It should at least be noted that before that vote the BHA proposed a compromise solution in which, essentially, we agreed to support the development of affordable housing in the underutilized building at 340 Furman Street in exchange for a delay in the development of the towers until the existing developments in the Park were appraised by the New York City Department of Finance and the revenue stream they would provide to the Park became clear. That proposal was rejected. The BHA was left with no path forward other than litigation, which it has now commenced.
For more background information on this issue, visit www.savepier6.org
Below are links to key documents and articles:
The BHA’s letter to the Empire State Development Corporation Board and to the Brooklyn Bridge Park Corporation Board, dated August 24, 2015, signed by 17 civic organizations and Public Advocate Letitia James, can be found here.
The BHA’s statement made at the public hearing in July 2015 on the proposed modification to the General Project Plan can be found here.
A Brooklyn Eagle editorial can be found here.
Click here for the joint letter from the BHA, People for Green Space Foundation, and Brooklyn Bridge Park Defense Fund summarizing the three reports the group commissioned to demonstrate that real estate development on Pier 6 to fund park maintenance is premature, at best, and very likely unnecessary at all.
The three reports can be found here:
Appraisal Report: This report by an expert appraiser calculates the likely revenue from existing projects in the park.
Impact on Financial Model: This report analyzed the impact of the appraisal findings of on the park’s financial model.
The Wall Street Journal’s coverage can be found here.