Problems and Solutions Mega-Development Projects Face: New York City Case Studies
University at Buffalo: The State University of New York
Jacob A. Bogitsh
PD 499
Dr. Ernest Sternberg
Fall 2011
Problems and Solutions Mega-Development Projects Face: New York City Case Studies
Introduction In the post-industrial economy, New York City boomed with a series of mega-projects that effectively transformed the iconic cityscape. Focusing in the midtown and downtown sectors of Manhattan, policy makers aimed to revitalize land for economic resurgence and slum clearance by undertaking large redevelopment plans in a number of blighted New York neighborhoods. These included the redevelopment of Battery Park City, Times Square, the construction of the original World Trade Center, the United Nations Headquarters, and Lincoln Center, to name a few. Such efforts, although applauded in their ambitious character, were matched by tremendous difficulties. The prodigious economic, social, and political complexities that characterize such projects never exist in a “Newtonian world of cause and effect where things go according to plan.” 1 Development is more often than not contingent on factors that are outside of the abilities of project leaders—causing delays that can last for decades. Success then becomes a confluence of opportunity and perseverance to continually progress. The ideals of creating an image of high culture for the city drove many of the redevelopment plans during this time. Hoping to compose neighborhoods that defined elegance through urban form, development coordinators saw slums as an obstruction to their vision. Due to these opposing interests, conflicts between public coalitions and project agencies would ensue about the physical and social goals that motivated officials. They viewed the marked real estate as an opportunity for profit and “creative destruction” 2, while residents and business owners often battled the challenges of eminent domain, relocation, and affordable housing.
Such
1
Nils Bruzelis, Bent Flyvbjerg, Warner Rothengatter, “Big Decisions, big risks. Improving accountability in mega projects”, Transport Policy. 9 (2002) 143 2 The term Joseph A. Schumpeter coined from Capitalism, Socialism, and Democracy (New York Harper, 1975) [orig. pub. 1942], pp. 82-85
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
obstacles were exemplified by the residents of Lincoln Square in the 1960s and 42nd Street theater owners during the redevelopment of Times Square in the 1980s. 3 To add to the complexities of progress, mega-development projects faced barriers obtaining support to continue onward as priorities, funding, and market cycles shift—causing fiscal uncertainty. Financial disasters, such as the 1975 fiscal crisis, 1987 real estate market collapse, and the recession of the late ‘80s, provided extreme difficulties for projects to progress. These obstacles caused investors to withdraw their support, problems for developers to obtain tenants, and fights to retain political support. In the face of these difficulties, government has the ability to mend plans and create policies that can encourage growth. Three case studies will be analyzed to determine the obstacles mega-developments face during development: Battery Park City, the redevelopment of Times Square, and redevelopment of Lincoln Center. These projects were similar in size, economic impact, cultural impact, and type of development. The three challenges that stood out among these studies were: eminent domain, the financial uncertainty of the fiscal crisis in 1975, recession of the late 1980s, and the role of government support. They speak to the different public and private interests involved in such large-scale development and the different difficulties developments undergo, sometimes causing immense delays lasting for decades.
Eminent Domain, the Protests of Relocation, and Affordable Housing Eminent Domain is the power of states (and certain localities) to acquire property unilaterally from a private owner in the pursuit of a legitimate public purpose. 4 Under the Fifth 3
Samual Zipp, Manhattan Projects: The Rise and Fall of Urban Renewal in Cold War New York (New York: Oxford University Press, 2010), 200, Alexander J. Reichl, Reconstructing Times Square: Politics & Culture in Urban Development (Kansas: University Press of Kansas, 1999), 77
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
Amendment to the United States Constitution, the owner of any appropriated land is entitled to reasonable compensation, which is usually determined to be fair market value of the property. 5 In urban renewal programs, two principles, identified by David Gale, have guided the process. 6 The first he calls “Tabula Rasa Imperative,” which operates under the premise that urban revitalization can only succeed by a complete gutting of blighted areas and building anew from the ground up. The second, “Publicism Imperative,” suggests that only through massive efforts between federal and local government action can slummed neighborhoods be reversed. He asserts that private-sector initiatives alone are not enough to appropriate the change, but require government power and money. Essentially, the combination of government’s ability to condemn land with the development initiatives of private-sector companies, enabled urban renewal programs to take way. During the latter half of the 20th century, many New York City megaprojects utilized a partnership between both private and public entities to facilitate this process. Using their vision for a high cultured New York, developers justified the acquisition of land to introduce a healthier social and economic environment. Times Square During the 1980s, the city saw Times Square deteriorate to an area filled with street crime, unsanitary conditions, pornography, and prostitution. Reminiscing of the once “Great White Way” 7 that occupied the location, the Koch administration, along with many pro-growth
4
Alexander J. Reichl, Reconstructing Times Square: Politics & Culture in Urban Development (Kansas: University Press of Kansas, 1999), 98 5 "eminent domain." Encyclopædia Britannica. Encyclopædia Britannica Online. Encyclopædia Britannica Inc., 2012. Web. 03 Jan. 2012. <http://www.britannica.com/EBchecked/topic/185870/eminent-domain>. 6 Reichl, 23. David Gale is a professor of Public Administration and Political Science at Rutgers University. 7 Lynne B. Sagalyn, Times Square Roulette: Remaking the City Icon (Cambridge, London: MIT Press, 2001), 30. The term used to describe theater entertainment in the 1920s.
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
development and business organizations, saw the redevelopment as an opportunity to create white-collar economic growth in the form of office buildings along 42nd Street. In 1984, the Board of Estimate (BoE), a governmental agency responsible for budget and land-use decisions in New York City, passed a resolution approving the Forty-second Street Project. 8 Desperate to recapture Times Square from further ruin and return it to the betterment of the general public, the BoE and Mayor Koch wanted to replace the project area with a variety of new cultural and entertainment uses. 9 Using the promotion of theater preservation as its strategy, a number of 42nd Street theaters would need to be condemned for rehabilitation. Shortly after this decision was made, local businesses and theater owners, as well as surrounding property owners uncertain about the future, fiercely opposed the project in the form of 19 lawsuits. They strongly opposed the acquisition of their land for the enrichment of other private developers, especially when some owners were willing to rehab the theaters themselves without the use of public funds. By the time the Urban Development Corporation 10 filed its petition for condemnation, 42 lawsuits â&#x20AC;&#x201D;seven of which reaching federal courtâ&#x20AC;&#x201D; piled up against the project, causing serious delays. Eventually, there would be a total of 47 lawsuits to overcome before any progress could be made. The use of eminent domain effectively cleaved the business community into those that supported the project and those that opposed it. One side perpetuated a pro-growth coalition put forth by Mayor Edward Koch, major corporations, and developers to facilitate and reap the
8
Reichl, 98 Ibid. 10 The Urban Development Corporation is a state entity sponsoring economic development projects throughout the state by issuing tax exempt bonds. It was later renamed Empire State Development Corporation [ESDC] in 1995 under Governor George Pataki. 9
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
political and economic rewards of a revitalized district. The other saw local business and property owners fighting to keep their theaters from being condemned for rehabilitation. Two primary organizations, holding on to their buildings as speculative investments, the Brandt organization and the Durst Organization, were involved in roughly three-quarters of the “litigation conspiracy” 11 to derail the project. The two organizations would lead a coalition of small business owners and neighborhood residents fearing displacement to form the Committee to Reclaim Times Square. The aim of the committee was to rally enough anti-development support to dominate public opinion about the project and overcome the pro-growth coalition. During the hearings, residents of the Clinton neighborhood (formerly known as Hell’s Kitchen) were vehemently present. Their opposition was based on the fear of displacement of low-and moderate-income residents along with the prospect of gentrification to the area. Many community members used the cheap theater prices as a low-cost source of entertainment, and saw the advancement of gentrification exclusively catering towards the upper-white middle class. Numerous residents were content with the status quo of the neighborhood and were insulted by the proposal that the revitalization was for the Clinton community’s benefit. There was a collective assumption that the development efforts were tailored more towards the political and economic incentives of pro-growth officials to gentrify community members out of the neighborhood to increase room for growth. However, their attempts were short-lived when their claims failed to live up in court. Legal approval to condemn properties was decreed in April 1990, five years after the Board of Estimate approved the project, initiating the redevelopment process. 11
The term appropriated by sponsors to describe the judicial actions the Brandts and Dursts organizations would use to halt the project.
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
Lincoln Square As Times Square was looking to revive the glory of the “Great White Way,” Lincoln Square, with Lincoln Center as its centerpiece, looked to confirm New York as the post-Cold War cultural capital of the world. As the nation was in the grips of fighting communism overseas, major public leaders, such as John D. Rockefeller III, his younger brother David, developer Robert Moses, and President Dwight D. Eisenhower argued for the same tenacity to rebuild urban blight and prevent decentralization on American soil. Moses would use his power as head of the Committee on Slum Clearance (CSC) to identify parcels of land envisioned for redevelopment that would benefit private investors, public rebuilding, or a combination of the two. 12 Using the ability of Title I of the federal Housing Act of 1949 to fund urban redevelopment and the power of eminent domain, Moses and his private-sector associates, effectively aimed to transform the urban slum of Lincoln Square to a world class performing arts center. To achieve this, Lincoln Center’s architects and site planners 13 had to “disrupt the nineteenth-century street grid, rationalize the neighborhood’s mixed-use tangle of traffic and commerce, clear away blocks of tenements and warehouses, and provide a fitting complement for the nearby superblocks that would house Fordham’s new campus and Lincoln Towers’ cluster of Corbusian high rise slab apartment buildings.” 14 Additionally, the other six main elements comprising the site were the Metropolitan Opera House, the Philharmonic, the dance
12
Samual Zipp, Manhattan Projects: The Rise and Fall of Urban Renewal in Cold War New York (New York: Oxford University Press, 2010), 162-163. 13 The firm Harrison and Abromovitz was appointed for site planning, as Wallace Harrison was a Rockefeller confidant and worked on many of the family’s real estate projects. 14 Zipp, 184
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
theater, The Julliard School, the performing arts library, and the repertory theater. Collectively, these edifices formed a superblock spanning from West 60th Street and Columbus Avenue to West 70th Street and Freedom Place. Proponents of the project envisioned Lincoln Square as a solution to the “evil” of “physical slums” and “malnutrition of the spirit—neglect of the cultural diet.” 15 To actualize their ambition, project leaders understood that a large political battle between “project sponsors and those tenants and businesspeople who stood to lose their homes and livelihoods” approached. 16 In 1955, Moses would add his intentions for Lincoln Square to his already long list of urban redevelopment projects. However, there would be strong opposition by Lincoln Square residents and protestors who wished to protect the diversity and social character of their neighborhood. Their resistance was only one of many that fought urban redevelopment plans throughout the 1950s to protect the urban culture of older neighborhoods.
The tenants
movement and organizations such as the United Committee to Save Our Homes, provided a unified voice for protesters advocating for “humane relocation practices” as well as asserting that Title I urban renewal displaced tenants to already overcrowded adjacent neighborhoods— creating more slums. They saw the slew of Title 1 projects as a way to remove those who were less desirable, dubbed as “negro removal” to make way for a higher class.
17
The attempts of
Lincoln Square residents to terminate the plan—instead of merely proposing better housing options—was only possible because of the headway made by the on-going movement to dislodge support for Moses’s method of slum redevelopment. 15
Ibid., 193. As part of August Heckscher and William Schumans commentary on the project in the 1962 special Lincoln Center issue of the New York Times Magazine. 16 Ibid., 192. 17 Ibid., 208
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
The protests formed into two neighborhood committees, one representing the tenants, and the other local businesses.
Led by retired housing activist Harris Present, resistance was
compiled into demonstrations directed at the mayor, petitions, letter writing campaigns, press attention, and other methods of operation. Their main demand originally was to postpone development to allow time for adequate housing to be provided for those being victimized through relocation, but soon sought to stop the project all together.
They would need to
effectively convince public opinion that Lincoln Square was a place worth saving, and that the genesis of Lincoln Center was undeserving to the loss of community existence. During the 1956-57 municipal hearings, a barrage of eccentric protests and pickets— ranging from metaphoric colonial costumes to tent campouts—aimed to capture the attention of the press, Moses, and the Board of Estimate (BoE). Their fight was unrelenting, aimed at delaying construction by filing lawsuits on the grounds that “eminent domain powers and federal funds for a Manhattan campus of Fordham violated the First Amendment of the Constitution.” 18 Businessmen cried that unlike residents, they were not required to receive relocation services by renewal sponsors, and the $2,500 federal reimbursement was not nearly enough to cover their moving expenses. Effectively, the creation of Lincoln Center would destroy their livelihood as well as the culture of their customers. The resistance put forth by the residents and businesses of Lincoln Square would ultimately lose the battle. The BoE supported Moses and the City Planning Commission’s decision to approve the project in November 1957 and on September 1st, 1959, through eminent
18
Ibid., 230. Present later admitted that the he knew the suits were not going to halt the project, but more importantly were to gain attention to their movement of “no homes, no culture” depicted by their signs and protests.
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
domain, demolition was set to begin for the project. During construction, the community would continue to accuse Moses and the developers of inhumanely removing them from their homes and placing them in inadequate living quartersâ&#x20AC;&#x201D;sometimes in buildings with no heat or hot water.
Others would complain that they received little help attaining locations, after
unsuccessfully trying to relocate to affordable housing. Eventually, the realization of the Lincoln Square project would fade the lingering cries of its former members.
The Effects of the Real Estate Market Crash The highly cyclic nature of real-estate markets causes development to endure periods of manic growth as well as severe disinvestment. During moments of economic expansion, demand for space skyrockets, rapidly increasing rent prices and creating an abundance of new projects. The market then becomes saturated, overproduction occurs, and supply quickly outpaces demand. A surplus swiftly appears, and there is a period of financial disinvestment. Once the market is contracted, development is delayed until either a new expansion occurs or businesses diversify their construction desires, reabsorbing the remaining surplus. Since new buildings are not being created, property rents rapidly increase again and the process repeats itself. 19 The combination of market cycles with the fiscal crisis of the late 1970s, recession of the late 1980s, and New Yorkâ&#x20AC;&#x2122;s heavy dependence on financial and business services (FBS) as occupants of new development, led many projects, such as Battery Park City and Times Square, to be stalled or almost entirely terminated. 20
19 20
Susan F. Feinstein, ed., The City Builders: (Lawrence: University Press of Kansas, 2001) 64-65. Ibid.
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
In 1975, New York City and State underwent a fiscal crisis that put many of its development projects in serious jeopardy. The 1960’s saw the city borrowing money from the capital budget to continuously cover its current account deficit. 21 “The municipal government was financing many of its annual expenditures with borrowed funds, and when the notes it sold for this purpose fell due, they were redeemed by borrowing yet more money.” 22 Once these methods were discovered, the capital market was then closed to the city. The burst of development that had ensued during the previous decade caused the city to spend more than it received in revenues, putting it in distress of defaulting on its bond obligations. Additionally, the building boom of the early 1980s led to a harsh recession during the late 1980s and early ‘90s. In order for the plans to be implemented, large adjustments would have to be made to adapt to market conditions as well as financial and political support. Battery Park City The inception of Battery Park City was executed by a deal made between Governor Nelson Rockefeller and Mayor John Lindsay in October 1978. 23 The two men looked to convert the rotting landfill adjacent to the newly build World Trade Center into prime real-estate, ready for development. 24 In 1968, through New York State legislature, the Battery Park City Authority (BPCA)—led by New York State Deputy Commissioner of Housing and Community Renewal,
21
Edward M. Gramlich, ‘New York City Fiscal Crisis: What Happened and What is to be Done?’, The American Economic Review, 66 (1976), P.415 22 Martin Shefter, Political Crisis/Fiscal Crisis: The Collapse and Revival of New York City (New York, Columbia University Press, 1992) p.xxvvii. 23 David L.A. Gordon, Battery Park City: Politics and Planning on the New York Waterfront (Amsterdam. Overseas Publishers Association, 1997), 1. 24 The site was made new land by excavations from the construction of the World Trade Center, expanding the island. The landfill operated as cargo piers and ferry docks before being abandoned and left to rot.
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
Charles J. Urstadt—was created to oversee the projects construction and finances. 25 The plan would then endure problems compromising on housing for middle and low-income units into its 1969 Master Plan, as well as collaborations between city and state government. However, the New York City and State fiscal crisis, as well as the real estate market collapse, would cause the project’s development agencies to become paralyzed. As New York’s economy contracted, office market collapsed for a decade, and employment slowly retracted—losing 500,000 jobs from 1970 to 1977—the BPCA found itself losing financial investment and funding for their plans. The Nixon administration put an end to supply programs in 1973, and in 1975 the bond market was sealed from the city. In January, 1975, The Urban Development Corporation (UDC) defaulted on a bond obligation and the market was then closed to the state. Finally, the luxury market declined and held private construction to a minimum throughout the 70s. As the state intervened to try and recover the city back into the bond market, the Emergency Fiscal Control Board (EFCB) was established. All financial concerns dealing with the state needed to be approved by the EFCB first. The BPCA was placed under EFCB supervision and encountered serious delays gaining approval for any progress. The BPCA suffered a great loss, when its strongest ally, Governor Rockefeller, left office to become Vice President under Gerald Ford’s presidency. The new governor, Hugh Carey, put extreme restrictions on borrowing and expenditures upon the government and its independent state authorities. Because of the new restraints, the BPCA was unable to sell its bond worth $100
25
Feinstein, 165; Gordon, 29
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
million, as it had previously planned, and a $200 million cap was put on general borrowing. 26 During the next two years, the BPCA would undergo audits and state reviews to determine its development strategy; and ideas of turning it into an industrial or recreational park began floating around. Eventually, Governor Carey decided to seize control of many state agencies, including BPCA, using “recess appointment” 27 to replace Charles Urstadt. The control of the BPCA was transferred to the Urban Development Corporation in 1979, and with the agency facing bankruptcy, there were serious concerns whether the bonds could be paid by its repayment date in 1984. Once its offices were closed and its staff released, the hope for Battery Park City looked bleak. The plan was then looked over by a consulting firm, Vollmer Associates, commissioned by David Rockefeller and the Downtown Lower Manhattan Association (DLMA). 28 It was sent to the Mayor’s and Governor’s office, proposing many changes to make the plan more appealing to investors as well as recommendations on how to meet its bond obligations. Meanwhile, the UDC’s primary goal was to make sure the BPCA could actually repay its bonds and prevent default—which was estimated to be $130-$140 million. Collaborating with the urban design firm Cooper and Eckstut, another report was made to analyze the future financial and design prospects of the plan. One of their discoveries was that the state would need to provide $350 million to immediately get out of the bonds and provide more time to analyze the project. Fortunately, in 1979, the office market was showing slow signs of recovery, as well as the city re-entering the short term bond market. David Rockefeller presented the troubled project 26
Gordon, 53 Recess Appointment replaces leaders of high-level policy making agencies without the approval of the State Senate. 28 Urstadt looked to Rockefeller and the DLMA for support and as a way to regain his title. 27
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
in front of newly elected Mayor Edward Koch, to negotiate a deal with the city. A Memorandum of Understanding between the Governor, the State, the UDC, and the BPCA was made on November 8th, 1979 with six provisions. One of these provisions, and perhaps the most important, was that the state would lend the city $8 million in loans to ensure the bonds were met. The state’s bail out effectively allowed the development process to capitalize on the economic boom of the early 1980s. Times Square Upper-class civic organizations—led by the Municipal Art Society—, planners, and politicians saw the West Side as a prime area to invest in office development as part of the redevelopment plan. 29 Essentially, it was at the heart of the massive project, more so, than the public version of cultural refinement, eradication of the slum, and theater preservation. The City Planning Commission’s 1982 “new midtown zoning” ordinance, made development possible by raising the permissible heights of buildings to encourage West Side growth and discourage further East Side density.
Prudential Insurance Company, in a joint-venture with developer
George Klein, proposed four large office buildings as the highlight of the project. 30 However, the surge in construction led to an office-space glut, which “could have surprised seasoned real estate professionals who expected a construction boom in the midtown west and saw a bust in the making.” 31 Simultaneously, New York City’s economy was on the verge of experiencing a severe recession, hitting the financial service sector particularly hard. 32 This led to a decrease in
29
Fainstein, 124; Sagalyn, 227 Ibid.; Charles V. Bagli, “After 30 Years, Times Square Rebirth is Complete,” New York Times, Dec. 3, 2010 (http://www.nytimes.com/2010/12/04/nyregion/04square.html?pagewanted=all) 31 Sagalyn, 226 32 Ibid. 30
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
leasing prospects for buildings in Times Square, as well as increased office vacancy rates— which reached 33 percent by the end of 1990. The project took a substantial blow when Chemical Banking withdrew as an anchor tenant. They were one of many others, such as developer Trammell Crow and Hanover Trust Bank, which would withdraw their support over a number of years. However, once Chemical Bank left, the joint-venture with the Kennedy Family for a merchandise mart also fell apart, as well as development of a proposed hotel nearby. 33 The 1987 stock market crash also caused Prudential to consider leaving the project if it was forced to build during a time when tenant occupancy was scarce. 34 The whole undertaking seemed to be on the verge of crumbling, but it was actually a chance for Rebecca Robertson, President of the 42nd Street Development Project, to reconsider the development plan, as she stated: To me, the market crash was a wonderful time to rethink the whole thing. We couldn’t have gotten our plan through in a hot market. The development pressures would’ve been way too strong. Everyone would’ve been talking about what big tenant can we get, and not about restoring popular culture and entertainment. 35 The opportunity to rethink the plan would provide enough time for the market to begin to recover, as well as the introduction of the Disney Corporation to the project—which ultimately revived the hopes for redevelopment.
33
Ibid, 230. New York Times, Dec. 3, 2010. 35 Ibid. 34
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
The Role of Government and Power of Political Support The process of eminent domain and the volatile nature of the real estate market provide mega-developments with immense obstacles to overcome in order to progress. However, a base of political support needs to already be inherent to promote the perpetuation of development. The pro-growth politics of leaders such as Mayor Koch, John D. Rockefeller III, Robert Moses, and government entities such as the Board of Estimate provided projects with adequate support to oppose conflicts. Federal and state assistance allowed failing projects enough breath to rebound in times of market stress, as well as frame the environment for pro-growth economic development. Conversely, when projects lose large political allies and strained relationships commence between City and State government, increased anguish arises that further jeopardize plans. Times Square After the project faced serious delays when the City underwent a strong recession, government took a strong stance to continue supporting the project. As officials were waiting for the market to turn around, the interim plan called for the restoration of theaters without the office development. William Sternâ&#x20AC;&#x201D;the commissioner of the Urban Development Corporation (UDC) at the timeâ&#x20AC;&#x201D;states government did three things that facilitated the areas revitalization: it began to fight crime, removed the sex industry, and lowered taxes for big businesses willing to move to
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
the area. 36 This change in environment allowed the area to no longer be a place filled with violence, prostitution, and pornography, but rather, a future mecca for tourism and business. Harsher crackdowns on crime began when Deputy Inspector Richard Mayronne instructed his men to conduct arrests involving low-level crimes, such as prostitution and minor drug transactions. 37 It further intensified when Mayor Rudolf Giuliani took office in 1993. He sent the message that the lewd behavior that characterized 42nd Street was not going to be tolerated anymore.
Along with his Police Commissioner William Bratton, strict police
enforcement almost eradicated crime from Times Square and the City. Crime rates fell from 2,300 in 1984 to a minuscule 60 in 1995, creating a safer climate for tourists and businesses in the area. 38 The second contributing factor was the eviction of sex clubs. Stern discusses the UDC’s power to condemn the institutions, alleviating the area of unwanted businesses: From 1984 on, drawing on the UDC's special powers to condemn for economic blight, the redevelopment project began to shut down Times Square's sex clubs. By 1990, after a hugely expensive six-year condemnation process, the UDC had taken title to two-thirds of the 13-acre project area, sending the sex businesses scuttling to other corners of the city. 39
36
William J. Stern, “The Unexpected Lessons of Times Square’s Comeback,” City Journal, http://www.cityjournal.org/html/9_4_the_unexpected.html (Autumn, 1999). 37 Ibid. 38 Ibid. 39 Ibid
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
The combination of reduced crime and expulsion of sex shops in the 1990s finally showed signs of reviving Times Square. As the area become more hospitable for businesses, increasing interests arose from major corporations.
The huge economic potential that Mayor Koch
originally set out for was finally beginning to reveal itself. The third factor was the tax breaks the redevelopment plan offered businesses to locate in the neighborhood. It did this by awarding special tax abatements, low-interest loans, and othersubsidies to well-connected firms. 40 The large incentives eventually enticed the Disney Corporation to begin establishing itself on 42nd street just west of Seventh Avenue, in the New Amsterdam Theater. 41 The possibility of securing Disney—with its wholesome imagery—as an anchor tenant in Times Square symbolized the project’s triumph in expunging the urban blight previously there. Rebecca Robertson was quoted saying that “Disney brought to the table, all by themselves, the possibility that the project would get done, and that it would be done by the most important entertainment company in the world.” 42 Once Disney’s presence was guaranteed, additional companies moved there, such as Madame Tussauds wax museum and American Multi-Cinema. Along with the restoration of the theaters, the area was finally shaping into a tourist and cultural destination. Battery Park City The negotiations between Mayor John Lindsay and Governor Nelson Rockefeller made it clear that the City and State wanted to create a waterfront development project for New York
40
Ibid. Reichl, 157. 42 Ibid. 41
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
City. It would consist of luxury housing and offices and financed by State “moral obligation” 43 bonds. These bonds were a financial tool by which the City would borrow money from the State with an understanding that if financial problems arose, the State would have a moral—although not legal—obligation to assist the plan. 44 There was a personal determination on behalf of Rockefeller to build Battery Park City (BPC), unlike many other Lower Manhattan waterfront plans that previously failed to actualize. “In order to start the development, the Governor had to make agreement with the new Lindsay administration, modify Harrison’s plan, set up an implantation organization, arrange funding and obtain the necessary approvals for building.” 45 Without the strong impetus of Rockefeller and the state, the project would have most likely remained a rotting landfill adjacent to the World Trade Center. Once Lindsay settled into his new role as Mayor, arguments ensued whether the State should control the redevelopment of City-owned property. They would settle on the State developing BPC and the City obtaining the Governor’s support for a proposed Linear City project over a Brooklyn expressway. 46 Additionally, after three years of negotiating, four issues were resolved; the financial return to the city; the proportion of low income housing units; the design of the project; and the arrangements for continuing city participation in project implementation. 47 Once a satisfactory plan was approved by the City and Governor, Rockefeller further implemented the project by setting up the Battery Park City Authority (BPCA) to oversee the project’s finances and bond obligations.
43
Gordon, 53 Ibid. 45 Ibid., 23 46 Ibid, 25 47 Ibid, 24 44
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
As previously stated, the fiscal crisis intensified, and Governor Rockefeller was appointed U.S. Vice President. This loss of support was extremely deleterious to the project because it lost its strongest political ally. With the absence of Rockefeller, the plan went through two administration changes at the State and City level. From here on out, it faced extreme difficulties obtaining political support from each, and it looked like the project was in dire consequences. The changing administrations did not keep the BPC project as a main priority, especially when undergoing an immense fiscal crisis. Both Mayors Lindsay and Koch wanted to direct funding for affordable housing to more dire existing New York neighborhoods, instead of a developing one. Additionally, Mayor Dinkins was diverting BPCA funds to fix the Cityâ&#x20AC;&#x2122;s deficit. 48 If it were not for David Rockefeller, Richard Kahan of the Urban Development Corporation, and Charles Urstadt firmly keeping the development alive by reaching out to political leaders, the plan would have been ignored and most likely never completed. This period of uncertainty, like many other projects, allowed it to be reconsidered. With a new deal being negotiated with the City, as well as the State bailing the BPCA out of financial disaster, hopes for the plan would be extended. It took two City and State regime changes to mend the bad relationship between the two parties. Once each side refocused its commitment to developing the area, restructured with a better plan, construction began shortly. Roughly three decades after the agreement was made between Rockefeller and Lindsey, the development finished for residents to enjoy. 49 Lincoln Square
48 49
Ibid., 101; Fainstein, 173. Gordon, 115
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
The three most important allies for the development of Lincoln Center for the Performing Arts were John D. Rockefeller III, Robert Moses, and the 1949 Federal Housing Act Title 1 funding. Title 1 funding provided federal support and subsidies for slum clearance, urban redevelopment, and other public housing initiatives—something Robert Moses had a particular affinity for. 50 Moses would use the government’s precedence of eminent domain in combination with funding from the private sector to fulfill his vision of sweeping urban renewal programs across the West Side of Manhattan, where more blight was located. As head of the Committee on Slum Clearance (CSC), Moses had the ability to designate neighborhoods renewal areas. In 1955, he did so for the 48 acres known as Lincoln Square.
The City Planning Commission (CPC) originally supported the venture in 1956;
however, conflicts over land prices and write-down values occurred between federal urban renewal officials, plan composition struggles, protests, and court cases caused numerous delays. 51
Unhappy with the progress, this influenced the Board of Estimate’s decision to
postpone the project—causing Moses to rethink his strategy.
Together with his staff, he
regrouped his efforts by: arranging the middle-income cooperative housing, cultivated the support of editors and writers at the major daily newspapers, ensured the support of city officials like Manhattan Borough president Hulan Jack by accepting a liberal West Side watchdog committee to oversee the relocations, went back and forth with sponsors and federal officials over land
50
Samual Zipp, Manhattan Projects: The Rise and Fall of Urban Renewal in Cold War New York (New York: Oxford University Press, 2010), 161 51 Ibid., 170
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
prices, and urged John D. Rockefeller III to curry favor with the Eisenhower administration and to bring federal urban renewal administrators in line. 52 Through Mosesâ&#x20AC;&#x2122; efforts to continue pushing for the projects approval, it cleared the CPC and BoE again in September and October 1957, land was acquired to be resold on March 1st, 1958, and eventually demolition began in August, 1959. 53 A large part of the projects success can be attributed to the conviction Moses put forth to redevelop the area. Appealing to his politically well-connected associates, such as John D. Rockefeller, he transcended resistance by providing added political support on the City and State level. This bolstered his ambition to transform Lincoln Square into Lincoln Center.
Conclusion By analyzing the causes and effects of obstacles to mega-development projects, similar conclusions can be derived. First, the cost of condemning properties results in a struggle between development officials and those poised to lose their homes and neighborhood. When undertaking such life altering projects, opposition to confront the change is to be expected. Secondly, the risk of fiscal uncertainty due to the real estate market cycle is unpredictable by nature. It would be immensely difficult, even for the most experienced developers, to predict the intensity of a market boom or recessionâ&#x20AC;&#x201D;effecting the security of financial investment. Lastly, the support employed by government and public officials has the ability to provide plans with the necessary foundation to endure withering obstacles.
52 53
Ibid. Ibid.
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
The successes Battery Park City, Times Square, and Lincoln Center remain as a testament to the perseverance to reshape New Yorkâ&#x20AC;&#x2122;s cityscape. The fruition of each project faced extreme obstacles throughout the process; challenged by protests, lawsuits, a stubborn real estate market, and political and financial support, the plans underwent periods of uncertainty and lengthy delays. Fortunately, the ability of project officials to reconsider strategies and plans, rally support, and progress onward ensured the completion of each development. Through these efforts, millions of tourists, residents, businesspeople, and families can relish in the establishments that have been created.
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Problems and Solutions Mega-Development Projects Face: New York City Case Studies
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