The outlook for New York’s mega-real-estate projects looked pretty bleak at the end of the Pataki administration, caught up as they were in a partisan game of chicken and devastated by inflation in the construction industry. The Moynihan train station plan had collapsed, the Javits Center expansion was running over budget and Atlantic Yards could not shake off controversy.
Enter Patrick J. Foye, Governor Eliot Spitzer’s pick to co-chair the Empire State Development Corporation, the state economic development agency. Mr. Foye, a Long Islander who once ran in far more conservative circles, has deliberately chosen to slow these projects even more.
He’s decided that the best thing to do is to give them a thorough going-over, redesigning the projects that were in tatters, replacing the previous administration’s project managers with his own picks and even questioning the endeavors that seemed, outwardly at least, like they were all set to go.
“Each project is different,” Mr. Foye told The Observer in an interview at Empire State Development’s Third Avenue offices. “We want to be able to convince ourselves and the governor and the Legislature and the taxpayers that we are getting the highest return on the resources that are made available to us.”
In his short time in office, Mr. Foye has gained praise from business leaders for his down-to-earth manner and emphasis on fiscal accountability. But he has also engendered criticism from others who are still waiting to see the outcome of all of this furniture rearranging.
This past March, for example, his office said that a new plan to expand the Javits Convention Center was expected in early May. In early May, Mr. Foye said a new design would be out soon. On Aug. 10, he told The Observer, “In September or October we’ll be making an announcement as to which direction we’ll be moving in.”
Oddly enough, one of the first fruits of Mr. Foye’s labors to emerge publicly has been his decision to keep Empire State Development exactly where it is. He has sold off an office condominium that his predecessor, Charles Gargano, had bought in lower Manhattan in order to move closer to Ground Zero. Instead, Empire State will extend its stay at its midtown location, one floor below the governor’s Manhattan office.
Due, perhaps, to a bullish commercial real estate market (or perhaps to shrewd negotiating), he has sold part of the Maiden Lane condo at a profit compared to how much his predecessor had paid for it just a few months earlier.
THE SON OF A WAITRESS AND a doorman, Mr. Foye attended Fordham University for college and law school, and then became a mergers and acquisitions lawyer at Skadden Arps Slate Meagher & Flom, which is where he met Eliot Spitzer and his wife, Silda. Mr. Foye set up a number of offices for the firm in Europe and then returned to Long Island, where he took a high-level position at Apartment Investment and Management Co., a real estate investment trust.
In 2004, he left to become president and chief executive of United Way of Long Island—in part, he said, because he would have to move to Denver, the REIT’s headquarters, to get promoted, and in part because the illness of a family member made him reconsider his priorities.
It was in the 1990’s when he was active in the Conservative Party and became president of the Nassau County Taxpayers Committee. He ended up, thanks to Governor Pataki, as deputy chairman of the Long Island Power Authority. Five or six years ago, Mr. Foye said, he dropped his affiliation to the Conservative Party. “No political party represented my views.”
Last year, he won a seat on the Port Washington school board running on something called the “Nine Daughters Slate,” so named because its three members had that many daughters among them.
“My political views, I don’t think much matter,” Mr. Foye said. The bearded 50-year-old speaks in a curt, matter-of-fact way, as if to signal that he is going to whip the place into shape, but that no one should take it too personally. “I think the focus on accountability to the taxpayer is frankly a natural thing for someone who is part of the Spitzer administration.”
And yet his defense of the public fisc is one of his most defining characteristics. Last month, Empire State Development issued a report that called for an overhaul of the Empire Zone business tax credit program that, in the words of consultants A.T. Kearney, “demonstrate[s] a single-minded fixation on job creation and retention at any cost, defining success with metrics more appropriate to the Industrial Age.”
“I think from the standpoint of the business community, everything I hear is that he’s a breath of fresh air,” said Kathryn Wylde, the president and chief executive of the Partnership for New York City, a business group that advised on the Empire Zone report. “He is bringing a kind of rigor to economic analyses of projects that are not just aimed at getting a ribbon-cutting, and business appreciates that approach. For the real estate community, it’s going to mean a harder test to meet the standards he has imposed.”
For example, over the course of the past seven months, Mr. Foye has been in negotiations with Vornado Realty Trust and the Related Companies, which are together proposing a massive redevelopment that would uproot Pennsylvania Station, move Madison Square Garden and insert several new office towers in that area. Mr. Foye said he wants to push the developers to make a “significant contribution” toward building a new Penn Station. He expects to issue a scoping document outlining the train station project in September or October.
The expansion of the Javits Center, on the other hand, is to be a publicly funded and owned operation that is both too small and too costly in its current design, which was approved a year ago by the Pataki administration. It is the true Gordian Knot of New York real estate: If the architects add floors, it will become less attractive to convention-goers. If they enlarge the footprint, Empire State Development won’t be able to raise money from the sale of neighboring land. And as it is, the project is already over a budget that itself was over budget. And it hasn’t even gotten under way.
Mr. Foye’s staff has made detailed cost estimates of the current design and found that the cost of the Javits expansion will reach $2.9 billion, he said. That’s $1.5 billion more than conceived when the Legislature approved it in December 2004, and $1.2 billion above anticipated revenues.
Mr. Foye said he would try to lower the cost and make the design more appealing to conventioneers at the same time. But he said he would also need to ask for more money from the state, city and hotel owners—a $1.50-per-room tax was imposed to help finance the expansion.
“Certainly the cost of Javits has increased from what it had been represented last year. Construction costs generally in the city and the region have increased,” Mr. Foye said. “What we are focused on now is coming up with the right balance of program, land and cost and also making sure that it works for users and customers.”
State Assemblyman Richard Brodsky, a Westchester Democrat who used to hammer away at Mr. Gargano in public hearings on Javits during the Pataki era, calls Mr. Foye “an enormous improvement.” But Mr. Brodsky, chairman of the committee that oversees ESDC and other public authorities, still thinks that Mr. Foye should be thinking more boldly.
“Javits and the Empire Zone program are two examples of things where he has been remarkably cautious and where facts can push them further and faster than he has done,” Mr. Brodsky said. “I think the decision to stick to the [Javits] footprint has more to do with politics than with building a first-class facility.”
Mr. Gargano, for his part, says that he thinks well of Mr. Foye, whom he knew from their common experience in the Pataki administration. Unlike Mr. Gargano, who oversaw economic development for the entire state, Mr. Foye has a counterpart in charge of upstate.
“Pat’s superiors in the governor’s office have a right to evaluate each of these projects, but I would hope they would know how much work and effort went into these projects,” Mr. Gargano said in a telephone interview from the east end of Long Island, where he is semi-retired. “There shouldn’t be any more delays than necessary because the more delays there are, the more expensive things become.”
Perhaps nothing speaks more succinctly of the difference between these two men than the fact that people would call Mr. Gargano “Chairman Gargano,” or even “Ambassador Gargano,” since he had once represented the United States in Trinidad and Tobago. Mr. Foye insists that even reporters address him as “Pat.”
THE ONE PROJECT THAT HAS NOT received the Foye treatment is the one that a sizable percentage of New Yorkers would like to see seriously gut-renovated: Atlantic Yards. Mr. Foye has previously explained to reporters that he has not taken as hands-on an approach with the Brooklyn complex as he has with Javits and Moynihan because it is further along, and because it is more of a development by Forest City Ratner Companies than by the state.
The project’s critics counter, however, that state and city taxpayers are contributing hundreds of millions of dollars in direct grants and tax benefits. In addition, Empire State Development is trying to invoke eminent domain to take people’s property and will actually own the entire 22-acre footprint, leasing the parcels to Forest City for a few dollars, according to the General Project Plan approved in December.
Mr. Foye has proposed some oversight, especially after a parapet atop one building collapsed while asbestos workers were doing preparatory demolition work in April. However, of several oversight measures proposed in May, Mr. Foye acknowledges that only two have been undertaken so far. Empire State Development has met with public officials once in a group and seven other times with individual officials or community groups, according to the agency. Also, it has met twice with an “interagency working group.”
“They have been responsive to a certain degree, more responsive than the previous administration. That’s for sure,” said City Council Member Letitia James, an Atlantic Yards opponent. “They give the appearance that they want to address [our] concerns but there has been no follow-up.”
Mr. Foye said it is a “short-term priority” to determine whether to request formal bids for an “owner’s rep,” a firm that would represent the state on construction matters. As for an ombudsman to hear community complaints about the construction, he expects to hire one by the end of September.
Given the expected time frame for the Javits design and the Moynihan Station deal, it looks like the next three months will be busy ones for Empire State Development.