The West Side rail yards competition has pitted some of the biggest developers in the city against one another in an intense race to win the right to build 12 million square feet of office, residential and retail space. But it is also pitting former senior officials of the Bloomberg administration against one another.
Brookfield Properties, for instance, in January 2007 hired Joshua Sirefman, the former interim president of the city’s Economic Development Corporation, to head up its U.S. development efforts. Just this fall, Brookfield brought on board another EDC staff member, Kate Collignon, as development director. Vornado Realty Trust, meanwhile, earlier this year snapped up their colleague, Kate Ascher, who had been a senior executive vice president at the EDC. In March 2006, Deputy Mayor Marc Shaw left to join Extell Development Corp.
“I think it is all very cozy, and it’s a challenge to make everything transparent,” City Councilwoman Gale Brewer, who represents the Upper West Side, said. “If you came from out of town, you probably couldn’t even get the time of day.”
Developers hiring people out of government is not unusual, and some of these hires were made well before the teams even knew they were going to bid to buy development rights over the 26 acres of rail yards in the far West 30’s owned by the Metropolitan Transportation Authority. But it is striking how each of the five teams has some sort of connection to the current City Hall, such that any advantage each hoped to gain from it may well be canceled out.
“They all have very good relations with the administration,” Gary Barnett, the chairman and president of Extell, said. “The administration likes and respects everybody.”
The developers and city officials dismiss the idea that personal connections would bias the selection process. As defined by the city charter, a conflict of interest is only created if former employees appear before the city agency where he or she used to work within a year after leaving government.
Mr. Sirefman worked on Brookfield’s bid and appeared before the M.T.A. selection committee last month to help make the company’s presentation—even though Deputy Mayor Daniel Doctoroff, who acted as Mr. Sirefman’s boss as recently as last December, is on the committee. (As it happened, Mr. Doctoroff was absent from the meeting when the Brookfield presentation was made, according to City Hall.)
Although the selection committee is apparently a separate agency from the EDC, Brookfield spokeswoman Melissa Coley said the company was checking with the city’s Conflict of Interest Board for clarification after an inquiry by The Observer.
The connections vary in intensity and in kind. The Durst Organization, which is partnering with Vornado in a rail yards bid, hired Jordan Barowitz, a former deputy press secretary for Mayor Bloomberg, as its spokesman. Rob Speyer, the president of Tishman Speyer, another bidder, was appointed a few years ago by Mayor Bloomberg to chair the Mayor’s Fund to Advance New York City, a mayorally sponsored charity that raises money for special city initiatives. (A Tishman Speyer spokesman said there was no conflict of interest because the position is pro bono and unrelated to the rail yards bidding process.)
The connection that has attracted the most attention is that between Stephen M. Ross, the chairman and chief executive of the Related Companies, and Deputy Mayor Doctoroff; the two are friends.
Mr. Barnett alluded to the connection when he told The Observer, “With the possible exception of one particular party, I don’t think that anyone has any special favor with the administration.” He would not be more specific, and said, when pressed, that he did not believe that the favored bidder would win the competition.
Mr. Doctoroff, in an interview with The Observer this summer about a separate matter, said that he had no conflicts with Mr. Ross from a legal standpoint because they had no financial relationship other than the time when both were co-investors in the New York Islanders hockey team. He said that because of allegations of conflicts, he had never gotten involved in any negotiations involving Related except for one case, in which he gave advice contrary to what Related wanted to hear.
Yet, because Mr. Ross and Mr. Doctoroff’s friendship is well known, some real estate executives speculate that Related will never win, even if it has the best proposal. On the other hand, whoever wins, his defeated rivals may walk away grumbling that it was because so-and-so used to be so-and-so’s right-hand man.
NONE OF THESE teams have recent connections to the M.T.A., which controls four out of the six votes on the selection committee; the Hudson Yards Development Corp.—a nonprofit chaired by Mr. Doctoroff that enjoys a working relationship with the EDC—appoints the other two. The committee’s recommendation ultimately has to be approved by the M.T.A. board. (Mr. Shaw was executive director of the M.T.A. from 1995 to 2001.)
An industry veteran said the notion of these hires causing conflicts of interest was ridiculous.
“Josh Sirefman is going to call up the mayor and say, ‘I need this done’?” he said. “The mayor would never do that. They are young kids.”
Another individual who has spoken with many of the players said, “Dan [Doctoroff] will award this to the team that is most likely to push this through. He is personally passionate about this. It is part of his legacy.”
City Hall spokesman John Gallagher said in an e-mail, “We fully expect former Administration officials to comply with all [Conflict of Interest Board] rules.”
Still, hiring public officials is a time-honored tradition among development companies, if only because they know how government works—and because a few cellphone numbers can come in handy in a pinch. Douglas Durst, co-president of the Durst Organization, said that former public servants can’t win a big project, but that other developers believe these strategic hires can improve access.
“They make a difference. They enable contact to happen much easier than if you were just calling out of the blue,” Mr. Durst said. “It expedites your ability to get a meeting.”
He added that he does not usually hire from the public sector. “The work ethic in the city is sometimes different than in private practice. You are trying to accomplish different goals,” he said. He made an exception with Mr. Barowitz because he needed a public relations director. “He’s done a terrific job.”
Kathryn Wylde, president of the Partnership for New York City, said that the relationships that government officials bring to real estate development do matter, but they matter “in the best sense.”
“In all business, trust is an important factor,” Ms. Wylde said. “When somebody reviews a submission, it is important they feel they can trust the information provided, and knowing that the people they have worked with are on the other side of the table is one factor.”
Mr. Barnett, an up-and-com
ing developer who is looking for his first big government deal, said that when he hired Mr. Shaw, Extell was working on a completely different idea for the rail yards: He wanted to build a convention center there. Mr. Shaw said he never got involved in that project because it was dead by the end of his revolving-door year. More than 18 months later, he is free to work on the rail yards bid. (He is also free to serve pro bono as chairman of the state’s congestion pricing commission; he said he got assurances from the mayor’s office and the office of the governor’s counsel that doing so would not constitute a conflict of interest.)
“The reason we hired Marc is that we are a growing company,” Mr. Barnett told The Observer. “I figured if he could help run New York City, he could help run Extell. We were looking for experience.”
The M.T.A. is keeping the exhibit hall, with architectural models of the five bids, open through Dec. 14 at its storefront at the northwest corner of 43rd Street and Vanderbilt Avenue. A final decision on who will win the bidding is expected in February.
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