In the universe of the city budget, cuts are everywhere.
Nowhere was this more apparent than the city’s capital budget, the decade-long plan that pays for new parks, schools, firehouses, infrastructure and economic development with $47 billion in city funds. The Bloomberg administration is proposing to shrink its capital spending by about $8 billion from an earlier version unveiled last fall, an act that, if approved by the City Council this month, will inspire a wave of cuts for new projects citywide.
But, at least in terms of economic development, two legacy real estate projects that have long been the focus of city officials—the redevelopment of Coney Island and of Willets Point in Queens—have escaped the knife entirely (and in the case of Willets Point, slightly more money was added).
This prioritization of the large and high profile offers a glimpse into the Bloomberg administration’s unabashed fervency regarding mega-development, an approach that has inspired no shortage of critics. While substantial development on these projects is likely many years off and ultimate success is hardly a given, officials argue that Coney and Willets deserve to be at the top of the list because of their potentially transformative effects in two underdeveloped areas.
In all, the city lists about $133 million in its capital budget for Coney Island and $424 million for Willets Point, which is by far the largest single economic development initiative. The entire 10-year budget calls for about $1 billion to go toward economic development over the next 10 years.
In the long list of smaller development projects, which range from industrial infrastructure to new retail centers, budget cuts were many. Varying from the preliminary budget in January, the administration scaled back or cut out investment in the Brooklyn Navy Yard, an incubator of sorts for industrial and manufacturing businesses; the Homeport mixed-use development on Staten Island; the Hunt’s Point produce market in the Bronx; and the development of Governors Island.
Most notably, the city took nearly $100 million out of the money it had set aside for a future expansion of the Javits Center, according to budget documents. Of course, the Javits money would not be needed for at least a few years anyway, as there are no firm expansion plans (earlier plans have been scrapped and the convention center is just starting a $463 million renovation). But it takes a heavy lift to put in such large sums of money—in 2006, both the city and state each committed $350 million to an expansion—and with the money removed, there is no pledge to put any of it back in at a later date.
Willets Point and Coney Island were by no means the only projects to maintain funding levels amid the cuts—some, such as the South Bronx Greenway and Long Island City streetscape improvements, received additional funds—but city officials said they indeed prioritized these two.
Seth Pinsky, president of the city’s Economic Development Corporation, which oversees much of the economic development budget, said Coney and Willets have tremendous potential to generate hefty financial returns and wholly alter neighborhoods.
“It’s these kinds of projects that I think the city and state have undertaken at their best moments,” he said. “You’re not looking for payback the next day.”
Deputy Mayor Bob Lieber, who oversees the city’s economic development efforts, said there is also a strong desire to push these larger, more difficult projects to a point of critical mass.
“You have to dig in now, and you have to remain steadfast to making the necessary investments so you can get these projects to that point of inflection,” he said.
The projects are envisioned to entail multiple billions of dollars of new investment and thousands of new apartments—by reinventing the amusement hub in the case of Coney Island, and redeveloping an undermaintained auto repair hub at Willets Point. But both are risky, if ambitious, and large-scale development in this city does not have a strong track record of success.
Still, everything comes at a cost, and at least in Mr. Lieber’s portfolio, it appears as though funding for affordable housing took more of a hit than did economic development programs.
Between last fall, when a preliminary 10-year capital plan was unveiled, and May, when a revised plan was announced, the budget for housing fell by 30 percent—or $1 billion—compared with 18 percent—$237 million—for economic development. As the city’s Independent Budget Office noted in its analysis of the mayor’s budget, funding for housing showed one of the largest decreases of any category.
This raises a host of questions about Mayor Bloomberg’s $7.5 billion affordable-housing plan, for which he once pledged to build 92,000 new low- and middle-income units and preserve 73,000 over 10 years. As the economy collapsed and the plan was already struggling to meet its new construction goals, 10 years became 11, and now with less money and a host of other factors hurting the affordable-housing industry, it’s difficult to see a scenario where the plan meets its revised goals, a priority for a mayor focused on numbers.
Mr. Lieber acknowledged that it would be difficult, and said that the city may need to shift the numbers some and put more emphasis on preservation than new construction.
“We still remain committed to the housing plan,” he said. “I think it’s going to be more difficult to achieve that same target.”
Overall, the capital budget did not undergo as large a decrease as once foreseen. Back in January, in an effort to cut back on high debt costs, the mayor proposed scaling back the 10-year plan by 30 percent. In recent years, the plan had reached tremendous spending levels, as the administration had poured about $10 billion annually into infrastructure such as new schools, water projects and economic development efforts (both mega-projects and smaller projects).
But most capital money is borrowed, and the city’s debt has reached noticeably high levels—the city has about $62 billion in outstanding debt and other obligations, an amount that is rapidly growing—at the very time that revenues are contracting, thus inspiring the cutback.
The powerful construction industry, which is now heavily reliant on public spending, pushed back against the initial cuts, as did the City Council. The end result: a decrease of about 15 percent.