The deal was no doubt helped by the generous amount of public space—30,000 square feet to be exact, not including the 12,500-square-foot promenade—the Poulalakoses and their partners, The Dermot Company, agreed to.

"My father's longtime dream since his arrival in Lower Manhattan over 50 years ago was to operate a facility in Pier A," Peter Poulalakos said in a release. "We're excited that now our family has been given the opportunity along with our partners, The Dermot Company, to make his dream a reality and create a breathtaking historic landmark for both the community and tourism in lower Manhattan."

The project is part of an attempt to revitalize Pier A that started in 2008 with the city forking over $30 million to the BPCA. In the two-plus years since the handout, the "BPCA has led the redevelopment of the pier, including the repairs to the foundation and replacement of the pier's deck."

In addition to the oyster bar, the Poulalakos family already owns a slew of downtown restaurants, including Bayards, Harry's Steak House, Ulysses, Financier Patisserie, Harry's Italian, Vintry and Adrienne's Pizzabar.

mcoyne@observer.com

As for Battery Park City bondholders? They have less to applaud.

Credit ratings giant Moody's last week put $1 billion in Battery Park City funds bonds "on watch" for a downgrade, sounding the alarm on what it apparently views as a challenge to the agency's stable financial footing.

Bond Buyer had a story on the issue Monday.

The announcement from Moody's said that while the money the city and state took was not specifically a reserve fund for the bonds, it was a factor in the bonds' high ratings:

Moody's has considered the balance of residual funds that could be used for BPCA purposes if necessary (subject to City agreement) to be a factor in the BPCA's credit strength and a contributor to the high levels of ratings assigned to the Bonds. Moody's is placing the Bonds under review for downgrade pending assessment of the impact of the withdrawals on the ratings.

ebrown@observer.com

The deal, signed Monday after a Battery Park City Authority board meeting, also creates a $400 million fund intended for affordable housing, a pot of money that was first promised back in 2006 when the city altered the well-used residential tax break known as 421-a.

All of the money comes from Battery Park City's plush coffers, which are filled with rent payments from the now-valuable real estate on the state-owned land mass, which was initially constructed with landfill from the old World Trade Center. While it nearly went bankrupt in its early years, the 92-acre mix of apartment towers, office buildings and parks is now considered to be wildly successful and is hailed as a model for public/private development. (That said, the city and state often tend to push for mega-projects instead, offering a giant site to one developer, as opposed to gradually selling off small sites parcel by parcel to individual developers.)

With regard to the money for the budgets, negotiations between the city, state and city comptroller (first Bill Thompson and now John Liu) dragged on well past when the Paterson administration first proposed the concept early last year, in part over concerns about borrowing costs. Mr. Thompson, as comptroller, was previously skeptical of aspects of the deal, however he signed off on it Monday in his new role: as chairman of the Battery Park City Authority board. (Downtown Express first reported the action). 

The total amount of money taken from the Battery Park City funds is $861 million, to be paid out over at least the next seven years.

The Battery Park City funds have long been eyed, and sometimes directed, for affordable housing. However, as a well-researched Independent Budget Office report from 2004 details, the reality has been that very little of the money over the years has ever ended up going toward housing.

Battery Park City today is now almost completely built out after more than four decades of gradual construction. Given that the Battery Park City Authority's mission—to supervise the area's development—is now complete, there have been many calls to disband it entirely (the authority's vice chairman, Charles Urstadt, its first chief executive, has called for its disbandment).

Full agreement here.

BPCA Agreement

It spends more per acre to take care of its parkland than is spent on just about any other city park. Its apartments rent above market rates. And it has given birth to some of the city’s—and even the world’s—first green-certified residential high-rises.

Its treasury is so well stocked, in fact, that the community, which is regularly ridiculed for its seclusion on the far side of West Street, regularly funds nonprofit organizations throughout the five boroughs and well into the suburbs. These are not contributions made voluntarily by residents and tenants, but instead are general revenues distributed by the Battery Park City Authority’s seven-member board, or its staff, from fees and assessments that developers and occupants must pay.

According to data obtained by a Freedom of Information Act request, these contributions come to about $900,000 annually. Over the past two years, for example, the Battery Park City Authority donated $7,000 to the Queens Library Foundation; $10,000 to the American Institute of Architects; $20,500 to the New York State chapter of the National Association of Minority Contractors; $10,000 to the Chinatown YMCA; and $10,000 to the Greater Jamaica Development Corporation.

Giving away public funds to nonprofits is a time-honored tradition in this republic among city councils and state legislatures as well as public authorities. Some people even affectionately call it pork.

But, on Oct. 9, Attorney General Andrew Cuomo criticized the charitable giving of one public corporation in an opinion that could affect every other authority throughout the state. The Long Island Power Authority, Mr. Cuomo wrote, “is not authorized to make payments to business, civic and not-for-profit entities that do not directly relate to LIPA’s mission. …”

Battery Park City Authority has taken another look at its giving, although it has yet to propose changes.

“We are not in a position to comment on the opinion. We are still analyzing it,” the authority’s president, James E. Cavanaugh, told The Observer. “We are obviously going to comply. Our initial take is that we are in substantial compliance.”

Assembly Member Richard Brodsky, a Westchester Democrat, questions why public authorities—whose board members are usually appointed by the governor instead of being elected—are giving away the public’s money.

“These are not set up to enhance the charitable infrastructure of the state,” Mr. Brodsky said. “They are set up to run ports and run subway systems and run roads. A pattern has emerged in some places where the choices are relatively arbitrary choices. It helps to know a board member, for instance.”

Some of these nonprofits do know Battery Park City Authority board members, although officials deny those ties play any role in funding decisions. Historic Hudson Valley, a self-described “museum of historic sites” in Westchester and Dutchess counties, received $19,000 over the past two years. One of its board members is Charles Urstadt, the vice chairman of the Battery Park City Authority.

Another $20,500 over the same period went to the Borough of Manhattan Community College Foundation. One member of the foundation’s board is Leticia Remauro, a vice president at the Battery Park City Authority and the person most responsible for determining the authority’s discretionary giving. The community college foundation’s chairman is Robert Mueller, a Battery Park City Authority board member.

TO DETERMINE WHETHER the Battery Park City Authority’s giving practices, which date back at least a decade, are legitimate requires a clear idea of what the institution’s mission really is. Its 1968 enabling legislation said that the authority was supposed to improve a “blighted area”—some of which was so blighted, one might add, that it was underwater. So the authority was created to borrow money, pour landfill into the river and then lease properties on its 92 acres to developers for apartments and offices. This “major new residential and commercial community,” Governor Nelson Rockefeller said in his signing statement, would contribute to the city’s budget 30 times the tax and rental income the dilapidated waterfront was then paying.

In 1986, an amendment to the original legislation entreated the authority to “promote the employment of minority group members and women” on Battery Park City contracts. In addition, in 2000, the authority’s board (which then consisted of three members appointed by the governor, and now has seven), passed a resolution calling for all subsequent development to be environmentally friendly.

Mr. Cavanaugh, the authority’s president, maintains that those policies justify contributions to programs that train minorities and women for construction and related jobs and to organizations that promote green building. In addition, the authority argues that the grants to Lower Manhattan museums and institutions make the area more vibrant and livable, increasing the prices of apartments and offices and allowing the authority to pass on more money to New York City’s treasury.

“If an organization contacts us for financial support, they have to fit into our written guidelines,” Mr. Cavanaugh said. “We ask, ‘Does it support Lower Manhattan? Does it have projects that provide some public benefit for Battery Park City? Does it encourage the employment of women and minority owned businesses?’”

Historic Hudson Valley, which operates six historic attractions up north, qualified because it runs programs promoting “the preservation of the Hudson River and its environs,” Mr. Cavanaugh said. Mr. Urstadt, who is often called the founder of Battery Park City, took exception to the idea that he had played a role in those contributions.

“Absolutely not,” he told The Observer. “I haven’t exercised any influence or made any requests. I haven’t used my influence at all.”

The Queens Library Foundation received money because it had given the authority advice on setting up a branch, Mr. Cavanaugh said. In the end, however, it will be the New York Public Library that will establish an outpost on Battery Park City property using money donated by Goldman Sachs.

The Borough of Manhattan Community College Foundation has traditionally set aside one seat on its board for an authority officer because the Battery Park City Authority underwrites scholarships for minorities and women, according to Ms. Remauro, the authority vice president who is also a foundation board member. Mr. Mueller, meanwhile, was on the foundation’s board before he joined the Battery Park City Authority, according to the college.

“What my participation on the board makes sure is that the foundation’s money goes to these minorities and women so they can continue their education,” Ms. Remauro said.

Battery Park City’s donations pale in comparison to the approximately $110 million the authority passes on to New York City each year to make up for property taxes the city would receive if the land were not owned by the state. But some affordable housing advocates, who are still smarting over the abandonment of a 1969 master plan that envisioned a neighborhood with equal parts low-income, middle-class, and market-rate apartments, believe the charity is still misplaced.

“There are two things that are very troubling about this,” said Brad Lander, the director of the Pratt Center for Community Development. “The first is that since these are redirected tax dollars, they ought to be spent as part of the state and city’s spending strategy and not by a small board of directors. The second is that they have an unfunded commitment of some $700 million for affordable housing and ought to be using that for a down payment on that commitment.”

Mr. Cavanaugh counters that Battery Park City has made good on its affordable housing commitments, which were made above and beyond the annual tax payments. The problem, according to a 2004 report by the city’s nonpartisan Independent Budget Office, is that the city failed to use almost $600 million of Battery Park City Authority revenues for affordable housing, as it was intended to be.

The authority runs three charity programs, although it admits that it does not advertise them or have a uniform application form. The board, as part of its fiscal year budget that ends Oct. 31, authorized $200,600 to sponsor events, $200,000 for employees to attend fund-raising events and $68,500 for affirmative action scholarships. Ms. Remauro said that she determines whether the requests—which number more than 100 a year—meet the authority’s written criteria, and Mr. Cavanaugh approves them. But the largest recipient of voluntary donations is one that Mr. Cavanaugh does not consider to be voluntary at all: the Alliance for Downtown New York, a business improvement district that covers Lower Manhattan up to but not including Battery Park City.

This annual contribution—it was $432,000 in 2007—is a line item in the budget that gets approved by the authority board. The amount equals the assessment that the authority would be liable for if it were privately owned and part of the business improvement district, Mr. Cavanaugh said. It is justified, he said, because the alliance operates a shuttle bus that runs through Battery Park City and also staffs an information kiosk on Battery Park City grounds. However, Ms. Remauro said that the alliance does not provide other benefits to Battery Park City that it does to its members, such as sanitation services, street furniture and security patrols, since the authority does those itself.

Another $200,000 line item goes to The Battery Conservancy, a private organization that raises money to care for the Battery, which lies directly to the south of Battery Park City.

By contrast, the Long Island Power Authority—the agency that prompted the attorney general’s opinion—gives out about $125,000 a year to nonprofit organizations.

But the Mayor today indicated that the city had different priorities: the majority of that trust fund--$70 million--is going to "hard to reach populations," including the very poor (those earning less than 30 percent of the median, who will not be served at all by Atlantic Yards), and households with moderate income (earning 60 to 80 percent of the median, who will receive just about 10 percent of the 2,250 affordable units at Atlantic Yards).

-Matthew Schuerman

And so, before Goldman resumes its efforts to build a headquarters across from the World Trade Center site, it is requiring the New York Police Department to submit a security plan covering lower Manhattan for its review. Until then, the investment bank’s $161 million lump-sum rent payment will stay in an escrow account.

A high-ranking official insisted that the police agencies were already drawing up a comprehensive security plan when state and city officials broached the topic themselves as part of negotiations to keep the nation’s 74th-largest company downtown. Goldman’s executives then asked government negotiators to back up their words with a financial guarantee.

One problem that Goldman saw, according to the official, was that the New York Police Department, the Port Authority police, the Battery Park City police, and state and corporate security forces all operate in lower Manhattan with confusing jurisdictional boundaries. Part of the intent of the comprehensive plan is to delineate who is responsible for what and how each police agency will communicate with the others.

The security guarantee is just part of a package of tax breaks, low-interest bonds and other discounts over the next several years that, according to back-of-the-envelope calculations, are worth $250 million in today’s dollars. The final piece of the deal—the lease—was approved by the Battery Park City Authority on Aug. 23. The parties officially announced the agreement the same day—but oddly, Brookfield Properties, which had a claim on the site where Goldman would build, was making no comment about whether it was satisfied. Last year, Brookfield said that it wouldn’t stand in the way of the deal.

Assuming that wrinkle gets a good ironing, a groundbreaking for the $2 billion, 43-story building is expected this fall, with occupancy by 2009.

The Goldman-NYPD arrangement means that the Battery Park City Authority won’t be able to use the rent payment, due next February, to pay off its own bonds or to feed money back to the city immediately. No one knows just how long it will take to finalize the security plan, but comments from officials suggest that it will be years rather than months.

Yet state officials insist there’s no risk that the state and the city won’t come up with a security plan, and that the rent payment—a lump sum that covers 64 years—won’t slip from escrow into the authority’s general account.

“The arrangement is, there will be a security agreement which the city has committed itself to and the state has committed itself to,” said authority chairman James F. Gill, speaking after a meeting in which the lease was approved. “We are satisfied that it will happen and will not affect our collection of rent.”

In addition, authority president and chief executive Timothy S. Carey said there was more than enough money to refinance the bonds that first established Battery Park City, as well as to fund projects across the five boroughs. Mayor Michael Bloomberg and City Comptroller William C. Thompson Jr. are negotiating with the authority to devote as much as $130 million to affordable housing—which, in fact, had been where the fruits of the 92-acre landfill were originally supposed to go, before they were diverted to other uses.

Goldman’s insistence on applying financial pressure to ensure a security plan reflects its long-standing interest in safeguarding its employees and operations. That interest is also reflected in the company’s desire to construct its own building and to be that building’s sole tenant, so as to exercise the utmost control.

Goldman panicked when it lost a little bit of that control last April. That was when a deadline that Goldman chief executive Henry Paulson had imposed on Mr. Pataki passed without the Governor making a decision on a controversial tunnel outside the proposed headquarters. The tunnel, executives feared, would create a speedway right outside the entrance to Goldman’s headquarters and cause a security nightmare. It was then that Goldman put its building plans on hold.

The bank had to scream to get the state’s attention, but Goldman succeeded mightily and has come out ahead, with more goodies than it had before the spring. Now it’s using a similar tactic to make sure that it gets what it wants in terms of security.

Coordination among overlapping agencies has bedeviled anti-terrorist arrangements since the Sept. 11 attack—and was, in fact, a major weakness that the 9/11 Commission found in the city’s response back then. Only this year, after some strong-arming on the Mayor’s part, did the Fire Department finally let the police have first-responder status at so-called “haz-mat” (hazardous materials) calls.

In Washington, D.C., a central planning commission issued a plan three years ago coordinating the steps for physical improvements to block terrorists, but in lower Manhattan, the efforts have been left decentralized.

The Battery Park City Authority turned bus shelters, bike racks, boulders and trees into vehicle-proof obstacles throughout its 92 acres soon after the attacks. Meanwhile, outside the New York Stock Exchange, the Lower Manhattan Development Corporation, a state-city agency, replaced metal barriers with a wrought-iron fence as part of what Mr. Pataki called an end to “obnoxious security measures”—and yet passersby still frequently see a pick-up truck filled with sandbags to keep car bombs away.

The Port Authority police and the NYPD currently have a security agreement in place that delegates authority for the area within the World Trade Center site fence, plus the sidewalk along Church Street, to the Port Authority, according to Port Authority spokesman Steve Coleman. However, he said that the two agencies will assist in responding to incidents in each other’s territory when necessary.

Police Commissioner Raymond Kelly has been highly praised for expanding the NYPD’s anti-terrorism force many times over, as well as getting private companies extensively involved. Security directors come to special department briefings and submit blueprints for review. But the Goldman arrangement is taking that involvement a step further, making the NYPD responsible for the success of one of the most acclaimed—and expensive—job-retention deals ever. The NYPD didn’t respond to repeated phone calls and a request for comment faxed directly to Mr. Kelly’s office.

A security consultant who has done work in lower Manhattan said that he knew of no other company playing such a role in police planning, but added it was understandable that Goldman would want a comprehensive plan.

“It is routine for tenants to have arrangements with developers that they will provide such-and-such services,” he said. “So when you get into a situation where one company is the tenant and the developer, what’s happening here is they are seeking those same guarantees from the city. But it is extremely unusual. Law-enforcement institutions as a rule don’t guarantee an individual institution anything.”

Battery Park City officials emphasized that Goldman will not have veto power over the security plan, although it will be a part—along with numerous public agencies—of the plan’s formulation. The particulars of what the plan will cover are laid out in a letter from James Kallstrom, the Governor’s special security advisor, who was assigned to Ground Zero after the Goldman deal first fell apart in the spring. That letter has not been made public.

Mr. Gill, the Battery Park City Authority chairman, said the city and state alone would determine whether the goals had been met.

“The city is committed to effectuate the security plan, and when that is done, the money in escrow, which is our rent in its totality, will be released,” Mr. Gill said.

State officials said they weren’t concerned that the Goldman arrangement would set a precedent they didn’t want repeated. Mr. Carey, of the Battery Park City Authority, said that since there was only one unassigned land parcel left under his jurisdiction, it wouldn’t pose a problem. But John Cahill, the Governor’s secretary and liaison to lower Manhattan, said that similar security guarantees might be used in negotiating future job-retention agreements.

“To the extent they’re talking about a $2 billion commitment and significant numbers of jobs, we’ll certainly have conversations,” he said.

And so, before Goldman resumes its efforts to build a headquarters across from the World Trade Center site, it is requiring the New York Police Department to submit a security plan covering lower Manhattan for its review. Until then, the investment bank’s $161 million lump-sum rent payment will stay in an escrow account.

A high-ranking official insisted that the police agencies were already drawing up a comprehensive security plan when state and city officials broached the topic themselves as part of negotiations to keep the nation’s 74th-largest company downtown. Goldman’s executives then asked government negotiators to back up their words with a financial guarantee.

One problem that Goldman saw, according to the official, was that the New York Police Department, the Port Authority police, the Battery Park City police, and state and corporate security forces all operate in lower Manhattan with confusing jurisdictional boundaries. Part of the intent of the comprehensive plan is to delineate who is responsible for what and how each police agency will communicate with the others.

The security guarantee is just part of a package of tax breaks, low-interest bonds and other discounts over the next several years that, according to back-of-the-envelope calculations, are worth $250 million in today’s dollars. The final piece of the deal—the lease—was approved by the Battery Park City Authority on Aug. 23. The parties officially announced the agreement the same day—but oddly, Brookfield Properties, which had a claim on the site where Goldman would build, was making no comment about whether it was satisfied. Last year, Brookfield said that it wouldn’t stand in the way of the deal.

Assuming that wrinkle gets a good ironing, a groundbreaking for the $2 billion, 43-story building is expected this fall, with occupancy by 2009.

The Goldman-NYPD arrangement means that the Battery Park City Authority won’t be able to use the rent payment, due next February, to pay off its own bonds or to feed money back to the city immediately. No one knows just how long it will take to finalize the security plan, but comments from officials suggest that it will be years rather than months.

Yet state officials insist there’s no risk that the state and the city won’t come up with a security plan, and that the rent payment—a lump sum that covers 64 years—won’t slip from escrow into the authority’s general account.

“The arrangement is, there will be a security agreement which the city has committed itself to and the state has committed itself to,” said authority chairman James F. Gill, speaking after a meeting in which the lease was approved. “We are satisfied that it will happen and will not affect our collection of rent.”

In addition, authority president and chief executive Timothy S. Carey said there was more than enough money to refinance the bonds that first established Battery Park City, as well as to fund projects across the five boroughs. Mayor Michael Bloomberg and City Comptroller William C. Thompson Jr. are negotiating with the authority to devote as much as $130 million to affordable housing—which, in fact, had been where the fruits of the 92-acre landfill were originally supposed to go, before they were diverted to other uses.

Goldman’s insistence on applying financial pressure to ensure a security plan reflects its long-standing interest in safeguarding its employees and operations. That interest is also reflected in the company’s desire to construct its own building and to be that building’s sole tenant, so as to exercise the utmost control.

Goldman panicked when it lost a little bit of that control last April. That was when a deadline that Goldman chief executive Henry Paulson had imposed on Mr. Pataki passed without the Governor making a decision on a controversial tunnel outside the proposed headquarters. The tunnel, executives feared, would create a speedway right outside the entrance to Goldman’s headquarters and cause a security nightmare. It was then that Goldman put its building plans on hold.

The bank had to scream to get the state’s attention, but Goldman succeeded mightily and has come out ahead, with more goodies than it had before the spring. Now it’s using a similar tactic to make sure that it gets what it wants in terms of security.

Coordination among overlapping agencies has bedeviled anti-terrorist arrangements since the Sept. 11 attack—and was, in fact, a major weakness that the 9/11 Commission found in the city’s response back then. Only this year, after some strong-arming on the Mayor’s part, did the Fire Department finally let the police have first-responder status at so-called “haz-mat” (hazardous materials) calls.

In Washington, D.C., a central planning commission issued a plan three years ago coordinating the steps for physical improvements to block terrorists, but in lower Manhattan, the efforts have been left decentralized.

The Battery Park City Authority turned bus shelters, bike racks, boulders and trees into vehicle-proof obstacles throughout its 92 acres soon after the attacks. Meanwhile, outside the New York Stock Exchange, the Lower Manhattan Development Corporation, a state-city agency, replaced metal barriers with a wrought-iron fence as part of what Mr. Pataki called an end to “obnoxious security measures”—and yet passersby still frequently see a pick-up truck filled with sandbags to keep car bombs away.

The Port Authority police and the NYPD currently have a security agreement in place that delegates authority for the area within the World Trade Center site fence, plus the sidewalk along Church Street, to the Port Authority, according to Port Authority spokesman Steve Coleman. However, he said that the two agencies will assist in responding to incidents in each other’s territory when necessary.

Police Commissioner Raymond Kelly has been highly praised for expanding the NYPD’s anti-terrorism force many times over, as well as getting private companies extensively involved. Security directors come to special department briefings and submit blueprints for review. But the Goldman arrangement is taking that involvement a step further, making the NYPD responsible for the success of one of the most acclaimed—and expensive—job-retention deals ever. The NYPD didn’t respond to repeated phone calls and a request for comment faxed directly to Mr. Kelly’s office.

A security consultant who has done work in lower Manhattan said that he knew of no other company playing such a role in police planning, but added it was understandable that Goldman would want a comprehensive plan.

“It is routine for tenants to have arrangements with developers that they will provide such-and-such services,” he said. “So when you get into a situation where one company is the tenant and the developer, what’s happening here is they are seeking those same guarantees from the city. But it is extremely unusual. Law-enforcement institutions as a rule don’t guarantee an individual institution anything.”

Battery Park City officials emphasized that Goldman will not have veto power over the security plan, although it will be a part—along with numerous public agencies—of the plan’s formulation. The particulars of what the plan will cover are laid out in a letter from James Kallstrom, the Governor’s special security advisor, who was assigned to Ground Zero after the Goldman deal first fell apart in the spring. That letter has not been made public.

Mr. Gill, the Battery Park City Authority chairman, said the city and state alone would determine whether the goals had been met.

“The city is committed to effectuate the security plan, and when that is done, the money in escrow, which is our rent in its totality, will be released,” Mr. Gill said.

State officials said they weren’t concerned that the Goldman arrangement would set a precedent they didn’t want repeated. Mr. Carey, of the Battery Park City Authority, said that since there was only one unassigned land parcel left under his jurisdiction, it wouldn’t pose a problem. But John Cahill, the Governor’s secretary and liaison to lower Manhattan, said that similar security guarantees might be used in negotiating future job-retention agreements.

“To the extent they’re talking about a $2 billion commitment and significant numbers of jobs, we’ll certainly have conversations,” he said.

While it's been treated as a done deal, the terms of that deal are still a matter of negotiation, and we're waiting to see what comes out of it. Plus, done deals have gone south before. Anyone remember the obscure state agency that killed the stadium?

That's unlikely here, but still ...

The Liberty Development Corporation, an arm of the Empire State Development Coporation, deliberated this morning on the Liberty Bonds that will be used to finance the $1.8 billion tower at West Street and Vesey streets. The Battery Park City Authority, the state agency that owns the land, is discussing the terms of the lease this afternoon and may vote to approve by the end of the day.

UPDATE: The Battery Park City Authority didn't finish with the lease this evening. They're meeting again at 11:30 tomorrow morning.

- Matthew Schuerman