Would you spend half your income on this?

The Bloomberg administration has a mixed record on affordable housing. It was one of the Mayor's signature initiatives when he took office, but the market has subtracted units faster than he has added them and across the city, the percentage of income that New Yorkers spend on rent—an apartment is considered 'affordable' if it consumes less than 30 percent of its inhabitants' annual income—has risen sharply.

But perhaps new evidence that the high cost of housing and income inequality impede economic growth might make Mayor Bloomberg, or at least his successor, take note.

A new Harvard paper has linked the high cost of housing to a slowdown of economic growth, showing that high costs of living are stopping both low and high-skill workers from moving where the best opportunities are.

“The best places for low- and high-skilled workers used to be the same places: California, Maryland, New York,” Peter Ganong, a doctoral student in economics and a co-author of the paper told The New York Times, which wrote about the findings. “Now low-skilled workers can no longer afford to move to the high-wage places.”

The success of places like New York, of course, rest on the best and brightest relocating here and continuing to drive the creative engine that makes the city a global capital. But now the population growth of rich states, which has historically been much faster than poor states, has slowed, according to the study, suggesting that people are pursuing lesser opportunities in lesser cities because they can't afford to move to places like New York or San Francisco. And the economic health of those cities, as the middle class finds them less and less viable places to live, may be threatened, despite foreign investment and tourism dollars that flood in.

After all, when a star journalist like Andrew Sullivan starts complaining about how painfully expensive New York is, you know you might have a problem. And while the recent college grad hungry for success might be willing to pay $900 a month for a small bedroom in a shared apartment in Bushwick, that recent college grad will still need to live with extreme thrift and a full-time job that pays at least $30,000 a year—or receive a monthly check from mom and dad—in order to stay here. Moreover, will a mid-career professional with a family move here for $65,000 a year if it means paying 50 percent of the family's income for a two-bedroom?

It's certainly worth consideration given that high housing costs and the city's growing gap between the rich and the poor is usually deemed an unfortunate, but unavoidable side effect of New York's economic growth. Looking at how these things can impede future economic growth leads to a very different and incredibly important conversation about the future of housing policy in New York City.

kvelsey@observer.com

Brooklyn's DIY tech campus. (Steiner Studios/NYT)

Back in the Spring, The Observer traveled to Steiner Studios at the Brooklyn Navy Yard, where Doug Steiner is working on building the biggest movie studio outside of Hollywood. Part of that plan is building a new media-tech campus, including a new grad school for Brooklyn College's film program that is already under construction in old radio building at the foot of Washington Avenue.

The marquee feature is a 20 acre satellite for Carnegie Mellon University, to be located on the site of a former naval hospital. On Friday, The Times revealed both a rendering of the project and the fact that the city and Steiner Studios were close to a deal for redeveloping the property.

Mr. Steiner, who owns the adjacent Steiner Studios movie and television production center, would connect the site to his property to create a 50-acre lot to be called a media campus. The project, which would cost nearly $400 million and take 12 years to build, would use the nine historical buildings on the site and create five new structures for a total of 328,000 square feet, housing media companies and academic programs. There would also be 100,000 square feet of new stages for film and TV, including the first underwater stage in the country and the first back lot on the East Coast to feature a New York City streetscape.

[...]

To make the plan viable and to build out the site’s infrastructure, including water, sewers and electricity, the developers are seeking $35 million from New York State and New York City and $2.5 million from the federal government.

Over the years, the site has been the focus of a series of failed proposals, most recently as a possible location for the city’s applied sciences campus, which eventually went to Roosevelt Island. But the developers say they are hopeful that this project will have more traction.

What is cool about the proposal is it will have that traditional collegiate feel. Some of these buildings date back to the Civil War era, when the Navy Yards was just becoming a hub of American naval power, and it helped churn out the famous ship U.S.S. Monitor, the first ironclad warship ever built.

Nowhere else in the city could a school come in and find itself sitting on a historic quad—to say nothing of a centuries-old history of innovation.

Tourist attraction.

Yesterday, Mayor Bloomberg announced that that the city would be raking in $70 billion from tourists four years from now, as the administration and NYC & Company continue to ramp up tourism to the city. Spending last year amounted to $32.5 billion, and $48.5 billion in economic impact, from a record 50.5 million tourists.

This got The Observer thinking, and, as often happens when we get to thinking, we we got to worrying.

At current rates, wouldn't it take, given diminishing returns, another 25 million tourists or so to reach the target spending levels by 2015? Think Times Square and the Brooklyn Bridge are bad now? Imagine them 50 percent more crowded. Oh, the humanity. (There would certainly be a lot of humanity around.)

But it turns out we had it backwards. This is not a case of diminishing returns but compounding ones.

By attracting a mere 55 million visitors by 2015, the city can reach its goal of $70 million in economic impact by then—so long as it is attracting the right visitors. Kimberly Spell, chief communications officer for NYC & Co., helped break it down for us.

Out of that 55 million we are targeting and selling destination to international travelers who spend more money than our domestic visitor.

In that international group we are super focused on the new emerging markets where the traveling populations have grown and are spending more on their vacations (i.e. Brazilians are making out like gangbusters buying up electronics, small appliances, etc. on their visits).

Add in cost of inflation, factored with strength of the dollar and rising costs of our goods (think shopping) into a complex economic model across our 18 markets (where we run tourism and press offices), and we get the new projections.

Those projections are below, and as they show, the growth in tourists may not be as horrifying as the typical(ly stuck-up) New Yorker might think. Tourism grew by 5 million visitors between 2005 and 2008, roughly the same time horizon currently being targeted, and would have continued to rise but for the recession in 2009. In fact, tourism totally recovered within a year and continued its march upward—toward the Empire State Building observation deck, no doubt.

What is more interesting about the numbers is how the spending per-tourist has risen over the time period, and how it tracks with the number of international visitors. In 2005, there were 35.8 million domestic tourists and 6.8 million international tourists, who spent $24.3 billion with $36.1 billion in economic impact. Last year saw 40.3 million U.S. tourists, 10.3 million foreigners, and $48.5 million in economic impact. By 2015, the administration projects 43.2 million from over here, 12.7 million from over there, all spending $45 million, with $70 million in economic impact.

The increase comes from the types of good and services used, some of which like food and shopping, have a duplicative economic effect. As the administration pointed out in its announcement yesterday, every percentage point shift between domestic and foreign tourists nets the city an extra $600 million.

"These new projections illustrate just how important future visitors are to the City’s economic well-being and the essential role tourism plays in sustaining the energy and vibrancy of the five boroughs," NYC & Company CEO George Fertitta said at a tourism conference in LA yesterday. "We have identified key growth markets and will be launching initiatives to keep our record-breaking momentum going through 2015 and beyond.”

Who knew Century 21 would be the key to the 21st Century New York City economy?

mchaban [at] observer.com | @MC_NYC

Tourism Economics Through 2015

Rotten tomatoes? (Getty)

Walmart is in a pickle, and not the kind that can be found in the canned goods aisle. Following the Mexican bribery scandal, pols high and low have reaffirmed their opposition to the store. But they are not the only ones. Even some of the big box retailers staunchest supporters have come out against the company, namely Greg David.

The Crain’s columnist and former editor for three decades of the influential business weekly is a big believer in capitalism and its important role in shaping the city—he just wrote a book about it. To that end, he has long supported Walmart’s efforts to open a store in the five boroughs (14 times at last count). Yet now, in light of the scandal, even Greg David doubts Walmart will ever open in New York. And he believes this is all Walmart’s fault.

For the past three years, ever since the mayor announced his support for Walmart during the 2009 mayoral race, it looked like the company might actually worm its way into the city, following previous setbacks and roadblocks pushed by labor unions and the City Council. It would build as-of-right and with popular and political support. But as the economy turned, the company dithered, and now the political math is no longer adding up, Mr. David argues.

Walmart squandered all that momentum by not announcing a plan to open stores. It is true that giant companies like Walmart march to their own beat, but the months of silence have clearly eroded its position.

The Mexican scandal hurts in two ways. It obviously means any move in New York will need to be delayed until the publicity dies down. More importantly, The New York Times story suggests current CEO Mike Duke, the driving force behind the effort to move into New York, could be implicated.

With the clock ticking toward a new mayor, Walmart may have just blown it.

Still, all is not lost. Mayor Bloomberg, supporter of all things free market and soulless, told reporters they should not rush to judgment on the retailer, according to Capital New York.

“No, I’ve not been a big supporter of Walmart," said the mayor. "I’ve been a big supporter of government not telling people whether they can do business here. I think you let the market decide whether people want jobs or not, whether people want to buy products at given price ranges for different types, and I think that that’s exactly what this is all about. I have no idea what Walmart did in Mexico, whether any of that stuff’s true or not. We’ll have to see. There’s one story in the paper."

There is more than a year until the mayor leaves office, plenty of time for Walmart to try and get things done. And really, how many Walmart shoppers read The New York Times?

Still, the stain of bribery gives the project's opponents ample opportunity to spread the word against the company, as they did at a rally on the steps of City Hall this afternoon. No sooner did the events begin at 2 p.m. than a statement popped up in our inbox, reaffirming the Walmart march continues.

“Our track record as a good corporate citizen is well known and in large cities like New York, residents continue to choose to shop and work at Walmart," company spokesman Steve Restivo said. "As a result, we continue to evaluate opportunities here to make access to our stores more convenient for customers."

The fighting has been heady so far, but if it continues, expect things to heat up on both sides.

mchaban [at] observer.com | @MC_NYC

More economic output in its pinky finger than in all of Peoria. (Getty)

The most heavily trafficked neighborhood in New York also happens to be one of the biggest economic hubs in the United States, according to a recent study. The Times Square Alliance and HR&A Analyst Inc. teamed up on a report on the economic impact of Times Square. The report, which can be downloaded from their website, showcases the dreaded tourist district as one of the largest economic powerhouses in New York and all of the United States.

Here's some interesting facts:

• Times Square pulled in $110 billion in 2011 for New York City.
• Economic activity has increased by $20 billion ($90 billion in 2007) despite a sluggish economy.
• There are 170,000 jobs in the district—including workers in the 29 million square feet of office space within the blocks.
• Times Square's economy trumps that of both the Portland and Pittsburgh metro areas (individually, not combined).
• There were 48.7 million visitors to New York that generated $31 billion in income.
• 21% of hotel rooms in New York are in Times Square with 17,000 rooms.
• There are 230 advertising signs that bring in over $60 million a year.

The best part? The report notes that Times Square helps cut the gap between New York City and Orlando tourism. There was about a four million gap in 2006 and only three and change in 2010. (Don't tell that to Mayor Bloomberg.)

Watch out, Mickey Mouse. Lady Liberty and her parade of neon is out to get you.

mewing@observer.com

Never forget the Cuba Cheese Museum.

If the Cuomo administration has been adhering to austerity in its first year, that is because there is a smaller pie to carve up, as the governor keeps reminding New Yorkers. But he was also taking his time because the money is meant to go where it can actually do real work, according to The Times, and that takes time to figure out. The Paper of Record calls the program "American Idol for policy wonks and economic development types." Submissions for the 10 regional councils are due today.

The theory behind the process is that rather than doling out pork ad hoc; the usual default positions behind stadiums, convention centers and cobblestone downtown streets; and infamous sinkholes like the New York State Museum of Cheese, state support for economic development should flow from a realistic, on-the-ground assessment of regional economies, resources and opportunities.

How much this proves to be an abstract exercise and how much it produces actual jobs remains to be seen. Still, almost everyone involved in the process and many outside it give Mr. Cuomo high marks for his framework for something that could prove more difficult than his earlier successes with legalizing same-sex marriage and passing a tough state budget.

“There is a sense that postrecession, we need a radically different kind of growth model that is not investing in the wrong things, and New York is in the vanguard of this,” said Bruce Katz, an expert on state economic development strategies at the Brookings Institution.

No more bridges to nowhere, then.

mchaban [at] observer.com | @MC_NYC

He means business.

As has been rumored since talk began that Chris Ward would be departing the Port Authority some time this year, the Cuomo administration is poised to announce Patrick Foye will be taking over the bi-state agency as executive director, The Journal reports.

Mr. Foye's most recent time in government was as downstate director of the Empire State Development Corporation, to which he was appointed by Governor Eliot Spitzer. He followed the governor out the door, and spent the past few years working for a Long Island law firm, before joining the Cuomo administration as an adviser on economic development.

The move should brighten the hopes of some who feared a return to an earlier era, when the agency was run by political appointees with limited development experience. During his time at ESDC, Mr. Foye oversaw projects ranging from Moynihan Station to the Javits Center expansion, though as The Observer noted at the time of Mr. Foye's departure, he "in many ways struggled to get projects off the ground in his first year." (For more on the man, we recommend reading that great profile by Matt Schuerman.)

Mr. Foye had been in favor of scaling back some of the grandiose projects of the Pataki era, not necessarily a bad thing, but a contrast from the pro-infrastructure Mr. Ward. “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," Mr. Foye told The Observer in a 2007 interview, a few months after taking over.

Both governors Cuomo and Christie have brought a bean-counting sensibility to public works, so Mr. Foye, who used to be a member of the state's Conservative Party, could be just the man for the job.

Update: And The Times' Michael Barbaro tweets that James Rubin, formerly of Bloomberg View and before that the State Deparment, is, at the behest of Governor Cuomo, joining the board of the Port and advising the administration on economic development matters.

Update 2: In an email, Vishaan Chakrabarti, who used to head Moynihan development for Vornado and Related, gives a vote of confidence to Mr. Foye: "I have worked with Pat for years and know his tireless dedication to the New York region. I look forward to our continued work together to build Moynihan Station and the other critical infrastructure we will need to remain globally competitive in the coming decades."

Update 3: Transportation Alternatives executive director Paul Steely White released the following statement after Governor Cuomo made the announcement official, which basically called on Mr. Foye to follow in Mr. Ward's shoes: “We hope Patrick Foye continues his predecessor’s record of accomplishments. Chris Ward’s work evidenced a strong commitment to the New York City metropolitan area, our environment and our quality of life. Investing in infrastructure is the foundation of the region’s economy and an engine for job creation. As a member of the MTA’s board, Patrick Foye knows first-hand the perils underfunded infrastructure present to the metropolitan area.”

mchaban [at] observer.com | @MC_NYC

"Normally, the farther you get from the subway the less expensive the housing is," said [Friends of the High Line co-founder Robert] Hammond, who confessed that he rents an apartment in the West Village. "But the closer you are to the High Line, the farther you are from the subway, and still, the closer the apartments are to the High Line, the more expensive they get."

More remarkably, The Times notes that, on the eve of the opening of the park's second phase this Tuesday, it has created $2 billion of economic activity. All that from a $115 million investment in the park itself and a rezoning of the property surrounding it. So maybe cutting the city's capital budget is not the wisest thing.  

Meanwhile, the Post reports that a few new condos does not a neighborhood make:

Some residents say the wave of tourists keeps them from being able to enjoy the park. "It's bringing a lot of business," said Andrea Norlander, 45. "But there's no community there," she said. "It's not a neighborhood."

So, despite all its successes, there's no room to stop and smell the roses on the High Line. Though these kids might beg to differ.

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mchaban [at] observer.com | @mc_nyo

The red-carpeted Council chambers in City Hall quickly became an interrogation room as successive Council Members took their turns bellowing aggressive questions and assertions at a trio of Bloomberg economic development officials.

Why not rule out the use of eminent domain? Where is the needed government funding going to come from? Why designate a private landowner’s property as parkland? Doesn’t the city government have a bad track record redeveloping Coney Island? Why use city money to bus in supporters to testify in favor of the city’s plan?

It just so happens that each of these questions had been urged by Mr. Sitt, the private landowner who has bought up the better part of the central amusement area in the onetime entertainment hub and who is now vigorously fighting key elements of the Bloomberg plan.

“I was pleased,” Mr. Sitt said. “It was the first honest forum on the future of Coney Island that’s ever been held, where every side and every perspective had to be upfront and candid.”

A previously low-profile and relatively little-known landlord, Mr. Sitt now finds himself planted squarely in Mayor Bloomberg’s path to victory on one of his top economic development priorities--in an election year, no less. It's a standoff that is rapidly headed toward a final round in coming weeks (the City Council must deliver a thumbs up or down on the mayor's plan by early August).

The city’s vision for the area imagines new rides, hotels and retail in the main amusement area, and a large swath of parkland that would be city-owned—land that Mr. Sitt now, in large part, controls.

And for two years now, city economic development officials have been desperately attempting to extricate him from the amusement district, but throughout, the Brooklyn native has proved astoundingly obdurate, resisting overtures, followed by demands, to vacate in an attempt to strike a better deal. What is remarkable, thus far, is that he is still in place and dominating discussion, displaying an ability to beat back the Bloomberg steamroller politically, as, at least for now, he has the ear of local Councilman Domenic Recchia, whose support is considered essential for the plan’s passage in the Council.

Now, as the Bloomberg administration is averse to any sort of defeat on its Coney plans, the question for Mr. Sitt becomes how much more fight does he have, or what kind of deal can he strike to make an exit?

THE CHAIRMAN OF THOR Equities, which owns and has redeveloped retail nationwide, Mr. Sitt, 45, doesn’t come across as the typical New York landlord of a multi-generational real estate dynasty that would typically undertake one of the city’s major development projects. His background is in retail for low-income areas, and he has no large, ground-up developments to his name in New York. Unlike many of the clubby real estate industry's top names, he is a first-generation large-scale landlord. He grew up in South Brooklyn and carries a thick accent to show it. He has short black hair, an average frame, and frequently puts on a teeth-baring smile that overtakes his face, adding to his salesman-like charm.

His involvement in Coney Island has been a nauseating up-and-down ride filled with the closure of numerous attractions at Coney Island including the signature Astroland, a public relations war, the creation of a less-than-popular flea market where rides once stood, and a rare attempt by the city to remove the private landlord (not usually the course of action for the developer-friendly Bloomberg administration). He is reviled by organized amusement supporters trying to preserve the freakish nature of Coney Island and his fight with the city has dominated discussion on the topic, obscuring other issues that are perhaps more consequential in the long run (for one: how big should the amusement area be?).

By Mr. Sitt’s telling, this odyssey started back at the beginning of the administration in 2002. Mr. Recchia approached him, Mr. Sitt said, as part of the Councilman’s search to find a developer willing to try to invest in the area. Coney Island has been on a gradual decline since its heyday in the early 20^th century and is now reduced mostly to vacant lots that are zoned for amusements.

“He had recommended that I proceed and go ahead to purchase property,” Mr. Sitt said. “At his recommendation, I proceeded.”

So Mr. Sitt cobbled up a collection of lots and old properties at Coney—over $100 million worth by 2007—with plans for a giant, Vegas-style new hub that would attract national brands and resorts: Glitzy hotels, apartments, indoor amusements, theaters, retail; outdoor rides. Regardless of the result, he says he “woke up Coney Island” with the new attention.

The city, which would need to approve any new development, generally gave a nod of to Mr. Sitt's efforts, as the administration, too, wanted to redevelop the area.

The problem, from the administration’s perspective, came with the details. City officials, particularly the notoriously detail-obsessed Department of City Planning director Amanda Burden, took a hard line against Mr. Sitt’s plans to build apartments in the main amusement area. From there, greater chasms became apparent and Bloomberg officials became increasingly worried that Mr. Sitt was nothing more than a speculator who would flip the property—he had no large-scale development experience in the city, after all, and had already flipped some property at Coney Island for a very healthy profit.

Mr. Sitt seemed to go to lengths to try to counter this impression—to show that his firm was legitimate and qualified. He brought on an endless roster of consultants and architects to draw up the plans and designs and sell the administration on them (a few names of those who have been on the Thor payroll: Thinkwell, Callison, Ehrenkrantz Eckstut & Kuhn, The Marino Organization, Wachtel & Masyr, Kramer Levin, Mercury Public Affairs, Capalino + Company; Knickerbocker SKD).

At one meeting at his 39^th Street office, two people in attendance recounted, Mr. Sitt shuttled a group of city officials from one Thor staff member to the next. The group walked into successive offices as Mr. Sitt got each staffer to recite their resume and job at the firm in an apparent effort to flaunt their qualifications.

Throughout the first half of 2007, officials from the city's Economic Development Corporation became increasingly frustrated trying to nail Mr. Sitt down on the details of his plans. He tended to speak broadly, city officials have said, presenting plans with numbers that simply didn’t add up. The city felt misled repeatedly on issues such as the existence of residential in the amusement district (he changed it to timeshares) and the sizes of retail and hotel rooms. (Mr. Sitt denies dishonesty in the process.)

From Mr. Sitt’s perspective, he has told numerous people that he felt the Bloomberg administration shifted course—first by going along with his plans and then, as jobs shuffled between city officials and the issue became higher profile, by refusing to work with him. He has told others that he thought he had a basic deal with the Bloomberg administration in 2006 to develop with some residential. City officials deny this, but regardless, by the time the plans became detailed and vetted by others in the administration, the reaction was a negative one, and officials felt Mr. Sitt overpaid for his land.

The two sides fought—in meetings and in the press—and, by summer 2007, the administration, led by then-Deputy Mayor Dan Doctoroff, changed direction, deciding to remove him from the central amusement area entirely with a land swap. Should he not like that plan—and he didn’t—a buyout was offered.

Since, little has changed, at least in the larger scheme of things. The administration has made countless offers to Mr. Sitt to buy a portion of his land or all of his property, with a ceiling of $105 million being offered (Mr. Sitt wants all his costs back, a minimum of $144 million), but the sides have remained unable to agree on a deal.

This is, according to people who have worked with him, the way he has acted on this project: he is difficult to pin down to specifics, and pushes decisions to the wire.

“The issue for us,” said a city official, “has been that every time we try to make a deal with Joe—as soon as you say yes to Joe, he changes his mind and wants to go somewhere else”

YET, GOING INTO THE final days and weeks before a City Council vote, Mr. Sitt has a strong hand. His greatest asset: the support he has won thus far from key Council members and, to some extent, the state Legislature. Without such support, the Bloomberg administration could push the plan through, and eventually push him out through eminent domain (an act that would be made easier given that the city wants to designate his property as parkland).

At the center of the standoff is Mr. Recchia, the colorful local councilman who has backed Mr. Sitt numerous times throughout the years of discussions, unabashedly presenting himself as close to the developer. His main goal seems to be a deal between Mr. Sitt and the administration that will take the landlord out without leaving him bitter. Politically, a deal would allow him to show progress to constituents on his key issue, without a protracted legal battle obscuring a victory.

“He was there when nobody else wanted to be there,” Mr. Recchia said of Mr. Sitt. “He’s the one that said, ‘Alright, I’ll put the money up.’”

He seems frustrated that the city’s offer has not led to a deal with its price that Mr. Sitt says is far too low.

“You have to keep an open mind – and look what they did in Willets Point and look what they spend money on,” he said, referencing the hundreds of millions devoted toward the Willets Point development. “You know what? We’re going to spend what we need to spend to get this project done.”

And throughout all of this, Mr. Recchia has had the backing of an important friend, Councilman Simcha Felder. The Borough Park councilman is an administration ally and has worked mostly behind the scenes, particularly in the efforts to reach a deal late last year, joining Mr. Recchia in meetings with top city officials as they urged the city to make an offer (they ultimately resulted in more deadlock).

The administration's line on the issue has been the same for months now: it has an offer on the table and it isn't offering more money to reward a speculator who overplayed his hand. "We’re simply not prepared to make concessions in Coney Island that infringe on our plans to expand and protect the amusement district," Deputy Mayor Bob Lieber said in a statement of Mr. Sitt. "He bought the site on speculation, and we’re prepared to pay him a lot of money for it. I can think of more than a few real estate speculators that are in a worse spot than he is.”

If it has done anything for the public review process, the Sitt-related imbroglio has obfuscated the litany of other issues that typically surround such a major development project and dominate debate in the Council. Affordable housing groups have been pushing for more low-income housing, a long list of unions wants various wage guarantees for contractors and workers, and there is not enough money in the city budget to carry out the plan, as officials acknowledge it would require hundreds of millions of dollars in infrastructure work.

Further, the loud group of well-organized amusement enthusiasts and Coney Island freaks, joined by the Municipal Art Society, has raised seemingly legitimate concerns about the density the city has proposed for the amusement district in its plan. Much like Mr. Sitt’s plan, the city envisions a modest outdoor amusement area of about 9 acres next to the Cyclone roller coaster, along with indoor amusements and a large set of hotels that were planned in part to subsidize the indoor amusements. But the Municipal Art Society and other groups say the hotels crowd out the amusements, which are too small to create the critical mass necessary to revitalize Coney.

Mr. Sitt’s main end-game is to get to a more favorable deal, something he says he still thinks will happen. Just how long Mr. Recchia will stay on his side is a key question. Given the councilman’s rhetoric about the need to revitalize Coney Island, it’s hard to see a situation where he votes against the plan in some form, particularly should the administration begin adding more pressure.

Speaking by phone Monday evening, he expressed backing for Mr. Sitt in principle—saying he was the first developer there, and shouldn’t be punished for that.

But when asked if he was in Mr. Sitt’s corner, he was non-committal.

“I am in everyone’s corner,” he said. “I aim to get something done.”

ebrown@observer.com

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.

ebrown@observer.com