Speaking at a Crain’s New York breakfast Thursday morning at the Hyatt on 42^nd Street, the Democratic nominee for mayor offered a blast from the past as his standard-bearer for how the city should get giant real estate projects built: Battery Park City.

Unlike many of the Bloomberg administration’s signature development initiatives—Willets Point, Coney Island, the West Side rail yards, Atlantic Yards—the 40-year-old project, started in the Lindsay and Rockefeller administrations, was developed parcel-by-parcel, with developers gradually building up the site to the point where it’s just getting fully built out today.

“The tale of the Bloomberg administration has been failed mega-development projects: Hudson Yards, Atlantic Yards, Willets Point and on and on and on,” the comptroller said.

“Rather than giving it to one developer and saying, ‘Here, you run with it,’” he said, “what we’re seeing now is people treading water, sitting there hoping the economy turns around.”

The solution?

“We should have done more staged development,” Mr. Thompson said. “If you look at models that have worked in good and bad economies, look at Battery Park City. It’s been better-planned growth; you’ve seen building and construction moving forward and developing in good and bad times.”

Of course, this isn’t a new idea; planning and neighborhood groups have been urging this for years. Giving a big site to a single developer all at once—such as the 22-acre, $4.9 billion Atlantic Yards project—could bring a higher bid given, among other reasons, that the developer would benefit from economies of scale and increased values as it fills out the site. But, as has been seen in these strained times, these projects are also quite prone to failure or renegotiation as the developers struggle to get off the ground amid the cyclical economy.

On the mayor’s mega-projects such as Atlantic Yards, the 26-acre West Side rail yards, the Coney Island amusement district, and, to a large extent, Willets Point in Queens, the administration has doubtlessly struggled to show anywhere close to the project it wanted. Officials had previously said their goal was to get all the administration's projects to the point where they were irreversible before the end of the mayor’s second term.

The only one that’s close to that point is Atlantic Yards, where developer Bruce Ratner is close to starting construction on the centerpiece Nets arena, though most of the project has been pushed off for years. 

ebrown@observer.com

Particularly in the competitive Democratic primaries, two fields of candidates launched arms races of sorts on housing, ultimately presenting plans that called for huge infusions of new money and an array of new policies long pushed by advocates. The Bloomberg campaign countered with similar plans of its own, particularly in 2005; now many of the campaign ideas are city policy.

So as the 2009 mayoral election nears with only one well-financed candidate actively seeking the Democratic nomination—Comptroller Bill Thompson—could a noncompetitive mayoral primary take a toll on the innovation and idea-borrowing that traditionally occurs in such campaigns on housing policy?

The spring and summer of election years, after all, are when housing advocates tend to push policy papers on campaigns and hold candidate forums. But now, numerous advocates say, their plans have been altered by the noncompetitive field. No longer will they be able to play Democrats off each other with various plans, as they had hoped, and at least one group has canceled a planned candidate forum as a result of the small field, according to its director.

“A lack of having a competitive Democratic primary has not brought the traditional issues, such as housing, to the forefront,” said Assemblyman Vito Lopez, chairman of the Assembly’s Housing Committee. “If that changes, and there is a very competitive primary, I believe that you will see each of the candidates talk on the issue of affordability and housing.”

Should housing ideas, and ultimately policies, indeed fail to emerge with the same vigor as in elections past, it would represent an unintended side effect of Mayor Bloomberg’s decision to extend term limits.

That decision has kept one, and likely two, onetime mayoral hopefuls—Council Speaker Christine Quinn and U.S. Representative Anthony Weiner—on the sidelines. Both have advocated a need for greater attention to the city’s housing policy, and surely would have focused on new issues. Ms. Quinn, who is pursuing another term as speaker, has pushed for permanent affordable housing. Mr. Weiner, who has suspended campaigning but has left the door open to a return to the race, has urged a focus on housing for “middle-income families.”

While campaigns are not generally known as great incubators of cutting-edge policy, housing issues have done quite well, at least from the viewpoint point of subsidized-housing advocates.

“In both ’01 and ’05, the fact of competition in the Democratic primary led to a proliferation of a lot of ideas around affordable housing,” said Brad Lander, the former director of the Pratt Center for community development (and now a City Council candidate). “That did come to encourage significant steps forward in affordable-housing policy.

Issues such as a housing trust fund, inclusionary zoning, a popular housing tax break reform and billions of dollars in capital spending all made their way into multiple candidates’ plans as they sought to match each other to demonstrate greater commitment to housing. The policies first appeared in the Democratic primary, then were carried into the general election, and many are now part of city policy.

In 2005, facing an incumbent Mayor Bloomberg, who already had a strong record on affordability issues, the Democratic candidates each came up with their own decade-long housing plans calling for billions in spending. When Fernando Ferrer, with his $8.5 billion plan, made it to the general election, Mr. Bloomberg countered with his own $7.5 billion commitment to below-market-rate housing, which is now a priority of his administration.

Given that Mr. Bloomberg’s approach to housing generally wins much praise from advocates, there is, of course, less room to criticize or to trump, at least in terms of spending. Still, in coming months, multiple groups say they are likely to push issues such as a need for far more permanent affordable housing (many affordability requirements currently expire after a set of years), and new attention to apartment buildings that were purchased by highly leveraged buyers who now risk default.

“The fact that there is a less intense election now is harder for us to play candidates against each other or get candidates to up the ante,” said Benjamin Dulchin, executive director of the policy-focused group Association for Neighborhood Housing Development. That said, Mr. Dulchin added that he believes the changing economy and strains on housing production will allow advocates’ priorities, such as permanent affordability, to get a hearing with or without a competitive election season.

A Bloomberg administration spokesman, Andrew Brent, contested the notion that there was any dearth of ideas in the city’s housing policy. “The Bloomberg administration is implementing the largest housing program in the nation,” Mr. Brent said in a statement. “To achieve it, we’re constantly developing new, innovative financing tools that help us create housing even during an economic downturn.”

All that is not to say that Mr. Thompson will be without ideas on housing policy, and indeed many affordability advocates view him warmly (though to date, he has not laid out specifics on this or other campaign issues).

A campaign spokesman for Mr. Thompson, Anne Fenton, said a noncompetitive primary would not hurt housing efforts. Instead, she said in a statement that the prospect of a third Bloomberg term is “standing in the way of more affordable housing” due to what she characterized as the mayor’s “inaction” on the issue.

ebrown@observer.com

And for a long while, city comptroller and mayoral hopeful Bill Thompson hardly made much of a public show of his seat on the IDA, and rarely, if ever, brought public criticism to the hundreds of millions of dollars in incentives that came up on the board’s agenda. All told, in the 77 IDA meetings Mr. Thompson's representative has attended since 2002, he voted "no" just three times, according to the IDA.

But now, with the mayoral election just eight months away, Mr. Thompson is striking a noticeably different tone, as he seems to be taking a more activist approach to some of the various roles the comptroller’s job affords.

Earlier this year, he came out strongly against the deal to issue new Yankee Stadium bonds when it came before the IDA (he voted for an earlier financing package for the stadium, though he argued a substantial jump in costs made the deal a bad one for the city). And in early February, he used his role as a reviewer of city contracts to block, at least temporarily, a design contract for an expansion of the Brooklyn House of Detention, a development he has repeatedly criticized.

The latest round came Thursday morning, when he joined the Retail Wholesale and Department Store Union and a host of other labor, religious and community groups to take a swipe at the Related Companies’ plans for a $323 million retail development in the Bronx, threatening a "no" vote if Related did not make certain changes. The project, the Kingsbridge Armory redevelopment, must go before the IDA, as Related is seeking $13.8 million in tax breaks. (According to its application, Related is paying $5 million for the 588,000-square-foot, city-owned building).

With regard to Related, Mr. Thompson is vowing to vote against the deal unless there is a community benefits agreement in which Related would agree to concessions such as guaranteed wages and community hiring. The firm has been asked many things for the development, including requests that it build a school, and that it not build a competitor to a neighboring grocery store.

“We are urging Related to sit down with the community to resolve this; to work out an agreement that’s fair to everybody,” said Mr. Thompson, who initially signed on with the coalition of groups urging a CBA last year. “Until then, I vote no.”

The request for incentives came as part of Related's negotiation with the Bloomberg administration, said Seth Pinsky, chairman of the IDA. Related was initially designated the developer almost a year ago, though it has not yet closed on the property with the city.

"They came to us, and they said that they felt they needed assistance with these additional incentives,” Mr. Pinsky said. "So we looked at the benefits of giving these incentives … and we determined that it was a positive return to the city.”

A Related spokeswoman wrote that the company is working closely with stakeholders and “we look forward to continuing our important discussions with them regarding the substantial benefits that this development will provide for the entire community.”

According to Related’s application, there could be more incentive requests to come. Related said it may apply for tax incentives from the state’s Empire State Development Corporation, brownfield cleanup credits, and a tax credit from the federal government for historic preservation.

And for a long while, city comptroller and mayoral hopeful Bill Thompson hardly made much of a public show of his seat on the IDA, and rarely, if ever, brought public criticism to the hundreds of millions of dollars in incentives that came up on the board’s agenda. All told, in the 77 IDA meetings Mr. Thompson's representative has attended since 2002, he voted "no" just three times, according to the IDA.

But now, with the mayoral election just eight months away, Mr. Thompson is striking a noticeably different tone, as he seems to be taking a more activist approach to some of the various roles the comptroller’s job affords.

Earlier this year, he came out strongly against the deal to issue new Yankee Stadium bonds when it came before the IDA (he voted for an earlier financing package for the stadium, though he argued a substantial jump in costs made the deal a bad one for the city). And in early February, he used his role as a reviewer of city contracts to block, at least temporarily, a design contract for an expansion of the Brooklyn House of Detention, a development he has repeatedly criticized.

The latest round came Thursday morning, when he joined the Retail Wholesale and Department Store Union and a host of other labor, religious and community groups to take a swipe at the Related Companies’ plans for a $323 million retail development in the Bronx, threatening a "no" vote if Related did not make certain changes. The project, the Kingsbridge Armory redevelopment, must go before the IDA, as Related is seeking $13.8 million in tax breaks. (According to its application, Related is paying $5 million for the 588,000-square-foot, city-owned building).

With regard to Related, Mr. Thompson is vowing to vote against the deal unless there is a community benefits agreement in which Related would agree to concessions such as guaranteed wages and community hiring. The firm has been asked many things for the development, including requests that it build a school, and that it not build a competitor to a neighboring grocery store.

“We are urging Related to sit down with the community to resolve this; to work out an agreement that’s fair to everybody,” said Mr. Thompson, who initially signed on with the coalition of groups urging a CBA last year. “Until then, I vote no.”

The request for incentives came as part of Related's negotiation with the Bloomberg administration, said Seth Pinsky, chairman of the IDA. Related was initially designated the developer almost a year ago, though it has not yet closed on the property with the city.

"They came to us, and they said that they felt they needed assistance with these additional incentives,” Mr. Pinsky said. "So we looked at the benefits of giving these incentives … and we determined that it was a positive return to the city.”

A Related spokeswoman wrote that the company is working closely with stakeholders and “we look forward to continuing our important discussions with them regarding the substantial benefits that this development will provide for the entire community.”

According to Related’s application, there could be more incentive requests to come. Related said it may apply for tax incentives from the state’s Empire State Development Corporation, brownfield cleanup credits, and a tax credit from the federal government for historic preservation.

Video of Thursday's press conference on the Related project from Mr. Thompson's office.

But the ever-deepening economic crisis has proven anything but typical, and developers of low-income housing are being sucked into the vortex, feeling the same paralysis affecting the rest of the real estate world. Now, on top of the lending crisis affecting all construction, a plunge in public funding awaits, as the cash-poor city and state governments are proposing to slash hundreds of millions of dollars in housing subsidies.

Affordable housing has been a stated priority of both Mayor Michael Bloomberg and Governor David Paterson, and cuts will clearly challenge both men’s commitments to the issue.

Already, federal incentives for low-income-housing developers have been falling in value, amplifying the effects of a prospective drop in city and state funds, which often supplement federal money.

“It’s certainly the most challenging time that I’ve seen in the affordable-housing business,” said Bernie Carr, executive director of the New York State Association for Affordable Housing, an industry group. “Generally, we’ve weathered recessions pretty well—it’s a countercyclical business.”

Housing advocates and developers view the governor’s budget proposal as especially damaging. That’s little surprise given that the budget seeks to close a $14 billion gap, engendering a cacophony of complaints from all quarters around the state. In the housing field, the governor’s budget calls for about $105 million in capital spending on housing through the state’s housing agency, about $200 million less than last year’s total allocation, though roughly equal to previous years’ amounts. While the Paterson administration apparently viewed the extra $200 million in last year’s budget as a one-time shot, advocates had hoped to see it repeated.

It’s difficult to put a figure on the amount of below-market-rate apartments that will or will not be created because of the funding cuts, as spending per unit varies widely from program to program. Still, $100 million of subsidy could easily help fund a couple thousand apartments.

The governor has also sparked resistance with a proposal to take money from a revenue stream from the Battery Park City Authority, which was expected to create a $400 million affordable-housing trust fund in the city. Mayor Bloomberg, City Council Speaker Christine Quinn, Comptroller William Thompson and several other elected officials and advocates have protested the move, as the trust fund was considered key to the city’s affordable-housing development program.

The Paterson administration has proposed bonding the money from the surplus and splitting the $540 million it would receive evenly between the city and the state.

Also in the governor’s budget is a program that could pit housing advocates against their higher-education counterparts. The Paterson administration proposes funding $350 million in higher-education loans with money that is typically used by developers as tax-free financing for below-market-rate housing. The state is subject to a certain bond-volume cap on that type of financing, demand for which has outpaced supply in recent years, and thus the education program could further strain resources on the housing side.

A state budget spokesman, however, said the affordable housing financing levels will not be decreased. This is perhaps due to a temporary increase in the cap as part of a federal housing bill last year.

By far the largest local commitment of direct subsidy for low-income housing comes from the city, but that, too, faces a major rollback. In his preliminary budget presented last month, the mayor proposed cutting the city’s capital plan by 30 percent. While the budget did not specify cuts to individual agencies, a 30 percent reduction in the housing budget would mean a $390 million cut over the next four years, based on the $1.3 billion the city had slated to allocate listed in budget documents.

Such a cutback would undoubtedly strain the Bloomberg administration’s 11-year plan to build or preserve 165,000 units of below-market-rate housing. Although the mayor has repeatedly made clear his commitment to carry out the plan, it has already been pushed out an extra year in the face of the economic crisis, and a recent estimate called for starting 5,063 new units this fiscal year, down more than 35 percent from the 7,947 estimated last fall.

As with seemingly every other industry, those in affordable housing have turned hopefully to the federal stimulus package, and indeed billions have been allocated to numerous programs that could fund housing. The state could be eligible for an estimated $300 million–plus for such programs, but it’s unclear how much of that could be used given various restrictions.

For instance, a $2.25 billion nationwide fund meant to replace tax credits uses a program that requires developers to pay workers a prevailing wage. However, low-income-housing developers often steer clear of such wages as the cost is too high, putting in doubt the ability to tap all the money locally, which would top $200 million in the state.

Still, David Muchnick, coordinator for the group Housing First!, said that while the amount for housing was a relatively small chunk of the stimulus bill, there is still hope on the part of advocates that the federal government will provide more for low-income units.

“I think there’s still room for optimism insofar as they recognize that they still need to address the rental housing and multi-family housing situation more aggressively,” he said.

ebrown@observer.com

In a letter to the commissioner of the Department of Design and Construction, Mr. Thompson's office said it was blocking the contract due to the ballooning costs of the development—and the design work—which together total $420 million, up from an original price tag of $200 million.

Mr. Thompson, a mayoral candidate, and a number of other local elected officials have come out against the project, saying it is not the best use for the space (he’s also a plaintiff on a lawsuit against the Bloomberg administration on the project, litigated by Randy Mastro). The Bloomberg administration has said the project is part of a larger plan to replace deteriorating facilities on Rikers Island and to create a less isolated jail, bringing inmates closer to the courthouse and other services.

Full letter to DDC below.

Bhod Contract Ddc

With glaring city budget gaps looming ($11.3 billion over the next two-and-a-half years), the long-term effects of Mayor Bloomberg’s massive capital projects are coming into better view. New York City, the comptroller’s report found, already has either the highest or one of the highest (depending how you measure it) municipal debt burdens of any major city in the country. During the fiscal year that ended June 2007, the city’s debt burden came out to $7,096 per capita, or “more than twice the average of a sample of large U.S. cities,” the report found.

When measured relative to the total property value in the city, only Philadelphia and San Antonio, among major cities, have a greater debt burden than New York.

The debt comes as the city has been relying heavily on capital spending, part of the Bloomberg administration’s broader plan to expand economic development efforts and modernize aging infrastructure, much of which was neglected during the 1970s. Even with a 20 percent reduction from what the mayor initially wanted, the city’s capital plan this year is over $11 billion, the highest ever.

One way the city could have avoided such a high debt burden: more “Pay-Go” spending, where capital projects such as new schools or streets are paid for not just with money out of the annual budget and are not completely reliant on debt. The comptroller’s report said that Pay-Go did increase a bit during the flush times—$200 million in the fiscal year ending mid-2006 and $300 million over the following years—but that type of spending has gone the way of budget surpluses.

One other note on debt payments: As revenues plummet, debt service stays the same, eating up an increasingly large portion of a shrinking budget.

Comptroller's report:

The board of the city-run Industrial Development Agency voted 11-1-1 in favor of the $259 million in tax-exempt bonds for the Yankees and 13-0 for the Mets’ $83 million, according to an IDA spokesman.

This set of bonds, which was the second round of bonds approved for the stadiums, provoked an unexpectedly loud response from a set of public officials who had not been critical of the projects in the past, particularly Assemblyman Richard Brodsky and, recently, city Comptroller Bill Thompson (who, as an IDA board member, was the lone “no” vote today against the Yankees).

The city’s Independent Budget Office said Wednesday that the two new ballparks were costing the city, state and federal governments about $1.2 billion through a variety of tax breaks and subsidies.

“Anybody can see that this is simply a bad deal for New York,” he said in a statement.

Mr. Thompson has offered occasional criticism on the issue before—the 2009 mayoral hopeful issued a report in November that found the Yankees improperly deducted $11 million in rent payments and other fees—though this is by far his loudest condemnation to date.

That he has apparently become an opponent makes life a bit more difficult for the Bloomberg administration, as Mr. Thompson sits on the board of the Industrial Development Agency, the city agency that approves tax-free bonds. The IDA has scheduled its hearing on a new round of tax-free bonds for the Yankees and Mets for Thursday.

Meanwhile, Assemblyman Richard Brodsky sent out a statement this morning saying he issued subpoenas to Seth Pinsky, the president of the city’s Economic Development Corporation, and Randy Levine, president of the Yankees, to compel the two individuals to testify at his hearing on the topic tomorrow.

Mr. Brodsky scheduled the hearing late last week, but the Bloomberg administration demurred, saying timing was short and Mr. Pinsky and his agency were busy, as the event was a day before the mayor’s State of the City speech. (According to an e-mail we got from the Associated Builders and Owners of Greater New York, Mr. Pinsky was scheduled to address that group at a luncheon tomorrow at noon.)

“Subpoenas, as always, are a last resort, but in this case were necessary,” Mr. Brodsky said in a statement.

Mr. Thompson: What you’re looking at now … it’s almost a rollback on a reduction. Because if you look, they just cut property taxes 7 percent. I think it is reasonable to expect that that’s going to get rolled back—I know the mayor is attempting to do that now. That probably makes the most sense in the short term.

Do you think the mayor will be successful in getting that through?

It’s clear the state isn’t going to be helping us; we haven’t felt the full impact of what the state cuts are going to be, so I think it makes sense to be able to do that, and the members of the [City] Council will probably agree with that.

And how about the $400 homeowner rebate?

That should stand for right now. I know it’s hard to take out of one pocket and put into the other, but we should continue that until times get tougher; and I think that’s fair to be able to try to give money back to homeowners.

How about a personal income tax increase?

You want to do income tax increases as a final resort, as a last resort, and I don’t think we’re there yet.

Was the city budget grown too rapidly in the past few years? I think city spending has grown over 20 percent after inflation since Bloomberg came in.

I think that a number of watchdogs have said that the mayor’s spending has exceeded what should have been done. Obviously, during tougher times, it’s easy to say that. I think there’s a lot to be said to the dollars that were put away during the good times. We didn’t fully get our way—I would have liked to see a rainy day fund. … We’ll see over the next year.

Should we step up capital spending on infrastructure and major projects? Some think spending on infrastructure is a way to stimulate the economy.

I think that what we need to do is look at projects that make sense. … You need to continue to spend and grow. At the same point, you may have to look at it [an individual capital project] and do it slightly differently than you had in the past. You might want to do it in stages.

So it’s not the city’s obligation to spend that money for the purpose of stimulus?

I don’t think you want to look at it as stimulus—I think you want to look at it as constant growth. I think you want to look at it as, those economic development projects that made sense before, they make sense today.

The Atlantic Yards project in Brooklyn faces some clear challenges, and the developer has asked for more than $100 million in additional assistance from the city. Do you think the project should get more government assistance if it can’t go forward otherwise?

No. I think that that project has received a lot of government assistance to this point. It’s a project I supported in its original form. It continues to morph and change, and that may be one of the projects that you have to reevaluate on a staged basis before you move forward. It is still a project that I support, but it continues to change.

A lot of people don’t seem to believe you when you say you’re running for mayor. Have you found that?

Some have, some haven’t. The one thing I have run into is a lot of people who have asked the question, ‘Are you running?’ You say, ‘Yes.’ They go, ‘Great.’ I think New Yorkers right now are angry. They’re angry with what happened. … I think every time you poll the public, they still indicate that they want term limits.

Do you think that will be a large issue come 2009?

I think that will be one of the issues in 2009. It still is early to identify and lay out a campaign against the mayor.

Why do you think people don’t really believe you when you say you’re running for mayor? Many people think you’ll eventually run again for comptroller.

I mentioned how much he [Mayor Bloomberg] can spend—I think that intimidates people. … This is one of those situations where only time will tell, but I’m running for mayor, and there are those who sit there, and say, ‘Really?’ Yup. And I think, over the next few months, as people don’t see you changing your mind or saying anything different, it’ll sink in.

So is that to say you’d counsel the long list of council members who want to be comptroller to run and give up their seats?

All the council members who I’ve run into indicate they are moving forward.

The mayor never has had a big defeat at the council with his big initiatives. Why do you think he’s been so successful?

The West Side stadium—I don’t think there ever was a final vote. I think there was a majority of the City Council that indicated they supported the West Side stadium, but that became a state issue. The vote in congestion pricing almost was advisory in nature in the City Council. I thought it was an issue that was, again, going to be determined in Albany.

But still, he’s had more success with the council [than with Albany].

I think he’s closer to the City Council in different ways. Clearly, the speaker of the City Council has helped to move things forward for the mayor, so I think that has helped him dramatically down here, as opposed to Albany.

Do you think Christine Quinn should stay on as speaker for another term?

I think that’s for her colleagues to determine.

A lot of mayors, including this one, have talked about decreasing our reliance on Wall Street. Why do you think that’s so hard to do, because I don’t think we’ve seen that happen with a tremendous amount of success?

I think that some of it is, particularly during boom times, it’s hard to walk away from salaries … and how much it contributes to the city’s economy. … It’s also looking at trends and understanding where growth is going. … Right now, the number of self-employed individuals in the workforce as part of the workforce, they’re up from about 8 percent of the workforce about 15 years ago to 17 percent right now. Some of that is, starting to adjust to benefit and help those individuals to grow and do better.

Any other industries you’d point to as ones we should be targeting for growth?

Everybody these days is, if you hear the words, green-collar jobs; you heard it on the national level, I’m not sure you’re hearing as much of it on the city level. … Those materials are imported from either outside of the city or outside of the country. If this is going to be a greener city, and this country is going to be a greener country, why aren’t we doing more? That is a growth area for New York City.

What concrete ways do you think New York would benefit under an Obama administration within the first year or two?

I think that the one thing that you really haven’t heard in years is almost an urban agenda. … We need the federal government back on some of those things—infrastructure, housing, health care. I think that would be a huge difference [between] an Obama White House [and] a McCain White House. Cities would be back on the map.

ebrown@observer.com