Hudson River Development Could Stick Taxpayers With Cost of Storm Repairs

The battle over the future of Lower Manhattan’s western shore is raging once again. Four decades after the Westway controversy, environmentalists are blasting the city and state for sinking $100 million into an expansion of Hudson River Park, and warning that the plan is a developer-led boondoggle with major consequences for both local marine life and New York taxpayers.

According to a letter signed last month by a coalition of environmental groups, including the Clean Air Campaign and the Sierra Club NYC Group, the promised expansion of the two-decade-old park is actually a Trojan horse for “building unsafe, environmentally destructive real estate in and over the nearshore waters of the lower Hudson River.” With the widely popular Hudson greenway largely complete, the signers argue that the remaining phase of construction will bring destructive development to the 490 acres of offshore waters that are also included within the park’s boundaries.

“Completing the park means building real estate development sites up and down a vast, environmentally critical and disaster-prone stretch of the Hudson River,” Marcy Benstock, director of the Clean Air Campaign, tells the Voice. “The idea that you shouldn’t just let a river be a river, that instead you should turn a river into real estate, is a ruinous policy.”

The public authority that operates the park has identified 17 outstanding capital projects that must be completed before the park can be considered done. Those include the introduction of commercial office spaces at a redeveloped Pier 40, the transformation of Pier 76 (currently an NYPD tow pound) to be partially used for unspecified commercial purposes, and the revival of Barry Diller’s controversial island park near Pier 54.

But further encroachment on the river, Benstock predicts, would cause irreparable harm to the many dozens of valuable species of fish who make use of the habitat, including the migratory striped bass and flounder that depend on the estuary as a spawning area. And because of a package of amendments stealthily passed by the state legislature, city and state residents may soon find themselves on the hook for storm damage to new real estate built in one of the city’s riskiest corridors.

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For those who’ve followed the saga of Manhattan’s west side waterfront, some of the players and their concerns may ring familiar. Back in the 1970s and 1980s, environmentalists raised similar objections about Westway, a proposal to tunnel a massive six-lane highway through 280 acres of new landfill along the Hudson River shore. Despite widespread political support, that project was ultimately abandoned in 1985, thanks in large part to the work of Benstock and other activists.

The current iteration of the park — the “son of Westway,” per Benstock — dates back to 1998, when Governor Pataki signed legislation creating the Hudson River Park Trust, a public authority with board members appointed by both the mayor and the governor. In addition to giving the HRPT control of the waterfront land between Battery Park City and West 59th Street, the law also granted the authority jurisdiction over the equivalent of 121 city blocks of nearshore waters. Unlike most city-run public parks, the HRPT would be permitted to supplement its public money with funds raised from “private sources for the planning and development of the park.”

To date, the HRPT has benefited from state and city appropriations, as well as federal and private funding and funding commitments, totaling approximately $930 million, much of it from moguls like Diller. In order to complete the remaining portions of the park, the public authority estimates that another $209 million will be needed in capital costs. After touting a full completion plan of the park during his State of the State address in January, Governor Cuomo put $50 million in the state budget to “finalize this amazing vision this year.” A matching contribution is soon expected from the city, making this year’s public funding total the highest in the park’s history.

The renewed political interest in the park has only exacerbated environmentalists’ concerns. They point specifically to a controversial package of amendments signed by Governor Cuomo in 2013, which allowed for the sale or transfer to private developers of more than one million feet of air rights above the area controlled by the HRPT — a move that opponents say is in direct violation of the federal Clean Water Act, as well as a host of local laws prohibiting non-water-dependent construction in or over public waterways.

“There’s no precedent for that,” says Allison Tupper, co-chair of the Hudson River Estuary Committee of the Sierra Club NYC. “It doesn’t make sense that rivers should have air rights above them, and as far as we know there are no other examples of that. … What they call a park is really a river.” Asked about the legal framework for creating development rights above a public waterway, which could either be used to build over the water or transferred to adjacent properties, the City Planning Commission replied only that the air rights had been approved by the state legislature, subject to the city’s ULURP land use process.

The 2013 legislation also included an indemnification amendment that, according to experts, could force city and state residents to pay for damages caused to the development sites. That’s a major concern, since the park is located in the highest-risk hurricane evacuation zone, and thus particularly vulnerable to the sort of devastating megastorms made more likely by climate change. That amendment alone could bring liability costs in excess of $1 billion, Benstock says, which would be passed on not to the piers’ developers, but to the taxpayers.

“Normally, when a landowner leases property, the entity that’s in immediate control of the property would have to agree to indemnify the owner or procure liability insurance,” says Jim Lane, an environmental attorney who also handles personal injury cases. “What’s going on with Hudson River Park is the exact opposite of that … This amendment leaves taxpayers on the hook even though the state and city aren’t in immediate control of the property.”

As for why the language was included in the legislation, Lane believes the amendment is “basically a covert subsidy, where taxpayers are providing financial aid to the Hudson River Park Trust and its developers, but without a transparent line in the budget that says what they’re appropriating.”

Even lawmakers who supported the legislation now admit that it was passed in a manner seemingly designed to limit public feedback. According to State Senator Brad Hoylman, who represents much of Manhattan’s west side, the amendments were pushed through in the middle of the night in the sessions’ final hours, without a single public hearing or senator’s name attached to them.

“It was a terrible public process, but unfortunately that’s the way Albany operates,” says Hoylman, who voted in favor of the amendments. While he would not explicitly say that he regretted the vote, the state senator tells the Voice, “I regret the circumstances under which we were forced to make a split-second decision on such important legislation with no review.” He noted that Republican control of the state senate rendered the issue “out of his hands,” and added that “it’s difficult to oppose something that’s intended to help out a major piece of infrastructure.”

For its part, the HRPT maintains that the indemnification provision is standard among parks on city and state land — even if the arrangement, in which a public park is leasing land to a developer, is not. “It’s no surprise to see such a familiar refrain from organizations that have protested every step of Hudson River Park for more than two decades,” James Yolles, a spokesperson for the HRPT, said in an emailed statement to the Voice. The private funding received by the HRPT via air rights sales above the piers, he said, “would be used to help complete long-planned public-park elements that are broadly supported by the community and have been the subject of environmental review and regulatory permitting.”

Some of the new additions planned for the park include a 320,000-square-foot commercial office space at Pier 57 being developed by RXR Realty, which Google is reportedly considering as office space; a recently revived plan for Diller’s $250 million amphitheater in the river north of Pier 54; and commercial office and retail space at Pier 40, for which the private developers of the St. John’s Terminal Building paid $100 million.

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Beyond the already identified development sites, the activists note that the money devoted to the park’s expansion is fungible, and thus may be spent on whatever the public authority — or the authority’s patrons — see fit.

The St. John’s Terminal Building provides an illustrative example: That deal was brokered by the private financing and lobbying arm of the HRPT, called Hudson River Park Friends (formerly Friends of Hudson River Park). At the time, Michael Novogratz, the group’s chairperson, also served as a principal in Fortress Investment Group, which invested in a controlling share of the St. John’s building in 2013 — just a few months before the state legislature passed the amendments that paved the way for the proposed redevelopment of the three-block-long property. (Attempts to reach Novogratz were unsuccessful.)

While both the Hudson River Park Trust and Hudson River Park Friends say their arrangement is totally above board, others see a web of conflicts. “The interrelationships of the relatively small group of financial and real estate moguls driving the plans for river development are deeply problematic, if not illegal,” says Benstock, noting that other board members of Friends also stand to profit from the sale of air rights. Their goal, the activist warns, is a piecemeal development project that could eventually cover much of the river, and for which taxpayers will be forced to provide cover once the next superstorm hits.

Additional money funneled into the project, Tupper echoes, “is going to be spent building and rebuilding more piers to get them ready for real estate that puts people in harm’s way, destroys valuable habitats and, because of the indemnification clause, could lead to absolutely dreadful taxpayer devastation.”

“We just want them to let a river be a river,” she adds. “That’s all we’re asking.”

Correction: Thanks to an email problem, this article initially reported erroneously that the City Planning Commission had not respond to a request for comment on the legality of air rights over a river. The commission replied in an emailed statement late Tuesday that the transferred air rights already existed in the park, and that the state legislature approved their transfer across West Street, subject to ULURP. The Voice regrets the omission.

In addition, due to an editing error, this article initially implied that new commercial developments in Hudson River Park will be directly receiving air-rights funds. The official list of projects being funded in that manner can be found here.