Thursday, April 15, 2010

Push to use $150 million in leftover money for W.T.C. arts building

Julie Menin, chairperson of Community Board 1, wants the proposed performing arts center at the World Trade Center to be built at the Tower 5 site.
Push to use $150 million in leftover money for W.T.C. arts building
By Julie Shapiro
Julie Menin is pushing the Lower Manhattan Development Corp. to use a recently revealed pot of money to build the performing arts center at the World Trade Center site.
Menin, an L.M.D.C. board member and chairperson of Community Board 1, spoke out about the PAC after the L.M.D.C. acknowledged last week that it had at least $150 million left over in a fund designed to help utility companies recover from 9/11. The utility companies have already received hundreds of millions of dollars in federal money, and they are seeking hundreds of millions more. Downtown Express first reported March 12 that the utility fund had about $150 remaining.
Although the entire $750 million utility fund was supposed to go to utility companies, the L.M.D.C. realized recently that the utilities do not have a claim on this $150 million, which is left over from early stages of the program. The L.M.D.C. could still give the $150 million to utility companies, as they are demanding, but the state-city agency could also direct it toward other 9/11 recovery projects in Lower Manhattan, like the PAC.
At the L.M.D.C.’s board meeting last Thursday, Chairperson Avi Schick promised to make a decision soon so the money is not stuck in limbo.
“I think we can all agree that having the money sitting in some unmarked account at [the U.S. Dept. of Housing and Urban Development] in Washington doesn’t serve the interests of Downtown at all,” Schick said.
Menin said building the PAC would be the best use of the money.
“It is an absolute travesty…that we still don’t have a performing arts center, which was promised to our community,” Menin said. “It is the biggest economic engine we could build.”
The performing arts center has been lost in the shuffle of W.T.C. projects. The L.M.D.C. has allocated $60 million for architect Frank Gehry’s PAC, but fundraising has not yet begun. And the PAC’s construction at Vesey and Greenwich Sts., where the temporary PATH station currently stands, could not start until at least 2015, when the new Santiago Calatrava-designed station opens and the temporary one is demolished. Many question whether the station will be done then, and in an interview, Menin said 2017 was a more realistic date.
Menin said a $150 million infusion could give new life to the project — but only if the state and city also agree to move the PAC a couple blocks south to the Tower 5 site, where its construction could start years earlier. At least a few other L.M.D.C. members support this move as well.
An L.M.D.C. study last year found that not only would it be feasible to move the PAC to Tower 5, but it would save several years and about $170 million.
The L.M.D.C. has not made this study public, but a copy viewed by Downtown Express this week listed several problems with the original location, called Site 1b. The reason building the PAC at Site 1b is so much more expensive — about $500 million, compared to $330 million at Tower 5 — is because the belowground infrastructure is much more complicated. PATH trains run beneath Site 1b, and a ramp down to the vehicle security center takes up space at grade, the study said.
The Tower 5 site, on the other hand, is less complicated because it lies just south of the World Trade Center complex and does not require as much infrastructure, the report said. The two sites are nearly identical in size and shape.
Site 5 is not without its complications, though. The Deutsche Bank building currently stands on the site, and while it is scheduled to be demolished by the end of this year, the project has been delayed many times before.
Under the assumption that the PAC will rise on Site 1b, the Port Authority is already building belowground supports there, using some of the money the L.M.D.C. has allocated. The L.M.D.C. has also spent about $8 million designing the PAC.
Moving the PAC to Site 5 would require state, city and Port Authority support, and so far the city is the chief obstacle, several sources said this week. Cultural Affairs Commissioner Kate Levin testified against the move at a City Council hearing last fall, saying the city needed to focus on Site 1b to ensure the PAC is built.
She and other city officials did not comment for this article.
Chris Ward, executive director of the Port, said this week that the city’s opposition of the move was so strong that it was hard to even consider changing the location.
“The city has been adamant that the performing arts center go where it was originally planned,” Ward told Downtown Express. “It is a question I can’t answer until the city changes their mind.”
The city has also not yet started fundraising, even though former Deputy Mayor Daniel Doctoroff said three years ago that the city ought to begin raising money soon. Levin said last fall that fundraising would not start until two or three years before the PAC opened.
The Port Authority once planned to build an office tower at Site 5, but now it appears that a residential or mixed-use building is more likely. The L.M.D.C.’s study showed that it would be possible to build a 35-story residential building on top of the performing arts center at Site 5.
In addition to the uncertainty of moving the PAC, there are two roadblocks to securing the $150 million in L.M.D.C. money for the project: First, the utility companies oppose it, and second, the L.M.D.C. may decide to use the money for something else.
The utility companies feel a claim on the money because they went to Congress and fought for it after 9/11. The $750 million that Congress approved was divided into six categories, based on priority, and the L.M.D.C. has been disbursing the money one category at a time.
The L.M.D.C. has now nearly finished giving out over $400 million from the first two categories, which cover emergency service immediately after 9/11 and permanent restoration of service later on. Because utility companies received so much money back from their insurers, the claims in those categories were lower than the L.M.D.C. expected, leaving at least $150 million out of $580 million left over. The L.M.D.C. never anticipated this scenario, so there is no defined procedure for what to do with the money. And there could be even more money left over, once a $19 million dispute with Con Edison is resolved.
The L.M.D.C. is now weighing claims in the third category, which compensates utility companies for work they do in connection with city reconstruction projects in Lower Manhattan. Unlike the first two categories, the utility companies have submitted far more requests for the third category than the $60 million fund can accommodate. The question now is whether to use the leftover money from the first two categories to satisfy the claims in the third category, or whether the leftover money should be used for something else.
There are also three additional categories of utility money containing a total of about $40 million, but that will likely be spent on the outstanding claims. The L.M.D.C. also diverted $52.5 million in utility money toward the Deutsche Bank demolition, and that money could possibly flow back into the utility fund based on a future settlement with contractor Bovis Lend Lease.
Spokespersons for Verizon and Con Edison, which received the bulk of the money so far, said all $750 million belongs to utility companies.
“These funds were earmarked by Congress to reimburse utilities for their out-of-pocket expenses caused by the 9/11 attacks,” said John Bonomo, a Verizon spokesperson, in a statement to Downtown Express. “The money should be used for that purpose first. Any money that remains once the utilities have been reimbursed could appropriately be used for other purposes.”
Bonomo said Verizon lost over $1 billion as a result of the attacks. Verizon’s office at 140 West St. was heavily damaged in the W.T.C. collapse, disrupting service on about 200,000 lines. So far, Verizon has received $185 million from the L.M.D.C. and is seeking an additional $45 million, Bonomo said.
Sara Banda, a Con Edison spokesperson, said Con Ed has received $161 million so far and wants another $176 million, which still would not cover Con Ed’s full rebuilding cost.
“We believe that the money should be spent on what the original legislation intended,” Banda said in a statement to Downtown Express.
To move the remaining $150 million away from the utility companies, the L.M.D.C. would have to hold a public comment period and get HUD’s approval.
Robert Lieber, deputy mayor for economic development and an L.M.D.C. board member, sounded supportive of using at least some money for another purpose.
“We have an opportunity here…to take a look at where we want to invest the money, what are best uses today,” Lieber said at last Thursday’s L.M.D.C. board meeting.
Lieber wants to see a plan for the money within 60 days, and other board members agreed that it was important to make a decision soon.
No one at the L.M.D.C. has opposed using the money for the PAC, but several board members said they wanted to examine other options before deciding.
The L.M.D.C.’s next board meeting will be in May.

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