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WOLLMAN: I'd like to welcome all of you to Baruch College and the Steven Newman Real Estate Institute Sitting Round Table for 2000. My name is Henry Wollman. I am the director of the institute and it really is a pleasure to see all of you here. Some of you I think have been here for one or two of the previous sessions of Brooklyn and it certainly is wonderful to welcome those of you who are here for the first time. There are a few small housekeeping items I'd like to bring up.
First, there will be food, coffee, water, things like that available throughout the morning. And what we'd like you to do in order not to disturb the speakers going on throughout the course of the next two and a half hours, is for you to use the back doors on the left or right to leave. The back door on that side will be open because it creaks all the way through the morning. Then you can just make a left or right to the room back there that you started from.
Second, I know that many of you have asked me about the availability of transcripts and records of what we done here. This is the institute review called Properties. This happens to be an issue on, and has a record of one of the conferences on (inaudible) that we did at the institute. This is published roughly, since we are still something of a start up venture, three times a year. The next issue on the Bronx is coming out in about three weeks and reflects the conference on the Bronx we did last year at this very same time. Some of you may have seen the planning tour of the history of public houses in the Bronx which was published as a special supplement to properties. Those of you on the institute's mailing list were able to get this. So I encourage you to put your name on the institute's mailing list and to look forward to the Brooklyn issue which will come out sometime around January, I am sorry to say. But it is probably as fast as we could work and will include a record of the conference and some additional articles that the institute has commissioned on the future of Brooklyn.
The last point I would like to make is to those of you who lead community organizations in Brooklyn. I have said the two previous times that the institute has made a commitment to working on an annual basis with a community organization in the development of a community houses and development plan. It is a way of providing some list of technical assistance and it is not just a resources of the institute that are brought to bear, but the resources of the City University as a whole. The School of Architecture and Urban Design, The City College, The Department of Planning and The Division of Planning with Hunter, the research facilities and resources of the graduate school. These are all things that have a role to play on the future of the city and the City University seems to be the most appropriate place for many of these things to happen. The institute looks upon itself as a facilitator in those regards.
We are working with the Reverend Floyd Flaig in the Alan (inaudible) Houses Corporation this year and developing a plan for the (inaudible) Corridor around the cathedral around the Alan Cathedral and we look forward to making a choice upon a group of applicants from a group of community organization applicants from Brooklyn, during the course of the next month for the target area and the partner community organization for this coming year. So those interested please call the institute and we'll tell you what you need to do.
It gives me great pleasure this morning, the third morning devoted to downtown Brooklyn in this 2000 Roundtable, a Brooklyn ascendant, to welcome
Joseph Rose, Chairman of the City Planning Commission and Director of The Department of the City Planning. He was appointed to the position by Mayor Rudy Giuliani on January 29, 1994. As chairman of the thirteen member Planning Commission, Mr. Rose manages the city charter expanded responsibility of the commission which includes approving all zoning and land changes, city plan choices and concessions, urban renewal plans, landmark and disposition of city owned properties. The commissioner is charged with planning for the orderly improvement and future develop of the city. Of the nine City Planning Commissions, seven members appointed by the mayor and five borough presidents by the public advocate.
Mr. Rose is also the director of The Department of City Planning, the mayoral agency responsible for long term strategic planning concerns that have broad implications for the city. The City Planning Department facilitates economic development initiatives, coordinating its activities with relevance to the agencies such as The Department of Transportation, Housing Preservation and Development and The Department of Environmental Protection. Prior to his appointment, Mr. Rose was Executive Director of the Citizen's Housing and Planning Counsel, a non profit public interest research and educational organization devoted to issues of affordable housing planning and urban development in New York City.
From 1981 to 1983 Mr. Rose served as Special Assistant for Urban Affairs to United States Senator Daniel Patrick Moynihan. From 1983 to 1993 Mr. Rose was a member of Community Board 5 which serves Community Board Chairman from 1985 to 1988. More recently he headed a planning committee. During his tenure as Chairman, Mr. Rose found the midtown children's project, an educational and recreational program for homeless families at the (inaudible) hotel. Please join me in welcoming Joseph Rose.
ROSE: Thank you and good morning. I'll try not to take up too much of your time but the last time I appeared at the institute was several years ago to speak at a forum about the downtown financial district and (inaudible) success has been great. I don't know if it is his relationship between Newman Institute forums and subsequent prosperity, but I hope that is the case. If nothing else, pulling everyone together on a fairly regular basis in conjunction with spending time to focus attention on what has been done, opportunity and where we need to go for future success is a very valuable endeavor.
The title of the conference in the several sessions is Brooklyn (inaudible). I prefer to think of it as "Brooklyn Ascending." I think the share of the work remains to be done and it seems to me -- have you read about my checkered career? It has been a very long time since I've been going to conferences and Brooklyn Ascending, Brooklyn is ascending. The future of Downtown Brooklyn, all the things that are going to happen. And the good news is a lot of things have happened, but I think partly in testimony to the presence and sense of opportunity, not as much has happened that needs to happen to consolidate Brooklyn's tradition. Not as New York's second city in the conference but as a key to Brooklyn, Downtown Brooklyn in particular, but all of Brooklyn, as a key partner to the economic regeneration and political regeneration of the City of New York. There is no question that the future prosperity and survival of the City of New York depends on a clear integration of the Brooklyn central business district into the over all economy of Manhattan. It can't be a younger brother or sister. It can't be a minor partner. It has to be part of our future. The reason is we need as a city several million square feet of additional commercial space every year to be developed. If we do not have that capacity for growth, when you look at there are 7.5 million commercial feet in Downtown Brooklyn, but as you look at the City of New York as a whole, Lower Manhattan, Midtown Manhattan, (inaudible) Manhattan hundreds of millions of square feet of space. And in order for us to have a reasonable growth rate we need four to five million square feet and obviously it is going to be (inaudible) through a business cycle but on average we need four to five million square feet of new commercial space development almost every year. The fact of the matter is we simply do not have that opportunity and that space in Manhattan.
There are things we need to do in Manhattan as well as to accommodate commercial growth. There are areas with appropriate (inaudible) for that expansion, but the fact of the matter is, it is going to take a very long time to bring some of those areas like the West Side south of 42nd Street on line. It is going to be expensive space and there is a need within the context of the New York City marketplace to allow for that first rate commercial expansion.
There are also all sorts of new businesses and several efforts under way. Senator (inaudible), we and the city government spend a lot of the time thinking on it where (inaudible) has us looking at Long Island City. And (inaudible) is always beating us up for not doing enough for Downtown Brooklyn and but the fact of the matter is that for all sorts of businesses they can not pay the top of the market branch in Midtown Manhattan and Lower Manhattan. There is just not a whole lot of room to expand. If we do not have Downtown Brooklyn in particular, Downtown Brooklyn and Long Island City emerging as first class competitors to the Hudson River Waterfront of New Jersey and to other cities that everyday set delegations to raid our businesses, the City of New York will not continue to grow. Our capacity to grow is the essence of our economic competitiveness in the future.
At the moment I don't have to tell most of the people in this room all the things that have been done and I do want to focus on the future but over the last several years there have been accomplishments that are worth taking note. In addition to continued success MetroTech, Renaissance Plaza, the Marriot Hotel has been a great, great success. It was there many, many decades since there was a hotel in Downtown Brooklyn the success of MetroTech and its future expansion, success of Renaissance Plaza the Marriot expansion is a clear sign that there is a market and it is a market that if we work together to satisfy that market, we will have a success.
There are some major new residential developments. We have a project underway, Polytech expansion. What has been happening with the Brooklyn Academy of Music all are major (inaudible) of the capacity for future success. We need to bring more private sector development. We can't be solely dependent on government subsidized economic activity. We need to create, in Downtown Brooklyn, a functioning fully private market.
Now there are plenty of opportunities in Downtown Brooklyn. The Livingston Street corridor. The Brooklyn Center of Urban Renewal area. Schimmerhorn Street the Court Street corridor. Very depressing when you consider its current state compared to what it could be. I'd have had several times where I've gone out working toward Regina Myer, the Director of our Brooklyn office and we look at the opportunity in Downtown Brooklyn and for all the success that we can stand around and say, "Look at all the things that have been done." Clearly the opportunities are made for going forward in the future and I want to spend some time talking about some things we are doing in the administration. Then I speak, you know, from obviously the touching part of the element. There is a number of different agencies that are working on Downtown Brooklyn. Some of whom you will hear from and have heard from in other parts of this conference. I want to put it in even broader perspective as well as just what we are doing at City Planning.
City Planning right now, we have going through the public review process a proposal for a Downtown Brooklyn special district. Just as we have a special district in lower Manhattan. Just as we have a special zoning district for Midtown Manhattan, so too, we will now have a special zoning district for Downtown Brooklyn. We are last creating one for Long Island City.
The point is, in these districts to recognize that there is a need to accommodate high density, high value commercial development. And recognizing that as the Downtown Brooklyn has, you have the Lower Manhattan and Midtown Manhattan that necessarily (inaudible) with Downtown Brooklyn against some very precious valuable residential neighborhoods of lower scale. But we need to create the regulatory environments in Downtown Brooklyn that says you can't build, you have the appropriate densities to build. It is a clear statement of policy on the part of government that the government of the City of New York that we want you to be able to build and we don't think you have to go every time you want to build through a long elaborate public process in order to be able to do so. The notion that every time you have a development in Brooklyn it has to be a function of accommodation of urban renewal and a special financial package and a special custom tailored regulatory environment in terms of zoning in order to be able to develop, is, I think something of the past. The world simply moves to quickly now to be dependant on a two and a half to three year process from the time somebody has an idea to do something to the time you are able to get something done. So the notion of the Downtown Brooklyn special zoning district is to create that regulatory environment where, this is consensus and here's where we want it, high density commercial and in some cases residential development. Let's get it done and let's get out of the way so the private sector can invest.
Now there are some issues and we are taking testimony on it tomorrow. Tomorrow morning at City Hall, and continues debate for weeks to come at the margins. There are different issues of which street should accommodate the which densities. Which streets should accommodate the (inaudible) and I think it is very important those of you who are here and obviously care about the future of Downtown Brooklyn need to make your voices felt. It is crucially important that we develop a consensus about the regulatory environment for the Downtown Brooklyn area so we can then get out of the way when those constructive (inaudible). I think (inaudible) spoke about some of the things that City Planning can do most constructively is to get out of the way. I am a firm believer in that. Once we have a consensus we can put the rules in place and the final touch can develop going forward. Anybody who wants to spend a great deal more time on zoning regulations and how it relates to the Brooklyn Special District we are happy to go into detail with you but I don't think we'll bore everybody else.
I want to speak about some other as I said micro issues relating to the future of Downtown Brooklyn. One, is there is some political and economic and financial lessons that I think the city needs to understand better than it now does especially as it relates to the future of Downtown Brooklyn. That relates to the tax environment of New York City and New York State. There are things we are doing, in fact, (inaudible) of an effort now going through further established tax benefits for Downtown Brooklyn, the Long Island City to create the environment where we encourage investment especially in new tenancies and buildings and technical upgrading to bring in all sorts of new economy. To get that done and to increase the margins we can make the cost of doing business in Downtown Brooklyn better, more hospitable than it is. The fact of the matter is Downtown Brooklyn will never be able to compete with Midtown Manhattan and nor should it. We are partners. Look at it as a city perspective.
There are businesses that have to be, that have to determine that they have to be in Midtown Manhattan in the command center of the global economy and we need to accommodate them and they'll pay top dollar for that. At the same time there are all sorts of others that can't compete and have no interest in competing at that sixty dollar a square foot rent and are looking all over the place. They are looking at New Jersey, obviously and that's the competition I would say for Downtown Brooklyn. We need a strong Manhattan. Without a strong Manhattan Brooklyn becomes far less attractive but the challenge is how do we get people who are companies, existing companies and future companies to think about expanding into the city and that means Downtown Brooklyn and Long Island City and Queens, as opposed to going across the river or going to some other town.
One of the things I found I think that it is (inaudible) on our fair city. The fact that a major tenant, very, very important was looking for major space and they made the decision to go to New Jersey. It is not one of these situations where we were being coy. We said just tell us what you need and we'll bend over backwards to accommodate you. We'll find a space. We'll create the most favorable tax conditions that you can possibly imagine, endure all the kinds of criticism that we get for this kind of deal. And we were told, in all candor, we are just not interested. And the reason for that was not that there weren't attractive opportunities, but the overall tax environment in New York City and New York State were considered to be a non-competitive move in what existed across the river and what existed in other places that they could go. And that's something that when you look at New York City and speak something of a liberal as you think of our political history the notion that we can just create special properties, tactics or special incentives and that will over (inaudible) a general tax environment that is not competitive with our surrounding areas who continually try to raid us as something we can no longer accept. We have to internalize that city and in no place do we have to internalize this more than in Downtown Brooklyn. We need to have a competitive tax structure as both a city and state with New Jersey and with the other cities and other states that we are competing with. If we don't do that, everything we do in terms of finance incentives, in terms of custom tailored deals is only trying to get us to a level playing field with our competitors. We can not accept a situation where we have a high tax. We'll always be a somewhat high tax environment but we can't be casual about it. Our agenda with Washington, our agenda with Albany our agenda with the city counsel has to be focused on tax cutting. It is an essential principle of the government of mayor Giuliani.
My fear is, and I hope I am wrong, is that this is not a value that has been as internalized as the rest of the culture as it needs to be in order for us to be competitive in the decades ahead. The good news (inaudible) department is that we're going to be around a little longer that we might otherwise think to continue to wave this flag but it is important that the traditional political culture of the City of New York and State of New York internalize the need to lower taxes not just as a political slogan but to just get elected, but to understand that the future vitality of our commercial areas depends on it. Not so much for the areas of Manhattan that are the command center of the global economy, you still suffer if you're not competitive. But there is such a need to pay those premiums in order to be in that small crossroads that you can, you are a little insulated from some of the adverse consequences. But places like Downtown Brooklyn are not. They don't have the insulation.
Secondly, the great asset is that New York City has -- Downtown Brooklyn has a couple of key assets. Obviously, its transportation infrastructure is a great asset. It allows us to bring a work force from all over the city to a very concentrated place. You can do that in Manhattan. The other place you could really do that successfully is Downtown Brooklyn and marginally less successful but still a concentration is Long Island City. That's why it is not by accident that we have those strategic notes through commercial expansion. It is because that's where the infrastructure takes us. The infrastructure is valuable because of who it brings. A work force that is the future of the city ties into our educational system. We have a labor pool. We need to have that be a trained labor pool. The politics of education in the City of New York and States of New York with particular the City of New York we can not afford to continue to maintain an educational system that is oriented for the bureaucracy and for the people who are paid by it. We need very strategically to have an educational system designed to train the 21st century work force.
The thing that sometimes gets distressing to me thinking strategically is who looks around this as a cliche at this point. Oh, the education system is our future. It is a key part of our economy. That has to translate into the willingness to make very tough courses and take political risks in order to get the kind of system that will train the work force. It doesn't do any good just to mouth the latitudes about how important education is to our economic future. It is important also to take to our political culture to stand up to the political bureaucracy and take back our school system to perform at the level that it needs to perform at. For all the rhetoric one rarely sees the willingness to confront those kinds of management and leadership issues. One hopes that we are at the start of a significant change in that regard, but it is not a casual issue for Downtown Brooklyn in particular. We have the infrastructure and we have the work force we need. We need that work force to be trained. There are also some very dangerous things that can be done.
One thing we need to do to accommodate political expansion in Manhattan is to bring, to expand the subway service over that western portion, southwestern portion of Midtown over the convention center area. We need to do it for a whole bunch of reasons but to accommodate commercial expansion as well. There are those who think that, well that's a great idea. It is terrific. Let's bring the number seven line west. And as long as we're bringing it west why don't we keep going under the river and take it over to New Jersey. That idea -- let me not be equivocate on this. I won't be around in this job by the time these issues come up, but Downtown Brooklyn has to understand that idea is a dagger and it is hard. If you can take the work force of Queens and Manhattan and on a one seat subway ride get it to the west shores of the Hudson, then getting all the tax issues and everything else, the game is virtually over.
So we have the great asset -- one of the great assets -- two great assets of New York City is an infrastructure and it is population. We have the ability to get this work force into a very vast area and have it provide the value that you can't find any place else in the United States and very few other places in the world. If a few bad decisions can have that strategic advantage, a very profound strategic advantage that evaporates like that. So we need to invest in our infrastructures. It has been many, many decades since the City of New York has invested in its infrastructures in a way that reinforces its commercial vitality. We need to do it with a view that reinforces and strengthens our position, not undermines it. So not that we don't need to facilitate trans-Hudson crossings as well, but we need to do it in a way that reinforces our strengths, not undermines it.
Other issues in Brooklyn. We need to accommodate residential development in the borough of Brooklyn. We need to identify two things.
A- How to protect and this ties back into the zoning laws I was talking about before. There are a lot of good neighborhoods in Brooklyn. Many of them very adjacent to Downtown but especially as we see immigration pumping new vitality and life into what many neighborhoods had written off a few years ago. We need to figure out how:
A- To protect the quality of life in the neighborhoods that exist that are strong and are attractive and I think Brooklyn has a sometimes a dual attitude toward this. On the one hand, we are very proud of those neighborhoods. On the other hand, we don't want too many people to know about them sometimes. We need to figure out how to accommodate additional residential development and do so in a way that is respectful of the special quality of the lower rise neighborhoods that we have, as you I guess go along the shore line, and into the residential heartland of Brooklyn.
How to do that. It is possible to do. One of the things we have seen is it is possible to develop first rate, market rate, affordable residential environment in a way that respects the contents and character of surrounding areas without shrink wrapping and creating such a regulatory (inaudible) that nobody actually wants to get involved in it. That's once again, the essence of what we are trying to do. We are looking at regulatory structure. How do we ensure we will be able to develop the houses we need for this hopefully well trained work force operating in the competitive tax environment?
So something we also think is very important to allow for the growth that is coming to Brooklyn. Brooklyn is poised now because we have had such a prosperity and there will be ups and downs in the economic cycle but the fact is much of what remained to be developed in most of the areas of Manhattan has now been developed. Now being consumed and the future clearly lies in Brooklyn and Long Island City as well. We need to have an approach on the Brooklyn waterfront. On the one hand, we shouldn't settle for too little. On the other hand, if the scale of our ambitions is too great we can go through the several more decades of battle on the Brooklyn waterfront similar to what we have on the west side of Manhattan. I think it would be a tragedy if that's the case. We need to come to a consensus with an appropriate scale, realistic approaches. And obviously there are a range of proposals on the Brooklyn waterfront ranging from the very grand park scheme to be fully ambitious in its own way and (inaudible) proposals. Neither I think in its current form is actually going to happen. We can spend another fifteen years arguing about it or we can figure out what are the issues we need to resolve.
What are our poor values? Sort it out and get to the point where we actually see things getting under way and getting both for parks and recreation purposes and for economic develop purposes in the near future. One of the phenomena of the current economy and the competitive environment which New York City faces, is things move much more quickly now than they ever used to. We don't have -- I don't think we ever had the three to four years it takes to make a decision in the City of New York about what to do with our physical environment but we said we once had that kind of leeway. We clearly don't have it anymore. We need a quicker decision making process we need to hold ourselves to standards of decision making that don't say let's go down a ten year saga to come to a conclusion and then come out the other end exactly (inaudible). That is a tragedy.
And once again to go back to what I said at the outset, if you look at what has already been accomplished in Downtown Brooklyn it is something to be proud of. And I don't want to in anyway minimize the projects that have been done. Clearly the challenge to Downtown Brooklyn and the borough as a whole, is whether or not the next three to five years are going to see this amount of private investment that builds on the foundations. MetroTech is a foundation. It is not the end. It is only about a couple of projects here and a couple of projects there, shoe-horning them in to what the current environment is and it will have been a great, great failure in Downtown Brooklyn. We need to recognize there is a partnership with the private sector and one of the things we need to do -- and I say we, I am a Manhattanite but I see this in Brooklyn --, the challenge is to develop the consensus in Brooklyn to take pro-growth, pro-development psyche in Brooklyn consistent with protecting those characteristics and qualities that make Brooklyn special. I don't think Brooklyn needs to have, and I don't think it really does have an inferiority complex regarding Manhattan but it has to come together.
One of the things I've seen just in drawing the -- in trying to draw the parameters of the Downtown Brooklyn special district. In recognizing there is a tension back and forth in terms of, well, exactly which street should be a high density street and which should be a low scale preservation area. These are all legitimate issues disagree about. What's not, though, is the recognition that it can be left open and then and if you can at the end of the day come to a resolution and say here are our core values. That has been the essence of what has worked. And I speak to somebody who is the community board chair for Midtown Manhattan during a period of its great regeneration where there was a recognition for the need of balance, but a very much -- a pro-growth values that were accepted as a given. That has to be the same set in its own way tailored to Brooklyn. Has to be the same set of values that we bring to Downtown Brooklyn.
Now, in closing I want to reinforce the issues of education, the issues of taxes and the need to invest in infrastructure that reinforces our economic opportunity. We talked to the mayor, the discussion about selling 110 Livingston Street and turning it into a higher end residential building or some high tech converse. (inaudible) the issues to the Board of Education and the politics entailed there. But it was interesting for some of us wrestling with these issues about the future of Downtown Brooklyn.
I think there is no reason that the future of Downtown Brooklyn has to be oriented around the public employment, public agencies. It is a good trade for Downtown Brooklyn if we could figure out -- there are plenty of places we could put large public agencies. It is a good thing about those of us who work for the government, we go where we are told to go. We moan and groan and whine a little bit. But the fact of the matter is, it will make a good trade for Downtown Brooklyn if we could move out some of the government bureaucracies and move in the new economy high tech. We don't always know which the next businesses -- how to move the private sector into a dominant role or a much more significant role of Downtown Brooklyn than the one it now plays is clearly the recipe for a future success.
So that spirit, that attitude, midtown Manhattan, lower Manhattan are not a function -- their success is not a function of the success of public sector employment. Quite the opposite. One of the things we have done in lower Manhattan is systematically move out and consolidate public sector employment and public sector demands on commercial space in order to be able to accommodate the private sector. We need to have the same attitude downtown Brooklyn. The good news is the pressure is there. The market desire is there, but we need to create a regulatory tax environment that says not just in a press release of our core values.
WOLLMAN: Thank you, Mr. Rose. There are a few seats open if you will please take them as I introduce the next speaker. Before doing so I would like to say that in both its capacity as Chairman of the Planning Commission and Director of the Department of City Planning, Mr. Rose is engaged in probably the most far reaching and important study and federal proposal for the future of the city that one could imagine from a Manhattanite perspective, but also from the perspective of Downtown Brooklyn as well. We have been reading about those a little bit in a very long piece of last Monday's New York Times. There was another --
MALE VOICE: About this proposal -- I don't know what it was about but it had nothing to do with what we were doing.
WOLLMAN: There is another side to that story and I would like to say without (inaudible) from the institute's perspective but certainly from a personal perspective, the importance of that work and importance of that work coming to fruition, lies much of the balance between private and public sector interests in the city, deserves all of your attention on whichever side of the issue you may wind up deciding. We are grateful -- I thank Mr. Rose and his efforts in bringing such a fundamental piece of thinking forward at a time when the Planning Commission had often been accused or the Department of City Planning had often been accused of being a rubber stamp zoning agency or a small, you know, agency concerned with the consideration of small individual development proposals.
From that perspective I would like to say that the schedule of conferences for the institute next year will begin on the fall with our usual development conference which will consider the issue of (inaudible) and growth as it relates specifically to the city.
Brett Siegel will be the chair of that conference. He's written extensively on the issues of scroll and growth. Has his own particular perspective on it. But he will be tempered from his position by Ellen Posner on her position. The two of them, I think, will make a splendid review of these issues as they come. The round table for next year will be about the Borough of Queens with, again, the cooperation of Clair Shulman and the Borough President's Office.
Finally, in the spring there will be a series of conferences on the issues of international investing in the New York City Real Estate. Assuming we have a (inaudible) that I think promises to be an interesting settlement (inaudible) to next years institute activities.
It gives me personal pleasure to introduce Alair Townsend. When the institute was first conceived, not by me, but by the previous president of Baruch, Matthew Goldstein, there was a kind of an agenda about it but it wasn't a very clear one and all that one knew was that real estate was crucial to the future of the city. When I was asked if and my background was of a real estate developer over one concerned with mixed income housing and the creation of mixed income housing, so now some public sector experience. The sense was, well, could this guy do this job? Could he make this institute sort of go? Well, I certainly wasn't sure. I certainly didn't know what the bureaucracy of the City University would be.
I went to see Alair Townsend almost in the beginning and I said I have an idea about a set of conferences. Would Crain's help us get launching this? And Alair looked at me and I don't know what she was thinking really, but she certainly did. And without the help of Crain I don't think we would be here today with the numbers of successes in the history of the past three and a half years that we have.
Alair Townsend became publisher of Crain's New York Business in February 1989. Crain's New York Business is a weekly newspaper covering the New York City economy and business community and the regional, national, international factors that affect us. This appointment follows a public service career in both New York and Washington DC. Ms. Townsend served at New York City's Deputy Mayor from February 1985 to January 1989. As Deputy Mayor she was responsible for formulating and guiding the city's policies to encourage economic growth and creation of jobs. She played a key role in the negotiations to keep NBC and Chase Manhattan Bank in New York, as well as developing essential programs to retain scores of smaller firms. Before becoming Deputy Mayor, she served three and a half years of New York City's Budget Director, responsible for managing the city's expense and capital budget, was the first woman to ever hold that post.
Ms. Townsend is a native of Elmira, New York and a Phi Beta Kappa of Elmira College and holds a Masters Degree from the University of Wisconsin. Please join me in welcoming Alair Townsend.
MS. TOWNSEND: Thank very much and good morning everyone. I am glad to be here with you this morning. Henry asked me to talk a little bit about the history of MetroTech and how it got off the ground so that's what I am going to do.
I served in government many years before in Washington and New York before joining Crain, and government in general and development projects in particular can be frustrating. The gestation period for many big projects is so long that even though you may have played a role in making them happen, the final chapter often isn't written while you were still involved or even in some cases while you are still alive. So, in my case, I happen to be in the stake of getting MetroTech off the ground but I was not at the Regional Plan Association years before that when they made a strong case for Downtown Brooklyn as a third business center for the city. I wasn't at Polytech all those dry years waiting for things to happen. I wasn't in the Brooklyn Borough President's Office constantly pushing for progress. Timing is everything and as Deputy Mayor I happen to come along just the right time. Lucky me.
I also have the support of Ed Koch who approved several incentive programs that were instrumental in attracting tenants. As I reflect on MetroTech and other projects in Downtown Brooklyn, seems to me there were several indispensable elements, some of which Joe mentioned in making the plan a reality.
First, having a vision. A kind of master plan supplied by RPA and supplemented by Poly. A plan supplied by developer Bruce Retner and Poly were key. It was very important to be able to get beyond what was spelled out in detail what could be.
Second, was scale ability. The kind of tenants we thought were the best prospect, financial service firms, were quite candidly unlikely to want their employees to be pioneers or to feel themselves as urban pioneers. To retain and attract talent they would want to know that other firms would be joining them and there would be sufficient scale to create the sense and feel of a commercial center and not an isolated outpost. Access by mass transportation was also terribly important. It is the thousands of anticipated New Workers who were being able to arrive and depart conveniently and make easy connections. A parallel concern to everyone understandably was safety. At one point, Chase executives sought a assurances that the local police presence, the number and how they were deployed would never be deduced. Now no mayor can ever bind future mayors and police commissioners in such a manner. Ed was honest enough to say so.
What saved us was the creativity of developer, Bruce Ratner, who said that safety could be guaranteed with the creation of a business including a district. That was, I have to tell you, an immensely important breakthrough and was typical of the constructive and creative response of Bruce and his team.
Another important factor was a competitive cost situation. Manhattan was becoming too expensive for many functions and companies were examining their location options. Once they start to do that, there is no particular reason for them to stay in New York and some part of New York unless it makes economic sense to do so. The developers in Jersey, Northern New Jersey suburbs were making very attractive offers based on lower costs of construction, lower taxes, virtually across the board and much lower energy costs.
So if we wanted to compete, we had to put together as of right, an incentive package that any relocating company could qualify without making special deals. The package had to be big and comprehensive and the package that was ultimately put together included real estate tax breaks, significant energy discounts, relief from the commercial rent tax which is now gone in the boroughs and (inaudible) other business taxes. With this in hand we were in business. It took a cooperative city and state government willing to fund the incentive program to do the required condemnations and relocations and not incidentally take the flack for doing that and provide the necessary infrastructure. Employees want more than nice offices and a convenient way to get to them. They want restaurants, coffee shops, places to buy the newspaper, places to stroll at lunch, fun bars to have a drink after work with friends, maybe even health clubs. These amenities can be created but it takes a long time to do so. It is far preferable to have them already in existence or at least have a core that can be upgraded or improved or expanded upon and that was the case in Downtown Brooklyn.
Finally, I hope you don't think I am being corny, but this is it an intangible factor that could be called community. A sense of place. It means that there is more to an area than a collection of buildings. There is a group of people and institutions who care greatly about the places and neighborhoods and who quickly and usually quietly convert newcomers into neighbors. That is very attractive and that is what Downtown Brooklyn offers, with Poly, with Howard Golden's office, the Brooklyn Chamber of Commerce, Brooklyn Union and others. Commercial, potential tenants coming from Manhattan were not used to this sense of community in neighborhoods. I don't think there is anything quite like it in major commercial areas of Manhattan.
Although these potential tenants may have visited a couple of times without being put into words what this new thing was they were experiencing, it usually became clear fairly quickly. They started to realize if they had problems they would be treated as common problems and taken seriously. They would be drawn into the civic life of the area before they even moved in. They would be asked to their share of responsibility for important organizations and causes and institutions. And like a kind of amenity package of shops and restaurants, this kind of community can't be created overnight. Sometimes it can't be created at all. But it can be kindled where sparks exist and where it does exist is in Downtown Brooklyn. It can be marketed as a major draw for an area.
I have to say that Ed Koch as also key to getting MetroTech off the ground. He and I both knew how big getting a first big tenant was. It meant that Brooklyn Union would go ahead with its new headquarters and Poly would proceed with a building as well. He argued strenuously with the then Chairman of Chase Bank, Bill Butcher, that we should be given the right to compete with New Jersey's offer before they abandoned New York with five thousand jobs which ultimately turned into six thousand.
We used to take prospective tenants to Poly's boardroom to look at pretty renderings of how the area would be. Then we would go up on the roof and that wasn't what you saw at all. We would point out what would go where. It took a real stretch and vivid imagination to get what was there then to what is there now.
For the end of their planning and our negotiations, Chase officials were taking the board of directors on a tour of the sites under consideration, the last several ones. They were going to be in New Jersey and going to go to Downtown Brooklyn and I thought: Oh, this is not good because I don't think Mike Esposito will deliver the: Look, will be here speech, with the same passion. So I argued strenuously that I should be on the buck as the tour guide for the group portion of the trip. No dice. No way. No how. So I went to the mayor and said, "They are going to take the board to New Jersey and Downtown Brooklyn." He said to me, "What do you need?" I told him I needed clean streets and a visible police presence. Well, you could have eaten off the streets. And when you give the organization like the New York Police Department an order, they carry it out. There were police cars, vans, buses, everywhere. Up and down the streets. The Chase Board saw this and said to the guy in charge,
"How can you say this isn't safe?" Mike called me later and said, "Townsend, you did your job on that one." And I said, "I would have planted trees."
Today, to be able to describe to you everything that MetroTech is doing (inaudible) occupied buildings five million square feet and two more buildings under construction. I mentioned earlier that it took extraordinary powers of imagination for potential MetroTech tenants to visualize what could be or that it could happen within their lifetime, and I think the view from Poly's group is now a tribute to those dreamers and the people who put in years and never lost the faith. To me it is wonderful to remember that those kinds of big dreams and projects still happen in New York. I look forward very much to the next chapters for Downtown Brooklyn. Thank you.
WOLLMAN: I'd like to now ask the panelists for the second session to please come together at the dais here. Without the help of Jim Whelan, the Director of the Downtown Brooklyn Counsel, this morning would not have been possible. He took me by the hand and said, "Okay, I am going to lead you into, not the wilderness, but into the glories of Brooklyn." And he did. Together and with the work of Ellen Posner a great deal of planning of this conference was done.
Please, those of you standing please come forward. There are some seats available. James Whelan is director of the Downtown Brooklyn Counsel. He previously served as Vice President of the Brooklyn Chamber of Commerce, with oversight of the government relations (inaudible) to the Vice President of the Brooklyn Alliance. Mr. Whelan was director, Interim Executive Director of the 14th Street (inaudible) Square Local Development Corporation. Please welcome James Whelan.
WHELAN: Thanks Henry. And thanks to your staff at Newman Institute for holding a series on the Borough of Brooklyn. As Henry mentioned, I am the Director of the Downtown Brooklyn Counsel, which is the organization comprised of many of the major corporate and academic medical and cultural institutions in Downtown Brooklyn, the executive of the counsel to promote the economic growth of the Downtown Brooklyn area.
Vacancy rates of class A office space approaching zero. Very low vacancy rates for class B and C office space. Nearly 40,000 students attend classes in the area each day. Retail space being rented over a hundred dollars per square foot and award winning hotel, residential real estate prices in neighboring areas rising over 50% one year. When you hear these facts, one immediately casts his or her eyes to many parts of Manhattan. However, these are the statements that speak for the current state of the economy in Downtown Brooklyn.
It is not said often enough but the fact of the matter is economic conditions in the Downtown Brooklyn area are good. Why is that? Obviously the strong economy in New York City plays a critical role. The economic resurgence being experienced is New York City today is so strong that it is fueling the rise of the entire borough along the Jersey waterfront.
However, Downtown Brooklyn possesses certain strength, certain strategic assets that give it a considerable edge over many other parts in the city and the region. There are three that I'd just like to mention now.
First and foremost, this was mentioned earlier. Its location and mass transit network. Downtown Brooklyn is serviced by fourteen subway lines, seventeen bus lines and a hub of Long Island Railroad. As a result, businesses that operate in Downtown Brooklyn can easily attract employees from a wide area including Long Island, Queens, Brooklyn and Manhattan.
Furthermore, with less than a ten minute commute to Wall Street, Downtown Brooklyn is the ideal location for businesses that need to do business in lower Manhattan but do not wish to pay the rents lower Manhattan requires.
The second advantage that Downtown Brooklyn possesses from a commercial real estate perspective is what I just eluded to. The cost of rent commercial space in Downtown Brooklyn is much lower than comparable space in midtown Manhattan. For example, rental rates for class A office space in Downtown Brooklyn is between thirty and thirty-five dollars per square foot. By comparison, rental rates in Manhattan are between forty-five and fifty dollars per square foot. For businesses that are price conscious, it is a critical factor.
Third, Downtown Brooklyn has a tremendously diverse economy. It services corporate, academic, government, and retail activity. In addition, Downtown Brooklyn offers cultural activities that are unparalleled compared to many other downtowns across the country. Moving forward there is some clear opportunities that will permit Downtown Brooklyn to build upon their strengths and furnish its image as a thriving commercial district.
The first opportunity pertains to the growth of high tech companies in Downtown Brooklyn. High tech companies are beginning to call Downtown Brooklyn home for the same reasons that financial service firms already have. The proximity to lower Manhattan, excellent mass transit, competitive rental prices and superb fiber optic capability.
The area within Downtown Brooklyn that's already demonstrated the greatest lure of high tech companies has been (inaudible). Over a hundred and fifty thousand square feet of space in (inaudible) is already occupied by high tech tenants. This figure is expected to double within the next several months. It is expected over the long term it could provide over one million square feet of space for high tech tenants. Its allure is simple. Competitive prices. Fifteen to twenty dollars per square foot for industrial law space, a convenient location with good mass transit just minutes from lower Manhattan. And it is all taking place within a neighborhood that is quickly transforming itself into one of the most exciting for New York City.
The next area for opportunity for high tech firms is Livingston Street. Last fall the Brooklyn Chamber of Commerce and Brooklyn Borough President's Office issued a report pointing out that Livingston Street was a central location for high tech companies. Inexpensive rents, good mass transit and adjacent to beautiful brownstone neighborhoods, Brooklyn Heights, Fort Greene. Livingston Street provides territory for high tech companies. The report's conclusions are already taking root. As I've been reporting, Crain's New York Business (inaudible) at 180 Livingston Street, the current location of the Workers Compensation Board. 180 Livingston Street which contains over two hundred thousand square feet of space provides ventures which specializes in the acquisitions and operation of properties for technology and telecommunication purposes with a tremendous opportunity to spurt considerable change along Livingston Street. This summer, in order to increase the pace of change along the Livingston Street corridor, the Downtown Brooklyn counsel will launch two initiatives.
First, we will examine the possibility of demolishing the Municipal Park Garage located at the intersection of Livingston and Bond Street and putting in a place of development that will spurt further change along that street in a manner consistent with the residential neighborhood. Presently, the Bond Street garage has little going for it. Only one third of the parking garage is used on a consistent basis. It is ground floor uses are characterized by homeless dropping center, illegal street vendors and a series of empty retail stores. The reuse of Bond Street garage properties will provide a further emphasis for change along Livingston Street.
Second, the Downtown Brooklyn Counsel will conduct a study of the stock at government owned and government operated space in Downtown Brooklyn in an effort to identify where the consolidation of government properties might be realized, thus spurting up space for commercial purposes. This issue is critical along Livingston Street.
While there is much good news and opportunities regarding Downtown Brooklyn I would be (inaudible) if I did not discuss an issue with implications for Downtown Brooklyn and the Borough of Brooklyn as well as New York City and State. Since 1992, eight and a half million square feet of class A office space has been (inaudible) along the Jersey waterfront. This space is being occupied by companies that are being priced out of the real estate market in Manhattan; companies that should be locating in Downtown Brooklyn. The only significant class A office development in the same time period on that side of Manhattan has been Renaissance Plaza.
At first glance one may say, so what. What is the big deal? Well, consider the following fact. Several years after it moved to MetroTech over seventy-five percent of the employees who work at Chase Manhattan Bank location live in New York City. Thirty-five percent live in Brooklyn. Does one really believe such statistics would hold true if Chase Manhattan had located its operations to the Jersey waterfront? The fact of the matter is, relocation of companies from Manhattan to the Jersey waterfront rather than Downtown Brooklyn, represents over a long term, a loss of jobs, a loss of revenue, and a loss of opportunity for the borough of Brooklyn, the City of New York and the State of New York.
Why did this location happen and what can be done about it? The most acute issue pertains to the cost of development. Our analysis reveals on a conservative estimate that there is a ten dollar per square foot differential between the cost of developing along the Jersey waterfront versus the boroughs outside of Manhattan. Why is this?
First, the Jersey waterfront has some advantages. The Jersey waterfront is characterized by lower acquisition cost, less expensive hard costs and lower taxes.
Second, New Jersey offers a very aggressive benefits package to attract businesses. For example, New Jersey offers a program entitled The Business Employment Incentive Program, or BEIP. Under BEIP the New Jersey Government examines the amount of New Jersey State income tax paid by the employees of companies relocating to Jersey. Jersey then agrees to refund the company up to eighty percent of such monies on an annual basis for ten years. It is critically important that we respond to the efforts being made by Jersey to recruit companies from Manhattan.
Over the last several weeks the Downtown Brooklyn Counsel has been in discussion with city officials as well as other economic development organizations from around the city about the need to reduce or eliminate the differential or developing costs that exist between the Jersey waterfront and the boroughs outside of Manhattan. We are optimistic that the New York City Counsel will propose steps over the next several weeks that address this gap.
On the topic of new commercial development, Downtown Brooklyn faces another issue; a longer terms issue. This one has to do with the availability of space. Presently, there is just two sites in the commercial core of Downtown Brooklyn that are assembled for new commercial development. That's it. Several months ago when Goldman Sachs was looking to relocate some of its operations outside Manhattan and place them in a campus like setting they had looked at Downtown Brooklyn. However, Downtown Brooklyn was not able to accommodate Goldman's needs. So, Goldman Sachs (inaudible) sight in Jersey City. Lost opportunity. Moving forward is very, very important to the success of Downtown Brooklyn that we create space to accommodate future business growth.
In conclusion, we all look back over the last fifteen years, it is clear that the efforts to create a thriving commercial district in Downtown Brooklyn has been a successful one. We are confident when one considers the area's strategic assets and current trends as well as the business community's commitment to work with all levels of government that the best is yet to come to the commercial district of Downtown Brooklyn.
WOLLMAN: Harvey Schultz was Senior Vice President of (inaudible). He previously served as commissioner of the New York City Department of Environmental Protection and as director of the Development Section of the New York City Department of City Planning. Mr. Schultz also served as director of the Brooklyn office of City Planning, and Executive Assistant to the Brooklyn Borough President. Please join me in welcoming Harvey Schultz.
SCHULTZ: Thank you very much, Henry. I tried to take the program literally. I wanted to take a look at Brooklyn's strategic assets. I wanted to look at it from a Downtown's perspective. I wanted to sort of lift it out of the (inaudible) things that we face. To me it is a trip down memory lane. As I used to get on the A train at East New York and Brownsville to come to Brooklyn Tech. Later on when I worked for the Department of City Planning as an intern in the Lindsay Administration. I had a boss, his name is Hank Serwin. There may be one or two people in the room who remember him. He told me of his vision of Downtown Brooklyn, the waterfront down to Grand Army Plaza and told me how the Flatbush Avenue would be ultimately revitalized (inaudible). That too, would benefit from the growth that would happen in (inaudible) sector and all over Downtown Brooklyn.
As a person who has kind of had the fortune of having various roles in the future of Downtown Brooklyn over the last three decades, let me refute first the assets over all to my point of view and then look at them. The past, the present, the future.
First, we are, in Downtown Brooklyn, a central business district. That in academic terms has a certain definition. We are a government seed. We are a cultural sector. We are an entertainment sector, a port system. We have private sector employment. We have public sector employment. We are, as many people pointed out, the fact, transportation hub and we serve a population over the residents borough and in the region in general. Too many people don't think this is an asset, but it is very much turning out to be. We have often competed with lower Manhattan for the Manhattan federal business district and we are not competing against New Jersey. That to me, as I will talk about later if I have enough time, is an asset as well.
For CBD which has a resident population between two and three million people whether they all allow themselves to be counted in all the neighborhoods from the Jamaica Bay to the East River -- so we have a population which is as great as any other place. We are a CBD which has great institutions with very, very, lengthy histories. We are CBD which is surrounded by the great waterfront, immediately surrounded by brownstone communities. All of its neighborhoods have superb mass transit access to it. We are a link to the server by a railroad terminal, a railroad system, the Long Island Railroad which has its terminal in its midst. We are a borough of diverse populations with connections to all parts of the world. That is very, very important. We are a borough with a worldwide name identity where many of its native sons and daughters have migrated to other locales and have become leaders in government and private enterprise. Yes, we have friends all over the place that come back to Brooklyn from time to time. We are a borough that has a reputation for its attitude first and foremost. We're a borough that has a reputation for its underdog status. Remember the Dodgers. For its determination. For its willingness not to surrender to any force from outside or from within. So, we are those who really take great pride in seeing that our borough, you know, is what it should be.
Let me take a look at these assets over time. The CBD has a history of, you know, over time it has had its up and downs. CBD before MetroTech, Morgan Stanley was going to Downtown Brooklyn before MetroTech. E.F. Hutton stood on the same roof before they had his scandal and luckily they didn't choose to locate in Downtown Brooklyn. So we have a history, okay. But unlike many other central business districts, many other cities the suburban flight which incurred didn't actually, was not a fatal blow to Downtown Brooklyn. We have always maintained their central business district status. Our strengths have never been abandoned. We look at other CBD's throughout New York State in any given day the population in Syracuse, Rochester, Buffalo, in some total is less than the number of people that are walking through Downtown Brooklyn. Just look at the CBD's through the rest of the United States that have been abandoned that no longer exist and before they did 20 or 30, 40 years ago. We have survived those trends.
But Downtown Brooklyn has been thought of as the stepchild to Manhattan. That's the truth for many, many years. Private sector and public sector investment. We fought for MetroTech we (inaudible) the hotel which is very successful and hopefully will expand.
The tide has changed in that strategic asset. When you take a look at the lower Manhattan's interests, they look at Downtown Brooklyn as the future for expansion of the economy of the City of New York. That's why the Schumer Commission was created. That is why thirty-five people, many of them not known to Brooklynites, the head of major corporations have banded together and said: Where are all of your sites in Downtown Brooklyn? Where are there sites in Queens? How are we going to beat, as Joe Rose said, against the (inaudible) that's coming to New Jersey?
So now Brooklyn is thought as the strategic resource for the city. It is the central business district within New York City that has the most potential for growth given all its other assets.
The people in Brooklyn have always been its strength and that is something I want to dwell on for the moment. That is true throughout its history and it still is the case. Whether from Europe, or as in the past, are all from all over the globe, families have struggled, worked, educated their children and watched them climb up the economic ladder. Whether they became local business leaders, worked in our education institutes, whether they became service workers, whether they worked in the cultural or government. You look at Brooklyn today and it is the healthiest environment as ever because that is still happening. People from all over have come here, committed themselves to the community, to the education institutions.
Let's look at those institutions just for a moment. Let's look at education. Dr. Chang will speak shortly for Poly Tech. We have LIU, New York Tech, Saint Francis, Brooklyn Law School, all within the midst of Downtown Brooklyn. Just outside of Downtown Brooklyn we have Medgar Evans, Kingsborough, Saint Joseph, and again I would say let's look at the leadership of that's institutions. Let's talk about the people who head those institutions. They -- let me just stop for a moment before I get there. Let's think about the world class cultural institutions. Let's talk about the Botanic Gardens, the Brooklyn Museum, the Brooklyn Public Library and its business library in Downtown Brooklyn. Let's think of just outside Downtown Brooklyn in Prospect Park. The Brooklyn Children's Museum, the Brooklyn Historical Society. Let's look at (inaudible) and its attempt to service all the neighborhoods in and out of Downtown Brooklyn. Let's think about great hospitals. Brooklyn Hospital, Long Island College Hospitals just outside Downtown Brooklyn. Methodist Hospital, Lutheran and Maimonides Hospitals. How do you assess these institutions and their strengths over time? Just think now that I've gotten into the people who lead them. Dr. Cheng at Poly. Dr. Matthew Rolend who's come back after a distinguished career to lead Saint Francis.
Let's look at our cultural institutions. Let's look at Arnold Leiman. Martin Gomez at the Brooklyn Public Library. Let's look at Karen Hopkins who has followed the legendary Harvey Lithenstein. Let's look at with a bit of humor in my mind the deans of Brooklyn's institutions. Who would have thought that Tucker Thomas and Judith Zook would be the eldest states people of Brooklyn's cultural institutions? These are leaders which have come to Brooklyn with a vision for what their institutions are. They have revitalized their institutions. They have begun to modernize and expand their institutions.
Let's go on just for one or two more minutes. Who would have thought 25 years
ago -- I am sorry. Yes, let me combine three of the assets I really wanted to talk about. The transportation, the neighborhoods and waterfront. When we look at the waterfront, think of its progress as happening pretty slowly. That has changed. Let's look at what is happening in piers one through five. Think of how well Downtown Brooklyn has positioned itself in the inevitable arrival of modern waterfront transportation tied to true transportation which already serves Downtown Brooklyn.
Let's look at those linkages to all those airports in the region. That's what future business populations in Brooklyn is looking. Yes, let's look at our infrastructures. We are wired with fiber optics. We are not only wired but our buildings are becoming retrofitted. The agencies and other places leave and they are replaced by private commerce. If the TA does leave, that building will become wired. It will be revitalized. It will become part of the modern telecommunications. Then the companies that are the new companies, the telecommunications companies, the new media companies will come into those places and live. They'll become the future of Downtown Brooklyn. I can go on and on.
Let me not outwear my welcome, but talk about what I think it really comes down to is the leadership Brooklyn has and how that all works together. That leadership is public, private and community, outside and from within Downtown Brooklyn. You just take a look at the leadership of Borough President Howard Goldstein who has represented and spearheaded the development of Downtown Brooklyn for over 25 years. He has spanned six and some odd number administrations. He has fought with all of them. Each and every one of them, with the same strength and vigor that he fights with any one of them. He has always fought for Downtown Brooklyn's fair share. Whether that did him well or did him poorly. The Downtown Brooklyn central business district as well as he, has survived for that reason. He has worked with people who understood that. All the mayors have understood that. All the staff and all the agencies have understood that. No matter how much they did when they did not do what he thought was right, he would fight with them.
Let's look at the business leadership in Downtown Brooklyn. Let's look at Bob Cattal and Craig Matthews. Let's look at Pat Thalen from Chase. Let's look at -- I wrote it down -- the evangelistic Kenneth Adams, who revitalized the chamber. Let's look at Jim Whelan who has taken over the Downtown Business Counsel. I predict we'll hear a lot more from Jim Whelan coming forward. Let's also look at the communities that surround Downtown Brooklyn. It is hard not to remember Tessy Wimcams from Community Board Two. It is hard not to remember Bob Ascedo from adjoining Board Six. We have new leadership. Craig Harriman. He's there in Board Six.
What am I really saying, what downtown has, is a working partnership that has survived with the survival of Downtown Brooklyn over 25 years on non (inaudible) matters, they band together. They actually have joined. We have (inaudible). We have Bill Halman who makes sure all the economic opportunities transcend to the thirty-five percent of the people who work at Chase. So what we have is an enlightened group of people who have developed a partnership, a true partnership. They don't always agree. Sometimes they fight too strongly. They forgive each other sometimes. But all in all, when you look at Downtown Brooklyn in the past and present and look toward the future, its assets are strategically placed and we'll all benefit from it. Thank you very much.
WOLLMAN: You don't scratch the surface of Brooklyn too quickly without hearing the name David Chang in many different ways. President of Brooklyn Polytechnic University, Dean of the College of Engineering and Applied Sciences at Arizona State but before that, Professor of Electrical and Computer Engineering at the University of Colorado. Dr. Chang is a Director of the Regional Plan Association and serves on the Executive Board of the MetroTech Business Improvement District. He last, is a member of the Counsel on Foreign Relations. Gives me pleasure to welcome David Chang.
CHANG: Thank you for this very kind introduction. I couldn't resist to tell you that Alair Townsend was indeed the only Deputy Mayor I know in recent time that actually stood on top of Poly's roof. What I didn't get a chance to tell her was we recently redid our roof so it is not the same she stood on.
I like to talk a little about some kind of (inaudible) for technological university like Poly, how we can form the partnership with our community. I do have a number of photos that I hope that will run through quickly, since I am sure you are familiar with many of them. I also want to apologize a little in that this is kind of re-packaged from a talk I gave months ago at the World Conference for Business and Technology Innovation in Shanghai. Since I look around I can see I am not in Shanghai, so that's not too bad. So you can see it here from me.
Let's start with some kind of perspective. My next view graph is in fact many of you know, is the (inaudible). That's what our neighborhood was a little more than twenty some years ago. This same place I will show you just remember this telepose. I will show you how it looks like when we get there. This certainly is a long journey for Downtown Brooklyn and Poly. Next please.
You might say that from the Poly's perspective we really were in a time worried about losing students. Just didn't want to come in this neighborhood, I am sorry to say. So my predecessor at the time was at the board was truly, very concerned about that. But also as a technological university we really want to sort of the start from the ground up to cultivate the kind of interdependency with industry. It is clearly we need a different environment. As everybody talking about this from the New York State and City's perspective, it is interesting that Joe Rose mentioned about corporate jobs moving to neighborhoods (inaudible). Well, that was the motivation back then. I guess is still now. And of course the urban renewal aspect of Downtown Brooklyn. Next please.
Just put a little perspective there. (inaudible) didn't start very quickly. The effort. I guess the discussions started in the '70's, if I recall what people told me. But I guess back in 1980 we were designated as the master kind of developer and of course we recruited the real developer the (inaudible) to come to department with us. '82, I think that from a university perspective that was very important. We were able to get one of the very first called CAT. CAT stands for the Center for Advanced Technology. In our case in telecommunication funded by the state. That kind of made a state that for us to go out and to recruit not only financial services, but the technological components of this industry that here in Brooklyn we are going to build some unique strengths in telecommunication and computers. I understand the public review process and approval process started
in '84 but probably took at least four years before the groundbreaking of the first meeting in Brooklyn. So indeed all that was a long process. And I understand it there were about 50 lawsuits all together during this time that somehow we need to settle in the court or out of the court.
As I mentioned, 1988 was the groundbreaking for SAIC. Of course, the last was completed the Renaissance Plaza and Marriot Hotel which truly had a very, very, important dimension to MetroTech. For sentimental reason we are talking about Howie Golden and I thought I should show you this robot and this person who is standing right next to the robot. This is the groundbreaking event in 1988.
So what is the MetroTech now? I am sure you will hear from others as well as eighteen acres with three point five acre common, nine buildings five million dollars after class A and that doesn't include, I guess, the Renaissance Plaza and office towers so there is another million there. Investment of 325 million. The building construction I believe is around one billion and now we have about 22,000 professionals working there.
So, MetroTech, for those who are Manhattanite, I would like to go through quickly some of the view graphs. That's the view coming from our library. Looking out at the building facing this is indeed SAIC building. There is a campus to sit around and eat and talk and what not. This, of course, is the hotel across the street that clearly is a key community meeting place. If you look at this sort of view from high up that's basically how it looks. The construction to your right is -- this picture was taken two years ago the hotel wasn't completed. Remember the telephone post? Well, you see the telephone post on the right hand side, but this is how it looks now compared with twenty years ago. We still don't have enough parking space as you can tell.
So what is the next five years we are looking for? Particularly what is the role of Polytech? We do see and have been talking to our community that there is a need to create this 24 hours a day for our students and high tech people. It is 24 hours. 24 hours a day, seven days a week downtown vibrancy is what we need.
The other thing is MetroTech is about the employers, about professionals working there nine to five. We really do believe incubators high tech start ups are the things we need. Just to prove my point, there is a subway station right next to our building. This is taken around 5:00. You see all the people coming one way. The poor student trying to catch up is the only one going that way. So I think that is clear. Create a different kind of community in Downtown Brooklyn. That is important to us. So Poly has -- as you have heard and read in the newspapers -- we have launched a very ambitious program.
The first is a new academic building that actually (inaudible) last week. Last Friday -- last Thursday. Following that in another four to five months we'll be doing our groundbreaking from the next building and that would be this 400 bed dormitory. And this is kind of the model of what it looks like. In front of you in the bottom is Jay Street and the Rogers Hall is our current main academic building along with the Jacob. We are going to build this new academic building with three floors as indoor athletic building for basketball down to this bottom three floors. So we'll be building this and should be done in about 18 months from now.
The other one is this new dormitory I mentioned. Let me run this quickly. This is the architecture rendering. We'll have an entrance facing Jay Street directly facing more toward south facing the Keyspan building and that's the new economic building we are going to put up. This is the rendering for the dormitory. So what we hope is that we'll create a different kind of campus life for the first time for the students. We never had dorms before. And we hope that we help take the first step toward creating a 24 hours community in Downtown Brooklyn.
Now, let me get back to this incubator issues. There is such thing as food chained in terms of high tech industries. You talk about the big companies. We also needed small companies; the start ups. And for university, particularly in this new economic era, it is important for us to look at a school as a very sort of entrepreneurial school.
The next graph is something I showed the board meeting last Friday. We are actually talking about many different facets. To the very extreme left you see the incubators. We are really interested in teaming up with developers and community leaders. Put together that kind of network of incubators around us. And if you go toward the other direction, we want to create some kind of community for the high tech entrepreneurs, for the developers who all get together, venture capitalists, and the law firms and what not.
This is so called incubator at University of California. San Diego, for instance, they created community that in fact is sort of cross fertilization type of place where people go to try new ideas and get their new ideas funded and get the help to get some new business going. Then we obviously, for university we are going to have some extra curricular type of things to support a different culture that I think should be exciting for us. Some of you actually attended it months ago at the Marriot. We had this workshop attended by a lot of the different people. The subject of the matter is raising the bar on high tech incubation. What we did is sort of find out what are the lessons learned from the various incubators from across the country, successful ones and not so successful ones and trying to learn from them. How to put together incubators for Downtown Brooklyn.
It is very clear -- I want to use this to remind you if you may or may not know we actually have teaching courses at the 55 Broad Street in the Wall Street area. So that's one way down in the bottom and of course MetroTech. If I start there and cross the bridge I will end up at MetroTech at the middle right side. And the scale shows some of the areas we are looking at as a potential place we can team up with developers to talk about these incubators.
My last graph is -- before you show it, I thought it was fun to show the people who live on the other side of the East River. If you are on the other side how you might look like. This is a picture taken from Brooklyn Heights. Well, like Harvey was saying, I think we have a lot of amenities. Looking at this, how can you not come to Downtown Brooklyn? Thank you very much.
WOLLMAN: I'd like to thank Jim Whelan and Harvey Schultz and David Chang for that overview of both assets and existing infrastructure of Downtown Brooklyn. I'd like to ask the panelists for the first part of section three of this morning, the case study on MetroTech Center to join us up here. Greg Brooks, Robert Rediker, Richard Warshauer and Michael Wise. We are running about twenty minutes late. Mr. Rose apologizes again for his being late this morning.
Greg Brooks, the Executive Assistant Chief of Staff to Brooklyn Borough President Howard Golden.
Mr. Brooks previously served as Deputy Director of Fiscal Management at the Electrical Department of the New York City Transit Authority. We have had the privilege of listening to both the Borough President and Assistant Borough President in previous mornings here and we look forward to Mr. Brooks' remarks. So please welcome Greg Brooks.
BROOKS: Thank you so much. It's certainly a pleasure to be with you this morning. I could not think of any more subject than Brooklyn to focus several mornings on. It is a very special place. I am going to be somewhat self indulgent in starting this speech, this talk, and tell you a couple of stories. One just happened a few weeks ago.
When the Borough President was the leadoff speaker at the first series and gave his key note address, he was very pleased with the series. He thought it was, indeed, a good way of focusing attention on the borough. We were leaving the building and he turned to me and said, "You know, if I had had my way we would be leaving Atlantic Center now. Baruch College in Atlantic Center and going to Borough Hall." It was a couple of decades ago when Baruch was thinking of where to site itself that it made a very dramatic error in judgement. Instead of Atlantic Center we appreciate the focus on Brooklyn but that was a mistake.
Secondly, I am going to tell you a little about myself. 22 years ago I moved to Brooklyn. I was, in fact, born at Williamsburg Hospital. When I was in my very formative years my parents decided to move out to Queens and then Long Island. When my wife and I got married and she was attending Brooklyn Law School, we decided Brooklyn was the place to be. Particularly because we couldn't afford an apartment in Manhattan. The phenomena has not changed. My parents after we were married came to visit us at our apartment on Clinton Street and walked in. The stoop came into the board. And they said to me, "How could you do this? We saved, we got you out of Brooklyn and now you are paying $290 dollars a month for a board room. You have to be crazy." Every time they visited they always sat by the front window watching their car. If I knew Alair Townsend's powers in bringing a police presence and wanting to appease visitors from other areas to get a sense of security I would have called her and had those police vans located on my block.
Later, they came to appreciate the fact that we moved to Brooklyn and they came to see it as a good place to raise children and indeed that's how we feel today certainly. One of my first jobs in city government was actually at the New York City Comptroller's Office where I worked for the Comptroller at the then Board of Estimates. I handled housing and economic matters at the board for him. When I was coming in and relieving the other person who had my duties before me he was walking me through his files. He was showing me the files and he said, "Well, this box of files is the MetroTech pile." I said, "Well, what is MetroTech?" He said to me, "That's Howard Golden's pipe dream. It will never happen." And that was the sense twenty some odd years ago or eighteen years ago, that MetroTech was a pipe dream.
What happened was it became a pipe dream to very important people. That's really what allowed MetroTech to become more than just a dream, but in fact a reality. It was really them who got together who made this reality, who were extraordinary in their vision and in their talents.
Of course, as a paid political announcement I have to start off with my boss. Because he never, ever, lost sight of his goal. Many people have goals and when it doesn't work out they just go on to their next goal. Howard Golden was not that kind of person. Of course, he had the ultimate leverage and that was the Board of Estimate. Because there wasn't a vote taken at that Board of Estimate that Howard Golden did not remind the mayor, I am voting because it is the best for the city. But creating MetroTech in Downtown Brooklyn is also the best for the city so he had that platform. He had that leverage and it really lead the way for MetroTech to happen. Of course, he had a very, very talented staff. Harvey Schultz was there in the early years when it truly was a dream and he put the meat on the skeleton and was able to really make MetroTech something people would take notice of.
Marlene Gelber, who was my predecessor in the Executive Assistants office, she was able when it came to the Board of Estimate, worked with the communities and had an incredible negotiating skill with the communities to allow MetroTech to happen. It was really unique. You were tearing down buildings, displacing people who lived and worked in the site and telling them, "Hey, this is the best for you." Well, it is very hard to convince people who have a three hundred square foot loft that they're paying almost nothing for, that they are going to benefit from some skyscraper being built and a new business coming in. But that was the case. If fact, Metro couldn't have happened as well without Bruce Ratner because he not only had a tremendous business (inaudible) to understand this was a good deal for businesses and he would make it happen and put his imprint in an area were no one had yet. He also knew how to work with the communities. He understood well, what is the cost of the lawsuit and how does it compare to my cost of settling? And when there were comparable costs he always sided with the settlement and allowed people to feel their own personal benefit from the creation of MetroTech.
Alair was not just lucky to be in a place and time. She was, indeed, brilliant. She understood the importance of the creation of MetroTech. She understood that economic developments isolated in Manhattan, wasn't economic development at all. In order for economic development to be true, all of the boroughs had to feel it and she saw the importance of MetroTech and saw the importance of projects like the Brooklyn Army Terminal which is a tremendous industrial area. Like bolstering the Brooklyn Navy Yard. So just allowing her to diminish her own role as being in the right place at the right time wouldn't be fair because she was an incredible leader during that time.
So what are all the ingredients that allowed MetroTech to happen? Clearly it had tremendous expertise. It had expertise in the finance world, expert planners. Expert people who understood government and what it would take to allow this kind of project to get through both the city and state levels of government. But you also had people who
scored "A's" in the category of: Plays well with others. That was very, very important as well. Because everybody worked together for a common goal and in working together for a common goal they managed to allow the unimaginable to happen and that was the creation of MetroTech.
People meet my boss today and they say,
"Well, I saw you on TV. I saw you on radio. Borough President, why are you frustrated? What is going on?" And Harvey said it right. Here is a borough president who has fought with mayors, right through the agents because of his longevity and because there were no terms limits, he had that good fortune. And what is the frustration all about? And Jim Whelan also had it right. It is that we have had the good fortune of riding the best wave of economic activity in the City of New York over the past seven or eight years. Really, we have only brought one new corporation to Downtown Brooklyn and that's the Lucadia Corporation Empire Insurance who sited itself in Renaissance Plaza. They came to the Borough President. He brought them to the administration.
Where are all the other companies going? They are not all going to lower Manhattan. They are not all going to midtown. They are going to New Jersey. And that has been incredibly frustrating and really gives people a sense of a lack of accomplishment because MetroTech is not over. There is a sight that still remains. We have soft areas along Livingston Street, Hoyt, Schimmerhorn, urban renewal areas which are right for development and everybody must see it and hear it because we need to continue our growth if we are to survive. That is very, very important to us as a borough.
With that said I know I am preaching to the choir. You are all interested in Brooklyn and future growth. I just want to thank you again and say this is indeed a great conference.
WOLLMAN: To hear now something about the core of MetroTech Center in terms of its business vision and business structure we welcome Robert Rediker, Senior Vice President of (inaudible). Mr. Rediker is supervised all aspects of developments for Atlantic Center, Flatbush shops and Court Street. The two hundred thousand square foot project in Downtown Brooklyn containing the Regal Theater, Barnes and Noble. Mr. Rediker previously served as the company's Vice President General Counsel. Please welcome
REDIKER: Good morning. I will try very hard no to repeat many of the things you have heard this morning, but as going through my notes and listening to all the speakers this morning it is a very hard thing to do. We have been asked to do a case study on MetroTech. As we reviewed the past I saw many analogies to today and to some of the issues we are facing in the completion of the development of MetroTech and other areas in Downtown Brooklyn. So what I'd like to do is talk a little about past and where we are at MetroTech today and come back and talk about the future.
MetroTech is a comprised of five million square feet of office building on sixteen acres and it will be hard to believe that this site which is what MetroTech looked like in the mid '80's, is currently this. What was involved to make the before picture and after picture was a tremendous relationship with the City Government and communities. I've lived through the development of MetroTech and worked with all aspects of government. Many people in this room I have worked with and I can tell you that the complex legal structure, financing structure the incredible involvement of the New York City Economic Development Corporation and mayor's office was critical to the relocation of over a hundred and sixty businesses and residences to make MetroTech possible. We put in secure systems, telecommunications infrastructure and created a new corporate campus environment. Taking the worst crime district in Brooklyn and making it the best, having the least crime in the borough today.
This project couldn't have happened without the vision of Howard Golden, Mayor Koch and Alair Townsend, Marilyn Gelber, Bruce Ratner and some of the CEOs of the corporations that were the pioneers at MetroTech. Richard Warshauer, who runs our Leasing Department at MetroTech will run you through now some of the buildings we have and existing tenants.
WARSHAUER: Thank you. My name is Richard Warshauer. I run the leasing at MetroTech. And coming in at the tale end of the development as I have, it is a little humbling. I feel like Isaac Newton who once observed if you are seeing further than others it is because you standing on the shoulders of giants. And I've been privileged to be put in the position of renting space to new buildings, of which are on the development the now. 9 MetroTech South, that is the Fire Department and the upper portion of 330 Jay Street. 123 MetroTech. This gives you a snap shot of our current tenants. As you can see, this is the cream of the crop. Class A corporate tenants of America. Pierrepont was our first building. (inaudible) there put up before the MetroTech project.
One of the many things people talk about today are the development of smart buildings. We were building smart buildings eleven years ago. And indeed it was a little smarter than we thought. The years at the time specified what the developers thought was a ridiculous amount of electrical power. Turns out today that is instead of twice the amounts necessary at maximum, it is four times the amount, the technology being such as it is.
The major tenants here, of course, is Morgan Stanley. This is one of their most important nerve centers. A worldwide recovery disaster center and all their top officers from the Chairman of the Board were down here on December 31st to safeguard operation into the new millennium. This is a good shot of the campus. The first building opened 1990 which was number 2, which is the second building on your right. It is the executive headquarters. Not in the back office, mind you, of SAIC, which is the back office of the New York Stock Exchange. This is a very -- it's the Fort Knox of technology. It is built in a manner so that it can be isolated from all utilities a weeks time and still run.
Next door on the right is the headquarters of Keyspan which is the Brooklyn Union Gas building within the building and on the lower floors it is occupied by one of the major clearing centers for Bear Sterns. The next building was E-911. This is a building against Fort Knox of technology both structurally and from an automation standpoint. The structural steel is built in such a way that God forbid a terrorist can surmount the blocks and take out a column, the building's integrity would not be in peril. It is also the major redundancy for the city's computers as well. Every police car is dispatched in this building, the City of New York.
Our next building is the Executive Headquarters Fire Department, which wraps a city landmark which is the students center of Polytechnic, our development partners. The firemen are the happiest of civil servants having relocated from a roach ridden slum a few blocks away. For those of you who are real estate professionals or who's company (inaudible) space it is no secret that there is an enormous shortage of space in the City of New York and in Downtown Manhattan, particular from where most of our tenants are likely to come.
This is the courthouse building. This is a mixed use building. The lower portion some eighty percent will be devoted to needed expansion of the Supreme and Family Court, which to those of you who are knowledgeable now operate in squalor. The upper floors, however, will be for third party private use and there will be a separates entrance just near the hotel about approximately two hundred thousand feet of what will be the finest office space in Brooklyn and also the best views.
This is the latest rendering of our last building to be put on the campus. We call it 9 MetroTech South. It is a half a million square foot building. A real work horse. The floor size would approximate forty-five thousand feet. We are in a discussion now with a number of tenants who are seriously considering relocating here. As all of MetroTech this property will be at the cutting edge of technology as we have always maintained throughout our history.
Again, many of the concepts be it fiber optic, be it redundancy, these are things we have been doing now for over eleven years. So it is hardly new to us. We would love to entertain your questions but we know we are running a little behind. So thank you for your attention.
REDIKER: Just before we move on to the next aspect, one of the things I wanted to mention is the trend that MetroTech over the last five years of having single purpose government buildings going up on campus. We now have two buildings left at MetroTech. 9 MetroTech South and 123. Both will be going into the grounds over the next six months. And I've been asked repeatedly why we have not been able to attract large corporate tenants to MetroTech. Why the trend has been moving toward government sector tenants, and quite simply the answers is we are not competitive anymore with the Stanfords, Westchesters and New Jerseys of the world who are pulling our tenants away from Manhattan to what used to be an outer borough presence in Brooklyn is now expanding. And not only are they going to New Jersey, they are going to Stanford Connecticut and we are moving to Westchester.
I think it is critical that the government move forward with the developers of MetroTech and all the other developers in Downtown Brooklyn to create the level of partnership that existed in the late '80's. Without that cooperation between the private sector and government we'll have a very difficult time competing with the Stanfords, Westchesters and New Jerseys of the world. And I look forward to working with each and every one of you to recreate that feeling of cooperation so we can continue to develop in Downtown Brooklyn. Thank you.
WOLLMAN: I want to tell you a little about Richard Warshauer. Vice President of leasing of Forest City Ratner Company. The developer of MetroTech Center. He is responsible for marketing and leasing more than seven hundred thousand square feet of new office space as well as the space of the building at
9 MetroTech South and 12 MetroTech Center. So, thank you both for that overview of the work of Forest City Ratner in bringing to life the ideas of MetroTech Center.
To end this first half, the case study of MetroTech Center, I'd like now to welcome Michael Wise, the Director of the MetroTech Business Improvement District and the current President of the New York City BID Managers Association; BID meaning Building Improvement District. Mr. Wise previously was Chief Administrative Officer and Deputy Commissioner for Administration at the New York City Department of Transportation and was one of the founders of the Flatbush Development Board Number 14.
WISE: Thank you. Good morning everyone. We are still in the morning. I brought a power points thing just to show you at MetroTech the BID has also gotten high tech. But I am not so sure I'll use too much of it because one of the advantages of being last is to hear what everybody else said and don't want to repeat yourself. So, in fact, some of what I had prepared I think has already been stated.
I would first want to echo though, the fact that it took a lot of very dedicated people in order to get Downtown Brooklyn to the state it is in today and certainly all those names that you mentioned have been part of that family. It is an honor to be part of them and to have so many of you here today. Harvey Schultz, we heard about the borough president, but Harvey was there when the vote came into the Board of Estimate. The borough president came in and sat and Harvey was with him and those kinds of things don't just happen. There really has been a passion for doing all this.
In order to contribute something extra to the discussion, I thought as I heard the area speakers, to give you a little information about the Business Improvement District. Alair, I think made a statement of how the fact that there could be a Business Improvement District in the early '90's allayed many fears about what Downtown Brooklyn was and how the investment would be received by their employees. A very important fact. As the bid came into existence, MetroTech itself, particularly the properties owners, voted to assess themselves a significant extra fee over and above their real estate taxes in order to create this bid. In fact the MetroTech bid was -- I believe it is the fourth largest budget of any Business Improvement District in all forty-one in the city at about a two million dollars level.
In addition to paying that extra assessment, they also have agreed, those organizations that (inaudible) on the commons which is that three and a half acre open space to pay an additional fee over and above the bid assessment for the maintenance of the commons in an organization known as Commons Associates. So that was a standing commitment on the part of the private sector and public tenants.
For example, Polytechnic and LIU and New York Tech who make a contribution
to the Business Improvement District in order for our district to be funded
and to carry out the activities it does. Now first generation bid activities
really had to do with what you heard which was clean and safe.
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