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February 14th, 2010, 03:04 PM
About New York

A War Over an Agency That Built a Honey Pot

http://graphics8.nytimes.com/images/2010/02/14/nyregion/14about_CA0/14about_CA0-articleLarge.jpg Marilynn K. Yee/The New York Times
CASH COW Battery Park City, home to nearly 12,000 people, has generated $1.8 billion for the city in the past 22 years.

By JIM DWYER (http://topics.nytimes.com/top/reference/timestopics/people/d/jim_dwyer/index.html?inline=nyt-per)

Published: February 12, 2010

The foot of Manhattan Island has grown by 92 acres over the past four decades, the shoreline expanded with dirt from the excavation for the World Trade Center and tons of sand dredged from the harbor.

Those sand piles have become one of the world’s great honey pots: Battery Park City, home to nearly 12,000 people and the World Financial Center. It has churned out $1.8 billion for the city in the past 22 years, money that has been used to build affordable housing in the five boroughs.

Now, war has broken out at, and around, the agency that built it all, the Battery Park City Authority (http://www.batteryparkcity.org/page/index_battery.html).

The chairman abruptly stepped down on Tuesday. The vice chairman, who was one of the founders of the authority in 1968, says that it no longer needs to exist, and certainly not with a budget of nearly $30 million. But his term is up, and he will probably soon be replaced.

The authority has $400 million in funds that normally would be available to the city. The governor wants half for the state budget. The mayor is negotiating. So is the city comptroller.

Hovering above these cosmic matters is a yearlong investigation by the state inspector general into what, apparently, were many false accusations about executives at the authority, including a classic showstopper: that they rented a two-bedroom “love nest” at a cost of $50,000 a year. In fact, the apartment was a working model for green technologies, with all entries logged in a book and recorded by surveillance cameras in the hallways.

Nevertheless, such investigations belong to a genre: There were questions about cronyism, a romantic relationship, the use of the authority’s cars, business lunches and staff picnics where a hired clown was deployed using authority money.

What did it all add up to?

Well, the amount that the authority has spent on the law firms that it hired to represent the employees under investigation — $500,000 — is more than all the questionable expenses combined, according to Alexandra Altman, the agency’s general counsel.

A draft of a report by the office of Inspector General Joseph Fisch says the authority had a culture of entitlement that was not typical of government agencies, paying, for example, for too many lunches. The authority said it had been successful precisely because it operated like a private business, with New York City as its single shareholder.

But officials conceded that certain expenses looked questionable in an economic downturn. James E. Cavanaugh, the president of the authority, said that he had cut the budget for meals, travel and community events to about $27,000 for this year, down from $61,000 in 2005.

Some of the agency’s responses to the draft question whether a final report is even worth publishing, given the “flyspecking” nature of the findings — including details on money spent at the annual picnic for a cotton candy machine and a softball umpire.

Mr. Fisch’s office declined to comment on the report because it was not final.

There are far bigger questions at stake.

The 92 acres of landfill are almost completely built now, with commercial office space, apartment buildings and a few town houses. There are also 32 acres of parks, public schools and an esplanade.

“The job of building it out is finished, but we’re still spending $30 million a year at the authority,” said Charles J. Urstadt, the vice chairman and the board’s original chief executive. “You don’t need the authority anymore.”

Mr. Cavanaugh said the authority would be finished with its major construction projects within two years. “Then we are built out, and that leaves people assessing what our future should be,” he said. “It’s a legitimate question.” He is studying how much would be saved if the city took over the operations, but said that residents were likely to be concerned that the facilities would not be maintained as well.

Should the authority exist in perpetuity? “Why not?” asked Larry Schwartz, top aide to Gov. David A. Paterson (http://topics.nytimes.com/top/reference/timestopics/people/p/david_a_paterson/index.html?inline=nyt-per). “It has an excellent reputation.” When the Legislature returns, Mr. Schwartz said, the governor will nominate four new board members; two have already been selected: William C. Thompson Jr. (http://topics.nytimes.com/top/reference/timestopics/people/t/william_c_jr_thompson/index.html?inline=nyt-per), the former city comptroller and an unsuccessful Democratic mayoral candidate, and Fernando Mateo (http://topics.nytimes.com/top/reference/timestopics/people/m/fernando_mateo/index.html?inline=nyt-per), a businessman.

Mr. Urstadt, who first worked on Battery Park City during Gov. Nelson A. Rockefeller (http://topics.nytimes.com/top/reference/timestopics/people/r/nelson_aldrich_rockefeller/index.html?inline=nyt-per)’s administration and was appointed to the board by Gov. George E. Pataki (http://topics.nytimes.com/top/reference/timestopics/people/p/george_e_pataki/index.html?inline=nyt-per), may end up being bounced by one of the new appointees.

The city has the option to buy Battery Park City for $1, although this would require some complicated arrangements over existing bonds. Even so, Mr. Urstadt argues, the transaction could ultimately be worth as much as a billion dollars to the city.

No, Mr. Cavanaugh said, probably not that much, but surely hundreds of millions. A spokesman for Mayor Michael R. Bloomberg (http://topics.nytimes.com/top/reference/timestopics/people/b/michael_r_bloomberg/index.html?inline=nyt-per) said the city would not be drawn into a discussion about the proposal’s merits.

“I don’t know why you would leave that much money on the table,” Mr. Urstadt said.

E-mail: dwyer@nytimes.com


Copyright 2010 (http://www.nytimes.com/ref/membercenter/help/copyright.html) The New York Times Company (http://www.nytco.com/)

February 16th, 2010, 09:49 AM
Wow, they can "buy" a sucessful buisness for $1, or leave it and let it earn them $400M a year?

Greedy bastards. Leave it well enough alone. Government has shown that it cannot handle things like this well. Something that makes too mucjh money always gets over-alloted very quickly.