March 4, 2006

RIOC Calls Public Meeting to Clarify Its Real-Estate Moves, Then Says It’s Mostly Secret
by Dick Lutz

The Roosevelt Island Operating Corporation (RIOC) invited residents to a meeting two weeks ago (February 16) with a promise of additional information about its recent real-estate offering, a group of five RFIPs (Request for Initial Proposal) for Island properties. But residents who attended expressed disappointment and, in some cases, outright anger that the information provided was little more than the small amount that had been made public at RIOC’s last Board of Directors meeting and reported in the October 5 and 22 issues of The WIRE.

Residents complained that they were being asked to comment on plans for the five parcels without knowing what plans had been proposed by developers. RIOC representatives said, in effect, that the proposing developers had been promised that their ideas would be kept secret.

The result was a clash between – on the RIOC side – RIOC President Herb Berman, RIOC Board Chair Deborah Boatright, RIOC Board Real Estate Committee Chair Deborah Beck, and RIOC’s commissioned real-estate consultant, Paul Mas – and, on the resident side, just about every resident who chose to rise and ask the "clarifying questions" that Boatright and Berman said the meeting was set up to answer.

Berman and Boatright actually defined the meeting two different ways. Initially, she told residents, "You’re here to ask clarifying questions." But when residents’ questions attempted to probe for additional information RIOC was not willing to dispense, both Boatright and Berman reversed field. Boatright said, "The whole entire purpose of this meeting was to have people share their views as to what they would like to see at the five sites. It would be helpful if you would confine yourself to that purpose."

Immediately afterward, as Rivercross resident Robert Chira, an attorney, attempted to raise a clarifying question to commissioned consultant Mas, Berman cut him off, "Once again, that’s not an appropriate question."

Berman deals with the matter in his column in this issue, as does Chira (letter), and Residents Association President Steve Marcus (column).

The five properties in question are:

• The northern three acres of Southpoint Park

• The Tram station area, which RIOC’s RFIP suggested might be ideal for "big-box retail."

• A parcel south of Lighthouse Park and east of Coler Hospital

• RIOC’s 60% share of Motorgate

• All the Island’s retail space except for what’s in Southtown.

RIOC has maintained that the RFIPs are simply to test the waters – not to promise developers that the sites would actually be marketed. As real-estate chair Beck put it, "The reason we want input from the market for these sites was to see if there is interest out there to provide additional [income to RIOC]." Nonetheless, RIOC charged developers $4,000 to $8,000 to put forth their ideas for the five sites.

Objecting residents expressed fear that RIOC is preparing to allow development in Southpoint Park, gut the Island’s retail locations in order to put them under a master tenant (separate report), allow higher rents in Motorgate by privatizing it, increase demands on an already-stressed transportation system by adding residential housing (at Southpoint and the northern site) beyond the six more buildings of Southtown and the Octagon population about to be added, and turn Main Street into an even busier thoroughfare by putting a "big-box destination retail" enterprise at the Tram station site. In the meeting and elsewhere, residents have voiced a fear that the Pataki administration wants to milk Roosevelt Island for every possible reward for political supporters before his administration leaves office.

One observer at the meeting said it seemed that Mas was ready to reveal more detail, frequently looking to Berman and Boatright when residents asked for more information, but then providing only a little more than already known.

As soon as residents started asking questions, Berman started rejecting them as out of bounds:

Matthew Katz, former Residents Association President: "Much of what you’ve presented this evening has been presented at RIOC Board meetings and reported in The Main Street WIRE. I was wondering if you could give us specifics on the 21 proposals."

Berman: "That’s not a clarifying question, Matt. That’s something that will ultimately be done, but not at this juncture while it’s still within the Board’s purview for negotiation and contemplation."

Katz went on to raise a question about the offering of space at the northern end of Southpoint Park: "My focus this evening is on what you are calling the ‘City Hospital site’ and what, for five years, I’ve called the northernmost three acres of Southpoint Park. For five years, I’ve been part of a process... to come up with a conceptual plan for those 13 acres, not just the southernmost ten acres, but the 13 acres, which includes those three acres encompassing 23 percent of the entire property. [It] was obvious from the git-go [based on surveys done by the Trust for Public Land] that no one wanted a ‘commercial crescent,’ which was how the potential was presented to the community, on the park. What people wanted was a park. What was presented in this room by Ms. Boatright’s predecessor [as RIOC Board Chair], Mary Beth Labate, was a promise that that would be a park and nothing but a park. It was understood by the community that it would encompass all 13 acres." Katz continued by summarizing $12 million committed for park development (see the January 28 WIRE on-line at nyc10044.com). "I’m wondering if you could give us a bit more information about – when you talk about ‘the City Hospital site,’ specifically what is it that you’re envisioning putting there that would not be specifically a park?"

Berman responded: "The RFIP was issued for the purposes of getting responses. It will ultimately be the Board’s decision if they choose to issue an RFP [request for proposals] on that site and, if they do, what purposes they may affix to the RFP... No conclusions have been reached as yet."

Katz: "But what I’m hearing is that something is being considered for the ‘City Hospital site,’ most likely a residential property of some sort, but you can’t go into detail."

Mas started to respond, but his voice trailed off. Katz asked, "You couldn’t clarify it for us?"

Berman responded, "No. Again, I think we should be respectful of the process, and the Board still has to contemplate the specific proposals..."

But later, responding to a question about the site, Mas seemed to indicate that past promises of "park only" were history. It came up when Cornell professor Tom Templeton said, "I’m curious that you continue to call it ‘the footprint of the City Hospital’... [one] rationale is that maybe you thought that because there was something built there before, it’s logical that there should be something there in the future. But the overriding consideration is that it should be a park."

Mas responded, "The rationale is that there was a building there. The area of Southpoint, just like the legislation [restricting its use to park purposes], is subject to interpretation."

The second questioner, Historical Society President Judith Berdy, ultimately gave up in frustration:

Berdy: "Did you get any proposals for Blackwell House?"

Mas: "Well, they could only respond to the whole package." (Blackwell House would be part of a master-tenant retail-space arrangement.)

Berdy: "I’ve lived here 28 years, as you know, and I..."

Mas: "I think I know what you’re going to say. I don’t mean to cut you off. But let me just explain as it relates to Matt’s question, too. When we put out the RFIPs, as Herb said, they’re informational, to begin to understand what options you might have, allright? Now, when we put out the RFIP for the City Hospital site the legislation was attached to that – that, you know, some people say it’s clearly this and some people say it’s clearly that. But it’s just been put out there, that’s all, and we’re soliciting the market for ideas, and trying to understand what values can be achieved, and what kinds of uses, and what trade-offs there might be in the process of doing this. Now, with respect to the retail, somebody taking over the retail might provide the funds to restore a landmark building. I mean, you know, when we look at these things in terms of what people propose, all right, it may also involve needs that the community has that they can provide."

Berdy: "At this point we need a pizzeria. I’ve been very frustrated by this entire process in that every single thing, every meeting you’ve had, everything to do with this has been secret, in executive session, away from the public, the public not involved, you people vanishing downstairs at meetings, and it makes the community – not the right word, but – suspicious, because we don’t know what you’re cooking in the oval room of the church and, you know, a public benefit corporation is public, and we’re not benefitting. I feel that you went to all the industry..."

Berman (interrupting): "Could you wrap up, Judy?"

Berdy: "I haven’t started yet."

Berman: "It’s been three minutes."

Berdy: "It’s OK."

Berman: "It’s not OK. Please wrap up, you have a few more minutes."

Berdy: "Mr. Berman, there’s no one else on line. Do you see someone else on line?"

Berman: "There’s someone else on line. Please wrap up."

Berdy: "Forget it. It’s not worth my time to waste with this."

Berdy’s reference to the community’s need for a pizzeria referred to RIOC’s closure of the Capri Restaurant about a month ago for non-payment of rent (see separate reports). Her reference to RIOC secrecy in real-estate deal planning was echoed by other questioners speaking later – by the next resident, in fact. Sherie Helstien, secretary of the Residents Association, an edge of anger in her voice, expressed her upset over the minimal publicity RIOC gave the meeting, but particularly over the restricted information dispensed.

Helstien: "We worked very hard to get people to come to this meeting. We were told that you were going to discuss the RFIPs that were put out. There have been pieces in The WIRE about these RFIPs – exactly what you’ve told us so far, so you’ve told us nothing, and my question is, what is the point of having a two-hour meeting with the community that is very, very concerned about many of these proposals – the commercial space in particular, but even more so, Southpoint Park? Why should we trust this process in any way, shape or form, where all we know is what we already knew. You haven’t told us anything about a ‘big-box’ store in a one-street community. You haven’t told us anything about what’s being proposed for Southpoint Park, except that you’ve alarmed a lot of people... You see, the minute you say, ‘accepting ideas,’ that raises alarm bells...

Berman: "Could you wrap it up, please?"

Helstien: "Yes. Clarify for me what exactly are the proposals you’ve received and why can’t we know about them tonight, because how can we possibly make any comments on any of this either by e-mail or tonight? There is no way. What is a two-hour meeting for? We have no idea from these dumb pictures that you’ve put up here. We know where the [spaces are]. You have to clarify. When you say you’re going to clarify, you need to clarify. You need to give us details. You need to tell us what was in those 21 proposals, because the last thing we’re going to find out is you’ve given all of this stuff to your Board, they’re going to decide, we’re not going to be able to make comments, because how can you make comments on something you can’t see and can’t know more specifically about – and then we’re going to end up with whatever you guys choose for us, and you’re going to say, ‘We did a meeting, we had a public meeting.’ We’ve got the public here... I’d like to know what kind of square-footage cost you’re going to charge for the commercial space. I’d like to know what you’re planning for Southpoint Park, which has $12 million already dedicated to a park. I’d like to know if you did get a proposal for a ‘big-box’ store on this Island – a Target, a Walmart, a K-mart, whatever. You can tell us that and you should tell us that this evening. If you can’t, what is the point of a two-hour meeting? You’ve wasted all of our time if you can’t tell us."

Residents attending the meeting applauded Helstien’s comments, but Berman responded by calling on the next questioner. Helstien continued: "So you’re not going to respond? Is that correct? You’re not going to respond to this tonight. Is that correct, Mr. Mas?"

Mas: "Our recommendation is... When you run an RFP [Requestion for Proposals] process, especially in public, the process is a lot more robust. What I mean by robust is that people who are proposing things give renderings, they give detailed studies, they analyze whether what they’re proposing actually fits in to what the site or asset is. That wasn’t this process. This process was not an elimination process. Nothing was being selected. The whole point of the RFIP process was to see what level of interest was out there in the market, and how the market valued it, then to begin to determine whether it made sense to say, ‘Maybe we should go to a final RFP and ask people to do that more robust proposal.’ That, I would presume, would then be made public."

Helstien: "So it’s after the fact, after you’ve already selected what’s to be done."

Mas: "Do you want me to finish? Or do you want to talk?"

Berman: "Well..."

Mas: "The point of an RFP process in the public sector, which is, by the way, now law, I would presume what RIOC would do, what we would recommend they do, is look at the best proposals, no matter what they are. Hopefully, you’ll have a lot of them, and hopefully those developers who are now going to spend – or the users or the investors, who you are asking to spend a lot of money and time to present their ideas – would then be presented in the proper format. We have no renderings. All we have are some concepts that people have."

Helstien: "And why can’t you tell us what those concepts are?"

Berman then interrupted: "Excuse me," he said. Then, sotto voce, "This is ridiculous." But Helstien heard him and responded.

Helstien: "No, it’s not ridiculous, Herb. You have a community who has come to a meeting."

Berman: "Miss Helstien, I am not engaging in conversation with you."

Helstein: "I know. You don’t."

Berman: "You’re right. I won’t and I will not. You’ve now occupied about ten minutes of time..."

Helstein: "Because these people are here waiting for clarification."

Berman: "I’m asking you as a courtesy to the people behind you to please conclude. I’ve given you more than enough time..."

Helstien: "I’m waiting for the response, and I think if you ask the people here they’ll want a response."

At that point, residents in the audience started to applaud, but stopped when Boatright began to speak. She redefined the purpose of the meeting, giving up the idea of clarifying questions: "I think it is important to know what came in on the RFIP submissions, you know. It was also important that we had this open forum to hear what you had to say in terms of comments about the particular parcels. This was an open forum not to sit and judge the process that we went through, OK? Because it was a process to sort of test the market to see exactly what was of interest on this Island, but this evening was an opportunity for you to come and to share your ideas about what conceivably could be some ideas about submissions coming in, so that your particular interest is to mar the process that we went through. It was not the formal process. The Board has not made a decision as to what’s going forward. This is the community’s opportunity to either say, ‘these are the five or six parcels,’ this is what we would like to see here. This is the opportunity to say that."

Helstien: "OK, here’s two things. We don’t want anything on the park but a park. Do I have some agreement in the community on that? [APPLAUSE] OK, are you taking notes, Mr. Mas, are you taking notes? $12 million has been dedicated to making the park."

Berman: "Miss Helstien..."

Helstien: "And then the other thing is we need a credit union, we need another financial institution where Montauk used to be. I understand you’ve discontinued your discussions on that... We don’t have another financial institution, which we sorely need."

Berman: "Let me just say... Apparently, certain people have come here with the deliberate intent to traumatize this meeting." (That brought laughter from part of the audience, leading Berman to say:) "Why don’t you be quiet and let me talk? ...to traumatize this evening and traumatize their neighbors. The whole entire purpose of this meeting was to have people share their views as to what they would like to see at the five sites. It would be helpful if you would confine yourself to that purpose. That was the purpose of this meeting. Thank you."

After several Island merchants stepped to the microphone to ask that they be given leases on their retail properties rather than being forced to operate month to month (separate report), Residents Association Vice President Margie Smith stepped into the discussion: "We really expected specifics – the kind of stuff we can comment on. You want to know what it is we’re looking for? We’re looking for the General Development Plan (GDP) to be observed as it was written. None of this [the RFIP offerings] was in the GDP. What people don’t want is piecemeal development, which is what we consider this. Now that we know we’re [financially] self-sufficient, we know that there’s no rush to this. You can sit down with the residents, you can tell us how much money we do need or don’t need in order to keep running this Island. I think we have enough money. I don’t think we need to give up any more open space. I don’t think we need any more big buildings."

Smith continued, "The last thing that I think makes this whole thing a little disingenuous is it was not advertised. Everybody here knows you have swimming at sportspark, everybody knows that there’s CERT training, because RIOC put out big fliers, colored things, they were in Motorgate, on the buses, on the kiosks – they were everywhere. Today we got one 8.5 by 11 [poster] on the kiosks, and one thing on the web. If you really, really wanted our input, would you do it that way?" Residents applauded.

Rick O’Connor, who identified himself as a resident of 30 River Road, asked, "Is there a vision or a model that you can point to that you envision Roosevelt Island one day looking like?" He probed, looking for some reference point, but Berman responded in more general terms: "This is not an overnight process. There will be further discussions within the community. It is a Board decision, but I assume and believe that the Board would want further community input before making a decision."

Somewhat earlier, Joyce Mincheff, a former member of the Residents Association Common Council, who identified herself as a real-estate professional, castigated the process and similar RIOC exercises of the past. That and other remarks brought a response from RIOC Board member and real-estate chair Deborah Beck.

Mincheff’s remarks: "In taking on the development of this Island, the State of New York committed to [the terms of] the General Development Plan." The State has broken the GDP repeatedly, she said, continuing, "It’s the Roosevelt Island Operating Corporation trampling on our rights here. We are entitled to the protections of zoning. It is tantamount to the emperor’s new clothes. Is there anybody here who doesn’t know that what you’re doing up here is simply a sham, dismissing our rights as taxpaying citizens for appropriate zoning and planning in this community? I beg that all of you go back to the GDP, and you’ll see that you have no right to issue any kind of request for any kind of information or proposals or anything of that sort because you are required by the GDP to develop in Southtown. You blew the chance to support the infrastructure of this community in a sweetheart deal to the developers of Southtown. There isn’t anybody in this room who isn’t keenly aware of that. And now you’re struggling to come up with other ways to provide income for this community so that you don’t have to go begging to the State of New York. It’s incumbent upon you to think about the nature of this community. We have elderly people... we have children who need parks because this is it for them – they can’t go two blocks down or three blocks over to play in the park because there is river there. We need appropriate planning in this community. We can’t have a big-box store. We can’t be dodging traffic. People who are elderly and disabled cannot be dodging cars coming down Main Street to get to a big-box store, and the nature of what State involvement we really should be having in this community is figuring out a way to lease these spaces so that our community is provided with service that we’re entitled to. We’d all like to walk out of here, go across the street to the pizzeria and have a slice of pepperoni, but because of RIOC’s deficiencies in recognizing that you should be providing leases based on a percentage of profit rather than on an idiotic square footage that’s not supported by the volume of population on the Island, until you can provide appropriate services... You cannot even do that right and yet you want us all to sit here pretending that you’re capable of providing adequate development on Roosevelt Island. Why should we think that you’re going to do anything different from what you’ve done for the last 30 years?"

Mincheff’s remarks drew sustained applause from the residents attending.

Later, Beck tried to explain the process. Her remarks:

"I feel like I’m jumping into a hornet’s nest here. The reason for this exercise is very straightforward. Roosevelt Island’s infrastructure – its roads, sidewalks, church plaza, the public buildings – all of those things require maintenance, improvements, and restoration.

"When I became a member of the Board of RIOC less than two years ago, we faced an enormous deficit. There were things that had happened in the way deals were made on Roosevelt Island that I don’t think any of us would like to see again. That does not mean, however, that we are in good shape going forward. What it means going forward is that right now we have money to do certain things, but we don’t have money to repair our seawall in the way it needs to be done, not necessarily tomorrow but over the next several decades. We don’t have enough money to repair or replace our roads, we don’t have enough money to do many of the things we all take for granted, because we live in the City, and the City takes care of it. Roosevelt Island is a public authority of the State of New York. The State of New York does not take care of Roosevelt Island.

"There was a time when Roosevelt Island was very favored and received a great deal of fiscal support. That went away in the late ’90’s, and we lament that, but that is the sad reality. The problem that we’re facing as RIOC and the problem that I face, as chair of the real-estate committee, is how do we determine what kinds of money we need and what our sources will be for those funds. Our sources are inadequate, as of today, projecting on what we have in income-producing properties. We will have to do something with our resources to produce additional revenue so that things that were neglected in the last decade can be rectified and we can begin to have an Island that we’re all very proud of and can continue to be proud of. That is the dilemma. Where is the money? Is it sufficient now? My understanding is no, that we don’t have enough money... The only one that can take care of it is RIOC. RIOC is the beginning and the end of the revenue source. So the reason we want input from the market for these sites is to see if there was interest out there to provide additional funds so that we could restore the Island and maintain it properly. We’re having this meeting tonight to hear from all of you.

"And I’ve taken notes... Frankly, in the real-estate committee, we discuss these things. We don’t have all the answers tonight, but we do know that we have to find out, and when we know that answer going forward – how much money we need to maintain this Island going forward – then we’ll know what, if anything, we need to do with the three development sites.

"What we also know is that we have not been able, as an organization, to maintain Motorgate. There isn’t the staff expertise to run Motorgate. We know there is a concern about costs for parking. We’ll take that into account. This is a resource that is already built. We’re looking into it. It has leaks, it has a number of problems. We will look at the responses. Hopefully, someone will come along and say, ‘Yes, I will maintain this property. I will restore it to its proper condition, and I will maintain it in a way that the residents can afford parking.

"The same is true of the stores. We have empty stores, we have merchants who have not been able to live up to their ability to pay their rent, and we have merchants who are very concerned about their future because they don’t have leases. What we need is professional management of our retail, and we are looking at that issue now. That is a very real concern that we have.

"Someone mentioned the credit union, or a banking institution. Just so you know, historically, when we lost our last banking institution, the banking institution that came up to the plate... said we will come to Roosevelt Island, but we don’t expect to make money here, and therefore we don’t want any competition for the duration of our lease. That is the nature of the lease with the current bank. There are certain situations on the Island that RIOC is, in effect, stuck with, not because we don’t want to do what’s best... I mean, I live here. I’ve lived here since 1977. We’re not trying to do things that are going to create a situation that makes life worse – I hope, but we are going to try to make a situation where there are the resources available to enhance what we already have, improve it, maintain it properly, and also bring to you all what it is we really need development-wise on the three sites... in order to get that revenue stream we need.

"Why are we going through this exercise? To try to find revenue streams so that Roosevelt Island can do what needs to be done."

Beck was applauded briefly.

Berdy returned to the microphone for the final word: "You’re lucky the community kept its cool tonight... We are so blessed with people who give a damn..."