Volume 21, Number 42 | The Newspaper of Lower Manhattan | Feb. 29 - March 6, 2009
B.P.C. member warns Paterson plan threatens credit rating
By Julie Shapiro
At least one member of the Battery Park City Authority board is objecting to Gov. David Paterson’s grab for the authority’s money. Paterson wants to the authority to give the state $270 million, mostly from issuing bonds, to fill the state’s budget gap.
Robert Mueller, a B.P.C.A. board member, called the governor’s request “a very serious thing” at the board’s meeting Tuesday.
“I think for sure our credit rating is going to go down [if the authority complies],” Mueller said. “And I think for sure it’s going to inhibit us from going back to market [to borrow] any significant amount for the foreseeable future.”
Mueller said the state and city seem to care more about balancing their budgets than they do about the future solvency of the Battery Park City Authority. It is unusual to hear members of the authority board criticize the governor, since he appoints them and they usually follow his lead. Mueller’s term on the board expires June 2010 and like most members, he was originally appointed by Republican Gov. George Pataki.
Paterson, a Democrat, announced his plans at the end of last year to use the authority’s money to close the state’s deficit, but the proposal is far from a sure thing. Any decision about the authority’s money must be made unanimously by the mayor, the city comptroller and the authority’s board. Democratic Comptroller William Thompson and Mayor Mike Bloomberg, now an independent, have both come out against Paterson’s plan, while the authority’s board has not taken a formal position.
“No, you can’t raid this fund,” Thompson said during a rally at City Hall last week, pretending to address the governor. “Keep your hands off this money.”
Thompson began advocating for the Battery Park City Authority’s surplus to go toward affordable housing in the city in 2005. Four years ago, Thompson convinced Bloomberg to support putting $130 million in B.P.C. money for affordable housing and Pataki signed off on their agreement. Thompson and Bloomberg now want to put an additional $400 million in B.P.C. money toward affordable housing, but Paterson’s proposal put that plan on hold.
Brad Lander, director of the Pratt Center for Community Development, said the situation now amounts to a standoff: The state can’t use the money without the city’s approval and the city can’t use it without the state’s approval.
“It’s like a game of chicken,” Lander said.
Meanwhile, the Battery Park City Authority’s surplus revenue is quietly accumulating in an untouchable fund, waiting for the parties to come to an agreement. The fund now contains $215 million.
The money from that fund has always gone exclusively to the city, never to the state, Jim Cavanaugh, B.P.C.A. president, said a few weeks ago.
Jeffrey Gordon, a spokesperson for the state’s budget office, said in an e-mail that Paterson would work with the city to find a solution for the B.P.C. money. He added that Paterson put $104 million for affordable housing in his executive budget.
Although the Battery Park City Authority is technically one of the three parties to decide how the B.P.C. money is used, chairperson James Gill said he is waiting for the city and state to come to an agreement.
“We are not about to tell them what they ought to be doing,” Gill said during Tuesday’s board meeting. Once the state and city present a united plan, “then it will be incumbent upon us to do the right thing regardless of what they want,” Gill said.
While Gill’s comments implied that he would not automatically follow the state’s lead, he also said earlier in the meeting that “the idea of us operating independently of the state is silly.”
The authority’s money comes from property owners’ ground rents and from civic facilities fees on top of the property taxes owners pay through PILOTS (payments in lieu of taxes). Each year, the authority’s surplus from the PILOTs goes into the city’s general fund, while the surplus from the ground rent goes into a holding account. That is the account with $215 million that’s only accessible by joint agreement of the authority, mayor and comptroller.
The governor’s plan would take $20 million from that holding account for the state budget and would also have the authority borrow an additional $250 million for the state budget by issuing bonds. The authority would then spend the next 20 to 30 years paying off that loan, shrinking its surplus, Thompson said.
Mueller, the authority board member, was concerned that taking on so much debt would limit the authority’s future options.
“Are we in a financial crisis? Absolutely,” Thompson said at last Friday’s rally. “But then again we are in a crisis when it comes to affordable housing.”
Bertha Lewis, C.E.O. of ACORN, got the crowd of activists whooping and chanting on the City Hall steps as she called on Paterson to back off the B.P.C. money.
“At first, the city used to snatch the money,” Lewis said. “Now the state said, ‘Hey, that looks like a good honey pot to me, so maybe I’ll do it.’ Well, enough is enough.”
One moment of awkwardness at the rally came when a reporter asked about the mayor, who was not present. Thompson is challenging the mayor for reelection in 2010.
“I know we reached out to him,” Thompson said, turning away from the microphone toward Pratt’s Lander, who stepped in and affirmed that the mayor and comptroller were in agreement.
The mayor’s office later issued a statement that did not directly condemn the governor but said the city wanted to continue using the B.P.C. money for affordable housing.
Assembly Speaker Sheldon Silver previously said he would not oppose the governor’s use of B.P.C. funds because it was a budget emergency.
As Friday’s rally concluded, the housing advocates waved their signs and shifted from one foot to the other to stay warm. Over and over, they chanted, “We want it, We need it, Affordable housing now!”