Rezoning New York’s Industrial Waterfronts

Event - March 2003

Rezoning New York’s Industrial Waterfronts

CUF Research Director Jonathan Bowles moderated this panel discussion on rezoning the city's industrial waterfronts, co-sponsored by the Center for New York City Affairs at New School University.

Tags: economic growth boroughs brooklyn

Rezoning New York's Industrial Waterfronts: Job Displacement or an Opportunity to Solve the Housing Crisis?

Jonathan Bowles: One of the central parts of Mayor Bloomberg’s housing plan is, according to the Mayor’s own words, to rezone abandoned waterfronts and underutilized manufacturing areas for mixed residential and commercial use. He’s asked the City Planning Commission to move forward aggressively with rezoning plans in several neighborhoods, including Port Morris, Morrisania, Greenpoint, Williamsburg, Long Island City, East Harlem, Jamaica, and Park Slope. We all know there is a serious shortage of housing in the city. Many experts believe the City’s industrial waterfronts represent the best opportunity to create new housing development, and the city isn’t taking full advantage of its enormous waterfront, which is a huge asset in the city, as you all know.

On the other hand, some say, the plan targets too many manufacturing zones, some of which have many productive job intensive companies. And there aren’t enough other places for these companies to go in the five boroughs. Now this forum isn’t intended to make this a zero sum game of housing or industry. There is no doubt that the city can do both.

With that overview, let me ask all of our panelists, beginning with Michael Shill, our housing expert, what your overall opinions are of the Mayor’s housing plan, particularly the part about rezoning industrial neighborhoods and waterfronts?

Michael Schil: Thank you, Jonathan. My take on the Mayor’s plan is that it is a very important step towards solving our housing problems. We can’t be naïve and think that we are ever going to solve our housing problem in New York. New York has chronic housing problem. We’ve had one for as far back as you want to read history – you’ll read about New York City’s housing problems.

Nonetheless, what we have right now is a situation where people are paying way too much, in terms of their income, for housing. The last Housing and Vacancy Survey data that came out about a month ago suggests that 25.5% of all renters are paying over half their incomes in rent. That is a huge amount of money, especially when one considers that a lot of these people are low income and have very little leftover afterwards. One of the reasons for this obviously is low-incomes, but the other is that we have not kept up with our housing needs. The city has grown by over 125,000 households over the last decade and we only added about 81,000 new housing units. So we need to produce housing. We are not producing enough housing. One of the reasons for this is that we are the most expensive city in the country to produce housing. And one of the reasons for that is the absence of land.

So I think the Mayor’s housing plan is innovative in the sense that it is saying, ‘Look, we don’t have a lot of new money. We are going to maintain our commitment in terms of money, but we have to look to other things. We have to look to new markets. We have to look to finding land that we can build housing on.’ That is, obviously, the purpose of today is to talk about that. The rezoning of underutilized manufacturing zones, I believe, is an incredibly important and vital way to get more land for housing. So I think overall the plan itself has lots of innovative solutions, and this particular solution is one that I applaud.

Greg O'Connell: I’m probably the only one on the panel who had a difficult time finding a suit this morning because most mornings I’m in my overalls working with my men on the waterfront, listening to the community and small businesses and their needs.

I’d like to take more of a balanced approach to any development on the waterfront. I think what the Councilman has done with identifying those pieces of property and what their uses are is a step in the right direction. There is no doubt that we need affordable housing. I don’t know if there is such a thing as middle-income housing in the city today. There are locations, and I can only speak a little more thoroughly on the Red Hook community, but there are vacant lands in the interior parts of Red Hook that are suitable for housing. Recently we went to contract and gave an option to the Fifth Avenue Committee to do affordable housing. Ten to fifteen years ago we recognized a need for, not only jobs and a place for small business to expand, but also a location for affordable housing. So we began to buy this property in the interior part Red Hook for housing. The contract we have is with the Fifth Avenue Committee. We are selling the property below market for them to do affordable housing. We’ll be putting up 60 units. We’re setting aside 19 units within the housing projects – policeman, fireman – who have saved and want to be part of the gentrification that takes place.

I think the approach should be long-term. There should be a long-term policy for industrial, commercial expansion. There should be a long-term policy for affordable housing. There should be tax credits for nonprofits for people to get involved in buying land for affordable housing. Those advocates of the nonprofits and affordable housing should be like a developer who looks far in advance to see what the possibilities are.

Something else that has been around the state legislation for a long time is brownfields. New Jersey is so far ahead of us in identifying how to solve the problems for housing, as well as for industrial use and for their expansion. So I think there has to be a definite policy of some sort that is long-term.

I have to tell you that I receive five to ten phone calls a week for small business – and Brooklyn is the home of the mom and pop small business – and they are always looking for space. I think we are up to a 96% occupancy rate right now. There is not enough space for them. Not only for them to start, but also for them to expand.

I have other things to talk about but I want to give the other panelists a chance!

Adam Friedman: I also had trouble finding a suit this morning, but it was more like a planning problem.

So this is the big picture question, and it is a very, very big picture. Jonathan enumerated a number of areas where the city is engaged or about to pursue zoning changes. But in addition to that there are zoning and land-use changes proposed for a big chunk of the far Westside and Lower Manhattan. What we’re doing now is really putting in place the foundation for this city for the next century. Unfortunately the tools that we have at our disposal, the land use tools, the zoning tools will reflect the last century.

What I see as part of this vision is that there are a couple of things that are essential for New York: one is maintaining its density and the other is maintaining its diversity. I see density, but I don’t necessarily see diversity in these tools, or in what has been proposed. As I look ahead, I see diversity in terms of either the physical form, income, demographics of those neighborhoods. I think that is a real problem. Out of diversity comes our creativity, and that is the engine that drives the city’s economy.

Where does manufacturing fit into all of this? Some of the areas we are looking at rezoning are some of the most dense industrial areas in the United States. As Greg just indicated, we see very, very little manufacturing land in which those companies which are dislocated can move. The first problem is that nobody is looking at the cumulative impact. While the Mayor’s vision, I think, is extremely appealing and seductive, how it gets translated and realized on the ground is very problematic. How can we maintain some diversity in our economy? We have an extraordinarily diverse population. So we need to look at the cumulative impact and develop new zoning tools.

I will add just one other point. The scale in which we are undertaking this effort is unbelievable. You have to wonder how fast this can all unfold in every neighborhood. If you’re thinking, ‘Where are people going to put their housing and investment dollars’ and we’re rezoning the far Westside and we’re creating opportunities for housing in Lower Manhattan, how much investment is going to be left over? Is it going to siphon off investment from Long Island City? Is it going to siphon off investment from North Brooklyn? The danger that we risk here is planner’s blight where nothing is going to happen for awhile. We’ve planted the seed – ah yes, this community is going to change – but there are the dollars to back up that change in the near-term. What happens is a cycle of disinvestments where property owners believe that their property is worth more than it in fact is, and they start putting everyone on month-to-month leases. And they start warehousing space, but the businesses that occupy those spaces lack stability and you have a downward spiral. So I think there are real risks there.

I do think there needs to be zoning changes. The problem is that we don’t have the zoning tools in place so that we can encourage residential development or commercial development in some areas, but still maintain manufacturing in surrounding areas and dampen the cycle of real estate speculation.

Councilmember David Yassky: Jonathan, I guess I’d answer your question by saying the Mayor’s policy is a very good first step toward a real housing policy but it needs a lot of improvement to get there. I appreciate you saying in your opening comments that it is not a zero-sum game. I do think policymakers have to be focused both job creation and on achieving housing goals. But the truth is there is a real tension there. Even in the best case: Greenpoint waterfront where I believe rezoning is appropriate. The truth is there will be some job displacement.

I think what we have to do is two things. First of all, come up with some programs to help those people who are being displaced, so they aren’t displaced to North Carolina but maybe displaced to Greg O’Connell’s buildings in Red Hook or in the South Bronx. Second, we have to focus on making sure that some of the housing that is built is affordable housing. If everything we do generates only luxury apartments, then we’re not really solving the affordable housing crisis, which is a crisis of affordability. So what I proposed is that the zoning tools we used on the waterfront include an affordable housing bonus that tells developers, ‘you can build only so much if what you’re building is all luxury or market-rate, but if you want to build more, you have to include some affordable housing in your development.’ I think if we leave it to the market and just tell the developers that we’re rezoning for residential then they’ll have it. Why have an all market-rate waterfront? I think that would be unfortunate.

JB: A lot of this tension between industry and housing, I think, stems partly from the fact that so many of the areas are being rezoned are these waterfront areas that are currently zoned for manufacturing. What can you tell people about why waterfronts? Is that the one area where there is land available for this kind of housing? Why is the waterfront such a big part of the Mayor’s plan? Is there just a lot of potential there?

Sandy Hornick: Let me step back and answer the other questions before I answer that one. Since I work for the Mayor, let me just say that it is the most brilliant plan that has ever come out by anybody.

The reason that you get the tension on the waterfront largely has to do with where the manufacturing zones are in the city. The city’s industrial economy basically grew up around the ports and the 19th century ….end of WWII….you’re not old enough to remember people describing the East River waterfront on both sides of it as being the greatest concentration of industrial activity in the world, at least in terms of employment. That was true. In 1947, before I was born, there were over one million industrial jobs in the city. In 1970, there were still 900,000 industrial jobs in the city. The reason there is all this tension is by using that same counting method, there are about 217,000 industrial jobs in the city now, which is a 71-72% decline since 1970. The federal government, by the way, has a new way of counting. They count production jobs rather than all manufacturing jobs, and by that measure, there are 129,000 jobs in the city. They just came out with that last week, so last week we lost 40% of our industrial base by that measurement. You have that tension there because you have the land being used far, far, far less intensively than it has been in the past.

Who said it that if you work for government and you’re accused of doing something quickly, you appreciate the novelty of that accusation.

I brought a few props here with me. This is the city’s comprehensive waterfront plan which was published in 1992. It calls for the rezoning of a number of places on the Greenpoint waterfront. None of those places have been rezoned yet. It’s only been 11 years.

As we’ve done this work in Greenpoint and Williamsburg, we look at what's happened there. We knew that the waterfront itself was very, very lightly used in Greenpoint. We have seen the only types of industrial activity that have come into the Greenpoint waterfront in the period are a paper storage place, hardly a major source of industrial activity. And we have a power generating company that wants to build a power plant that the community is opposed to. They don’t want it on the industrial waterfront. One of the reasons, in fact, that we’ve delayed so long in moving on Greenpoint and Williamsburg had to do with the fact that for many years the major issue was waste removal and transfer stations. Those were the industrial activities going in there. Nobody but nobody in that community wanted them and nobody wanted them for very good reasons. So when we go into a place like that, we look at it. What’s happened in the ten years since then?

Somewhere in the audience there is a very bright guy who works for us, and he has provided me with all this information because I don’t know this stuff by heart. The industrial activity has declined in the places that we’ve proposed to the community to rezone by more than 50%, not because we proposed to do anything in the last ten years or that the city was out there rushing to do things, because as we said, we don’t rush to do things. But because private market forces had taken over and the areas that we are proposing for rezoning that is where the job decline has been.

In other areas of Greenpoint and Williamsburg, there has actually been a gain in employment. Not necessarily a gain in manufacturing employment, but in a broader category of industrial employment, which includes transportation, utilities and things like that. We are not proposing to rezone precisely because they are the stronger industrial areas. You can take the same analysis when you look at the far Westside where the city stands to gain over 100,000 jobs over the next 30 or 40 years. It is a place which, in spite of the biggest boom in the city’s recent history of the last 50 years, lost industrial employment in the 1990s, which is just incredible when you think about what went on in the city. The city had its five strongest years of job growth since they started keeping date in 1950. And the far Westside actually lost then. The land is sufficiently low value on the far Westside that they park horses there. They are very charming. Presumably, we’ll figure out a way to still have horses serving the tourists who go to Central Park, but a) you’ve got a place next to the central business district of the city of New York. You have a central business district which is hard-pressed for space in good economic times. It has plenty of space in bad economic times. We did say this in another report that the Commission drafted in 1993 that the city’s central business district would have to expand.

You’ll have a choice of keeping a place with declining industrial activity or opening it up to other uses. And the question is, can you do it in a way that protects those areas that are most deserving of protections. That is exactly what we try to do when we do things. Yes, you can say we have an ambitious agenda now, but it is an ambitious agenda of things that we have talked about for more than decade. We have talked about the far Westside for more than a decade. We have talked about Greenpoint/Williamsburg for more than a decade. We have talked about Morrisania, with the community’s request, for about seven or eight years. I don’t view that as a criticism of the people that we work for, but that they are finally moving long-standing agendas. I think they should be applauded for doing that.

I’ll stop there.

JB: Let me ask a question to Michael and Councilman Yassky. Could a city realistically solve its housing crisis without rezoning industrial areas right now? The second part is which of the industrial waterfronts that we’ve talked about has the most potential for housing development to occur sometime soon?

MS: As I said a moment ago, even with the rezoning we are not going to solve our housing problem. It is going to continue at some level. Housing is one of those areas….to the extent that our housing prices go down, it is very conceivable more people will move into the city, so this is not a problem that you can solve. What you can do is ameliorate it and we can make it better. Rezoning is a very important aspect of this because it is going to do a few things. One of the things it is going to do is drive down the cost of land. The cost of land is obviously one of the things that makes housing so expensive. So if you increase supply, you should be able to drive down the cost of the land. Also, one of the things why this rezoning is important pertains to the question why Williamsburg, why Greenpoint, why the waterfront – one of the reasons why is that the market is showing us that market-rate housing can probably be built there with no subsidy or minimal subsidy. That’s important. That’s important in a time when you don’t have the money. It’s also important in a time when we have to get the biggest bang for the buck out of our public expenditures. So in a sense this rezoning is very important particularly in a time of limited resources.

Another reason why the rezoning is so important is that we are actually running out of land that is available for housing, at least for subsidized housing. One of the reasons New York was so remarkably successful over the last 15 years in the ten year plan was, ironically, because we had a lot of free land and cheap land that the City had taken as a result of the tax foreclosures and abandonment of the 1960s and 1970s. That land is now almost all gone. And it has mostly been used to provide affordable housing to many New Yorkers – over 180,000 units have either be rehabilitated or built. But now we’ve run out and we need to find additional land in order to be able to make our housing programs work.

I don’t think waterfront zoning is the end of the story. We need to do a lot of things in a lot of areas. I wrote a report with Jerry Salama and Martha Stark about three years ago. We had 75 recommendations of which waterfront zoning and manufacturing zoning was only one of them. In terms of land, there are lots of things that we could be doing – none of them will have as big a bang as the waterfront zoning. But one thing we can be thinking about, obviously it was mentioned a few moments ago, is brownfields remediation. We can also use eminent domain to round out assemblages of properties. The city still owns property but not enough for economies of skill and construction. Not the oldtime urban renewal but eminent domain. We can also avoid auctioning off our property and holding it for eventual housing construction. One more thing and I’ll end here. Greg said we need a long term policy; Adam said the tools represent the last century. Well that is because we have a zoning ordinance that is firmly rooted in the 20th century. A lot of that zoning ordinance is now irrelevant. A lot of that zoning ordinance is based upon ideas of strict segregation of uses, which we no longer adhere to or at least it doesn’t fit the city that now exists.

So one of the things I think we need to do and one of the things that will convert this from being a zero-sum game – meaning that we always have to make trade-offs – the reason for that is that we’re looking at one piece of land at a time. What we need to be thinking about is a comprehensive rezoning for the city, in which certain areas will see increased density because they have the capacity and infrastructure. Other areas will see reduced density no doubt. What we can do is comprehensively say ‘Where should manufacturing be? Where should housing be? Where should commercial uses be?’ Don’t get me wrong – I think this is a great idea that we’re doing this now, but the problem is that we’re only looking at things in isolation, rather than looking at the big picture.

If we were to do a comprehensive rezoning, it would not take a year. This is the short-term solution. Comprehensive rezoning would take five, ten years to really get going, but I think it is important to begin the process.

DY: I think Michael’s reframing of the question is good. The question is whether the trade-off worth it in any particular waterfront rezoning? Do we make enough progress toward our housing goals to be worth the job displacement? There are plainly areas in the city where the trade-off is worth it, where the opportunity for housing is good enough to be worth the displacement that does occur. I do want to be clear about both sides of that. One is – is it enough by no means? Michael is absolutely right, we have to do a lot more. Brownfields have been mentioned a couple times; I can’t overemphasize that, particularly because…let me answer your question of why the waterfront…well, historically the waterfront was where the jobs were. It was where manufacturing was and it means there is a lot of pollution. To make the most out of rezoning opportunities, we’re going to have to do some brownfields, finally recognizing we can’t insist on environmental perfection if we’re going to make use of this land. I think the state legislature is moving fitfully toward that but we really have to push them.

We have to do some other things that Michael has written about. As mentioned today, he did some pathbreaking work on why it is so expensive to build here in New York City. I believe we can make it materially cheaper to build here. We are introducing to the Council a bill that would force the city to use the same model building code that almost everybody else in the country uses. I think that would make it cheaper to build here and therefore cheaper to rent or to buy. So we can certainly do more than just rezone.

On the displacement side of the trade-off, I do want to take issue with what Sandy said before about the cause of the deindustrialization in Greenpoint. I believe Greenpoint is a place worth rezoning. It is worth building housing there, even given the few jobs that will be displaced. But I think there has been significant additional job loss in the ten years since 1992 when the report came out. Plainly, a lot of it is due to large economic forces, I think we have to recognize that some of it is due to the City’s land use policies.

Here’s the dynamic. Once the market begins to perceive that an area that is zoned for manufacturing use may be rezoned, speculators – and I don’t use that in a bad way but that is part of our capitalist economy is people make bets with their investment dollars – but speculators begin to bid up the price of land in the hope and expectation that it will be rezoned. That means the landowners can make more money by selling off the land to people hope to use it for residential development than they can by renting to the commercial users that are out there. There are still firms that employ people. You’ve already seen that. In Greenpoint, land trades hands in astronomical prices and it is still all manufacturing, but there is enough likelihood of rezoning that it can justify those higher costs. To me, the lesson of that is not that we shouldn’t rezone Greenpoint. What’s happened has happened. But the lesson is that we have to be very serious and very firm in our communication to the marketplace (us being the government here). The areas that we still want to preserve for job creation and jobs must be serious about preserving them. We have to be clear and firm to discourage that speculation dynamic.

JB: Adam, one of the things that Michael mentioned was that instead of this one-by-one approach that we have to have this more comprehensive plan and taking into account what the last two speakers said, you advocate on behalf of manufacturers. You’ve seen all these manufacturing zones around the city. If you were giving a presentation of city planning today, what areas would you tell them really because of the dynamic there, because of how many companies and the jobs are there right now, which right now should probably stay manufacturing and which makes sense for a conversion to housing?

AF: Long Island City and Hunter’s Point in particular, is an area of the city where the number of industrial jobs is actually increasing. Yet, the city has proposed to encourage more housing development there. Under the existing zoning, you could develop another 5,000 units of housing, so that is one area I would take off the table.

There is a continuum here, a progression of thought that we need this comprehensive planning, which is true. What happens is every zoning change gets to be a pitched battle. There is no security that some area really will be dedicated to manufacturing uses. When I look at Sunset Park, other areas of Long Island City, areas of Red Hook, I see solid industrial areas that really should be preserved. Where David was headed, I think, with looking at some of the tools…we don’t have those tools in place, so we’re locked in this dynamic where we going to do something but it is going to displace everyone. Well that’s the wrong question. We have to break into that dynamic. Yes, we need to make change. There is an economic justice argument here. The people who are going to bear that cost of displacement need to be helped as well. Alternative replacement space needs to be found for them. Some of the mechanisms in which we can do that include planned manufacturing districts and how we treat our manufacturing districts now. There are no real manufacturing districts in this city because everyone knows they can be used for other things, whether there has been movement to put superstores, homeless shelters, pornography, and then there is the BSA which end runs zoning completely. So the message that is constantly put out there is that these areas are like free fire zones. And anything goes there. We did a tour in the Red Hook waterfront about ten years ago and we went to Snapple. Snapple wanted to bring a couple hundred jobs and a new production facility in the Red Hook waterfront. They are in an industrial zone. On one side of them is the container port. And there is this little area of land that they are only allowed to lease on a month-to-month basis. They cannot acquire it. They cannot get a long-term lease because the owner of it wants to keep it for residential.

JB: And it is zone manufacturing?

AF: Yes. Its surrounded by manufacturing on all sides, except for the waterfront on one side. So what we’ve done is created a culture or system of beliefs that manufacturing, because we know it is devalued in the city, these zones really don’t count. One of the reasons we need a comprehensive zoning change is to develop a mechanism which can get the message out there that this really is for manufacturing, and the market has to adopt or respond to these messages to the system that is being put in place.

In other areas, we can have stable mixed-use districts. Much of North Brooklyn is an ideal area for one, where you say, ‘Yes, we’re going to have some development here. We’re going to have new housing development.’ But you also have to set aside a critical amount of industrial space. Everytime you do some conversion, you also have to dedicate an equal amount for industry. That’s a why of preserving a unique, mixed-use, vibrant neighborhood.

JB: Sandy, I want to give you a chance to respond. What do you say about Adam’s statement about how the city doesn’t do this kind of thing, where they take away a zone, they create areas where manufacturing can still thrive.

SH: First thing is that we do it all the time. Whether people listen to us or not is another matter entirely. In Red Hook, as case in point, there is an approved 197-A plan which calls for the waterfront to stay manufacturing. The fact that the property owner believes in his own mind that that’s going to change, maybe he’s right….or maybe he’s looking at the example of Greenpoint where it wasn’t the government that changed policy. It really wasn’t even the board….appeals to change the policy, though we can come back to them in a minute. It was the fact that a lot of young people chose to live in Greenpoint and Williamsburg and they made it a very, very trendy place. The other day when Norah Jones won the Grammy and said that she had lived in East Williamsburg, which is one of the manufacturing zones which we are not purposing to rezone, my first reaction was to call the director of the Brooklyn office. I said, she lives in East Williamsburg – East Williamsburg is gone! She called me back. She looked up where she lived and said, “No, she lives in a residential zone, we’re OK.”

So we don’t make that happen. I’ve been in government a long time. I actually co-authored the City’s loft conversion policies back in the 1980s in Manhattan. We set up enforcement units to stop illegal conversion. It actually worked for a few years. Ultimately, the way government works is that once it works, the problem goes away and people lose interest. The problem has recreated itself in Brooklyn. But it has recreated itself in a situation where, quite frankly, the state legislature is unwilling to create any kind of regulatory structure which would let this thing move from the current Wild West – whatever you want to call it – to one in which it could be regulated. Basically the City moved against the one or two buildings several years ago, not because they were living there illegally, but because people were concerned with fire safety issues. I can tell you the political establishment didn’t say, “Oh my god, people are living in manufacturing zones illegally.” What a mean and vindictive government you are putting people out of their homes…and will you please stop that? They weren’t that polite about it.

So it is fine to say that there is a mixed message in the zoning. Maybe you can say that having a manufacturing zone that doesn’t permit residential is a mixed message, but you have several different things going on. One is that you have a housing shortage that Michael and other people have pointed out. When we did the Manhattan loft thing, Jerry Coleman was a former member of the City Planning Commission and he is an official of the Hatter’s Union, which at the time, was still relevant in New York City. He was sitting at the table with me and said, “You don’t have an industrial policy problem. You have a housing problem. That’s why what you have going on in SoHo and Tribeca.” Of course he was right. And it is still right, which is to say that people are still living there. There is something cool about slumming and living in a trendy neighborhood.

If you watch Gangs of New York, the housing is pretty bad in that movie. Certainly you can go back to the 1840s when the city’s population first started to grow and find the housing crisis. I don’t know about before that. That’s the earliest that I’ve ever seen it. An 1842 report on the city’s housing crisis. So we’ve been in a housing crisis for a long time. There will probably be a housing crisis for as long as I’m around. But you can make it better.

We’ve made progress in housing in the city in various points. We made progress in the 1920s when 80,000 units of housing were built in a year. The conditions under which people lived weren’t the same. A lot of things were going on and it was cheaper to build housing since the standards weren’t as high as they are today. We produced 80,000 housing units. The housing that my grandmother lived in before this had four families sharing a bathroom in the hall; this was replaced by better housing. Granted they were walking up to the fourth floor, but it was still better housing.

Similarly, we made progress in the 1950s when we produced 30,000 units of housing a year. We haven’t done that in a long, long time. If you’re going to bring down the cost of housing, you’ve got to produce more. There is less housing produced than the demand each year. So the housing prices will continue to rise, and that is the situation we have.

JB: I just wanted to follow-up with a question that there is no denying that we have a severe demand and need for housing in the city, but I want to go back to a point that Michael made about using a comprehensive approach vs a one-by-one approach. You used the idea of Norah Jones in East Williamsburg. When I talk to manufacturers around the city, one of the things that I hear is that the City Planning Department is not rezoning East Williamsburg. They are rezoning the waterfront and Greenpoint. But they are not doing anything to preserve in East Williamsburg where there are quite a few manufacturing companies right now. The lack of that kind of proactive, aggressive approach to say we’re going to put stronger tools there has allowed all this illegal conversion and speculation to occur in East Williamsburg which is still mostly an industrial neighborhood, but is changing faster. Other people say the same thing about Red Hook, which is definitely an industrial neighborhood in which you are not rezoning right now, but the fact is, it is a hot commodity with the views. Is there any thought at the Department to while we rezone these waterfront areas to residential, can we put stronger protections in for some of the remaining areas, rather than just not rezoning them?

SH: I think the answer to that question is would it be helpful if you did it? There is a long history of adopting policies which attempt to keep manufacturing stronger by reducing competing land uses. In 1974 the City adopted such a policy citywide in which they took all the things that they thought at the moment could be competing uses. Those included a lot of large retail establishments but not others because they didn’t think toy stores would get big and then Toys R Us were invented, so there were exceptions. But supermarkets and department stores, they said, couldn’t go in manufacturing zones. Community facilities, hospitals, houses of worship couldn’t go in manufacturing zones. It is all still on the books almost 30 years later. It has been successful in keeping out the things that it was supposed to keep out. It hasn’t been successful in getting new industrial activity. People say, well if you keep everything out it wouldn’t be effective. What you get is a lot of loft tenants.

The other part of it is that we also looked in the mid-90s at all the city’s industry. We did a citywide investor’s study. The first thing is counter-intuitive but if you think about it, it’s not really so. That is, there was more industrial activity in the places that had other things going on than in the places that just had industrial activity. The answer to that is that businessmen don’t really want to be in empty, deserted places. It may be an oversimplication, but business congregate to places where other things are going on. That is true of the city’s industrial areas, as well. The city’s best industrial areas are not exclusively industrial. They are not exclusively manufacturing. There are all kinds of other things that go on. From places to get a car fixed to restaurants to shopping. Those are the healthier industrial areas. They are not the weaker industrial areas just because they have competing uses.

So the question is can we make it more restrictive? It is certainly possible to write such rules. There is just zero evidence that such rules are helpful.

DY: I just want to jump in here because it is not all on Sandy’s shoulders to preserve manufacturing. The word manufacturing can be misleading to some people. We’re talking about jobs. It’s not auto factories and iron works obviously anymore, but its food processing companies and specialty woodworking and metal fabrication. These are not big factories with giant smokestacks. One implication of that is that they can coexist with residential development. One thing that Adam spoke to is more modern zoning tools, and I think we do have to be creative in looking at zoning tools and categories. You can have residential and employers side-by-side, but limit what the employer can do. No deliveries, no trucks between midnight and 6:00am – things like that regarding noise levels for the neighbors.

But it is not all up to City Planning to do this. We have to look to the other parts of the government, too. Adam’s story before about Snapple not being able to get more than month-to-month lease….we see that a lot, especially on government owned property. In Red Hook, we have the Red Hook Container Port which employs 300-350 very well paying, blue collar jobs. But the Port Authority has been willing to give them only a two year lease at a time. Any business person knows that you can’t run a business that way. You’ve got to make long-term investments. You’ve got to be able to borrow knowing that you’re going to be in business 10-15 years to pay back and make the investments necessary to compete. We have to provide the transportation infrastructure necessary for businesses to survive. In Sunset Park, the city spend $20 million to refurbish a brand new shiny float bridge that could enable New York City companies to get their goods out by rail a lot more cheaply than they now do by truck. But its sitting unused because the city has been bureaucratically incapable of figuring out how to let an operator use it. The city has to provide the same focus to supporting businesses, and particularly smaller businesses, that it does to residential.

JB: Michael, before you chime in I really do want to get Greg, because I haven’t given him a good chance to respond to all of this. I wanted to wait to ask him about Red Hook but now that we’ve gotten into that….Greg, there is a lot on the table here, but when talking about Red Hook can you first start and tell me is there a demand there? Because there is a perception around the city that there is a lot of underutilized, abandoned areas there. But when I’ve gone out and seen your properties, it always seems pretty thriving, full of companies. Is there still a demand for space at your properties?

GO: There is a definite demand in Red Hook. I remember years ago when we’d advertise space in the New York Times. We’d get a call and they always asked the magic question, “Where is it?” As soon as they heard Red Hook … We have two signs in two of our buildings now and I average between five and ten calls a week from small businesses looking for homes in Red Hook.

There were so many different things said here today. Regarding some kind of a master plan and zoning, one size doesn’t fit all. That is what makes Brooklyn unique. What happens in Williamsburg and Greenpoint is different from Sunset Park. I think that always has to be considered. Each one has its own personality. Something else that should be considered is the human/social consequence of any zoning changes that takes place. In Red Hook, half the population in the houses are at the poverty level or below. We have at least a 20% unemployment rate right now. We have to be careful that as gentrification takes place in these areas – and it’s not a bad thing – but what are we going to wind up with? Are we going to have an oasis of poverty there? Or should we continue something that has been growing where we are creating jobs locally for the people in that community?

I think something we need to talk about is that we do not want to lose the working waterfront. I think the Councilman spoke about the Red Hook Container Port. It is so very important for that community. We’re spending all kinds of money dredging over in New Jersey. Over here, we have the deepest natural depths. Transportation is fair: the BQE, over 20 maritime related service companies and the container terminal has increased from 92,000 containers to 100,000 containers. David speaks about looking for a long-term lease. Why? Because they have Phoenix Distribution, which is the largest importer of Heineken.

Let me give you some statistics. Using Phoenix as an example, if they were able to relocate to Red Hook, they would ship directly from Holland, bypassing Newark, taking 16 million truck miles off New York City roadways each year. They would create 300 new, great-paying, entry-level, union jobs and 15 new Longshoreman jobs. The ripple effect of that is 10 to 1.

JB: Greg, let me ask you so there is a lot happening in Red Hook. There is a chance, it sounds like, to actually expand the job base in Red Hook. What are the obstacles with the zoning and the pressures on real estate there? Are there things that you’d like the city to come in and do? Say maybe housing here, industry there? What do you suggest to the city?

GO: David mentioned it. What do businesses want more than anything else? They want stability. They need the ability to plan long-term. The businesses that want to expand but perhaps that land is not available or perhaps it is being warehoused for future use, waiting for zoning changes. Long-term leases. They could negotiate whether it be the Port Authority or other, just so they could make plans. That would have a great effect. The policy is so very important. Government can set off economic development by investing in it public places and spaces.

I think transportation is so very important for Brooklyn. We’re talking about a Gowanus Tunnel but what is the ramification on adjourning neighborhoods? There should be an overall transportation plan. The use of the water taxis in Red Hook – we have three and are getting three more – so it looks like it is going to work. Let’s look to possibility of expanding the transportation of goods. We have Hunts Point, the fish market …perhaps try to do a study whether we can pick up goods and services right on the waterfront and maybe make locations along the waterfront for a deep….

Something else that hasn’t been mentioned is a working waterfront. I’m talking about tugs, barges, etc. They need locations to bring concrete and stone and aggregate. Can you imagine if they didn’t have a place or a location where they could have a landbase? What would that do with the amount of trucks that were needed for that? We only need to look at 9/11 and how the tugs and barges helped to evacuate people from the World Trade Center. There is only one place in New York harbor that ….where the tugboats actually go and pick up fuel and food. We would like to have something like that in Brooklyn. There are 140 tugs in New York harbor….it is a great attraction. The public loves to come and watch the tugs. These are things that I think I would like to see government more involved in helping bring to businesses.

JB: Let me try to finish up before Michael talks and opening it up to questions. Michael, could you also try to address some of Greg’s comments about Red Hook? In your suggestion for a comprehensive solution to this, is it realistic that we say Greenpoint or Williamsburg waterfronts are OK for housing development. Red Hook, which does have housing pressures right now, but maybe that makes more sense to remain in the waterfront for industry.

MS: What I was going to say relates to that, but I’ll do what everyone does when I’m the moderator and ignore your question. I think it would be useful to step back and do something that we tend not to do too often and that is express some modesty about what government can do and what government can’t do. This is a long-term trend in New York of the decline of manufacturing employment. A great study was done a couple years ago which talked about the loss of 675,000 manufacturing jobs. At the same time, we have not had the same level of rezoning of land and the city’s manufacturing base has declined. One of the things that when I say modesty, what I’m saying is that the economic forces are very, very strong behind this. I few want to put our bodies, including governmental bodies, up against these market forces, it is going to be very, very difficult. I think we have to be modest about what we’re doing. We could make things much worse off than better off, and harm the city’s future by standing in the way. Sometimes we need to stand in the way of market forces. Zoning is a particularly good example. What is zoning? Zoning is a way to separate out noxious uses from non-noxious uses. Of course we’ve increased the burden on zoning to achieve all sorts of social objectives. But nonetheless, that was the initial purpose.

I think you have to be much smarter than me in order to understand how you can use zoning to protect a declining sector. Zoning doesn’t create demand or confer comparative advantage. I think zoning does have a role and there is something zoning can do to create incentives with regard to manufacturing. That is certainly possible. If you reserve certain areas for particular industries, there may be by allowing industries to locate near each other you could have information externalities and common suppliers – the whole idea about how cities grow up to be cities of agglomeration. But a haphazard policy of just saying we need to preserve manufacturing is destined to fail. The question is not if the Brooklyn waterfront is going to be housing. The question is when. It is happening. We can either have our zoning match what is happening or we can just let it happen and have a whole new SoHo, a new loft ward. I’ve been on the loft board for six years. I view the whole thing as a nightmare that has been going on for 25 years and still half the buildings are illegal. We can get out in front and facilitate the market. In some ways we can create incubators and industrial parks to generate some sort of conglomeration but the idea that we can actually throw ourselves in the way of such strong forces is really stretching my ability…..you know, I think Sandy is great…but I don’t think he is that great.


JB: I’m going to open it up to questions. I can’t guarantee that Michael is going to respond to them, but…..let’s give it a shot. Please ask a question and don’t make a statement. Limit your question to one minute. We have a microphone on the left, please form a line.

QUESTION: A question about brownfields. I thought about four years ago we were pretty close to adopting appropriate law that would resolve this somewhat difficult problem. It seems that people think it is no problem and the people who want things cleaned up 100% so you can, not only eat off it, but also you can it. I met Senator DiNapoli and Senator ?? who both seem to be very close to having a bill which is sounds rational to me. How do we move this?

JB: How do we move on the brownfields? David, do you have any confidence in your colleagues in the state legislature?

DY: I have a great deal of confidence as a Democrat. But I think the most recent positive step has been taken by the Republican legislature. As I said before, this has been a cordoning off and there is no perfect solution. What the politicians, and myself included, have to do is recognize at some point the search for the perfect becomes the enemy of the acceptably good. We have to pick a trade-off point, do it and move forward on that basis. I think we are getting closer to doing that.

QUESTION: You’ve briefly mentioned in passing the BSA, kind of as an annoyance. The BSA, at least in the Greenwich Village waterfront, has been the problem. There are quite a few automatic variances, almost automatic variances. What happens then is exactly what is spoken about. …waiting for a variance to come so that they can make a killing. All I’ve seen City Planning do is come up with a plan to rezone it because they say it is no longer manufacturing. It is the mother of all self-fulfilling prophecies. What can we do about reigning in this insane variance process?

SH: I disagree ….in the area south of Greenwich Village which is essentially known as the graphic arts area, we did oppose variances there. BSA is legally constituted to say that if they find certain things, they must write the variance. One can debate with how they do their findings, and maybe in the course of my career, I’ve had occasion to disagree with them, but you can’t have a zoning resolution without having a body like the BSA that is the … relief. We’re not proposing zoning changes. Again, if you look at that area in the graphic arts center, the things we have talked about doing are not just a blanket rezoning. Once again, it looks at those areas where there continues to be significant job concentration – not necessarily by the way – will they be industrial jobs. Over time those switch from printing-related jobs to other kinds of jobs. But there are 5,000 still in that area. There are 129,000 production-type, manufacturing jobs in the city. That is an enormous number of jobs that any city in the world would be very happy to have. We’re very happy to have them. We have programs, benefits and other things the city does to try to help the city’s industrial base. So when I talk about this stuff because I don’t care about industry, it is because you asked me a different set of questions.

Take a look at the housing demand in Greenwich Village and it is pretty extraordinary. It is so extraordinary that, in fact, today, you get legal conversion as compared to what you get in Williamsburg which is illegal conversion. You have to try to figure out how you solve the housing demand and protect the most industrial jobs that you can. Is that a science? No, it’s an art and subject to human failings. If you look at everything that has been proposed, we have not proposed to rezone the meat market. We have not proposed to rezone the core of those jobs. That is true in every single place we have looked.

If I can go back to my props for a moment….we looked at the waterfront and we said there were places that we would not rezone. We said we would not rezone the maritime industrial areas, such as Sunset Park and other ones. And we haven’t done it. I can’t say no one will ever do it in the future, but that was the policy that was published in 1992 and we’ve adhered to. Whether people believe us is a separate story.

JB: Does anyone on the panel want to respond to this?

DY: I just want to quickly say that I don’t think Greenwich Village is the best example, but I do think it’s true that the BSA has functioned as a way around the zoning process, unfortunately. For a couple of reasons: one is it’s cheaper. It’s much cheaper for a landowner to seek variance than a rezoning. And it was used in a way, particularly in the 1990s, of avoiding the political, City Council review of rezoning. I do think it would be worth addressing that. In other words, making the variance process and rezoning process more comparable in terms of cost to the owner, and having some political review so that there isn’t an incentive to get around Sandy and his genuine dedication to sensible citywide zoning.

AF: I would like to just very briefly add to that. There are certainly ways to reform the BSA. In the old days, before charter reform, BSA was re-appealable, and now that power is gone. Maybe now we should look at other ways to bring in the political process to make sure there is oversight and make it appealable.

MODERATOR: We really need to move on. Next question please.

QUESTION: How the review goes for requesting variances….I will confess I was getting very impatient with some of the generalities of Red Hook this, that and the other. A specific case in Red Hook is the Monarch Luggage building. I wanted to have that clarified because my understanding is that it wasn’t the old-fashioned case of loft-occupancy where it was do-it-yourselfers. They came in with contractors, they did the work, they got people in there. I think they’ve got commercial leases. I think they were granted some variance. I feel there is a false dichotomy here between affordable housing and manufacturing. My impression is, and I’m not a planner, but that there is affordable housing around manufacturing zones. What is happening in Red Hook is not only a squeeze on the businesses but housing is no longer affordable as well. I’m living down there; I’m wanting to buy; I’m renting right now and I’ve been watching for the past three years. My impression is that a three-story, brick building has jumped from $75,000 to $100,000 a year. Apartments have gone from about $500 five or six years ago to about $1200. That is not affordable housing for the people down there. In other words, that hasn’t been touched at all. Monarch Luggage sits there. It has a huge effect on all sorts of people.

MODERATOR: Anyone want to address that?

SH: I don’t know the Monarch Luggage situation but I’ve certainly seen it happening many, many times before. Essentially, people go in and either they don’t follow any plans, or they follow plans to divide the building into office space. They’ve got plans. They put up a building permit. All this stuff goes in and they carve it up into what could be offices except that they have bathtubs and showers and a few other things in them that they are not supposed to have. Then there are people living in them. Unless someone is ultimately willing to kick out those people…we set up a loft enforcement unit….

MODERATOR: Is it a failure of enforcement? Anyone on the panel, could the enforcement of these things be better?


MS: Let me just address a piece of what you said. I have no idea what Monarch Luggage is or the building, but it is the piece about how the housing might not be affordable in the community. My take on this is that all housing is good. We need housing at every income level. The people who are going to live, for example, in the building that you suggest might not be able to afford a unit there. But make no mistake, they would be moving elsewhere in your neighborhood in all likelihood. The point is that what we need to be doing in this city is increasing the supply of housing at all income levels, including the Brooklyn waterfront, Williamsburg and Greenpoint. It may not be housing that is affordable to the family that is paying 50% of their income in rent that I was talking about earlier, but it will help those people in the long run.

QUESTION: Despite the fact that I represent housing, I agree with Jonathan’s opening comment that this is not a zero-sum game. One of the issues that comes up in studies across the country, most recently in a study that the state controller did a couple of years ago, was the intersection between jobs and housing. In fact, the housing shortage in the city has really been a barrier to job growth in the city. I just want to ask the panel to comment on that. I wonder how good is a good job if you’re spending half your income for rent and living in a basement, as hundreds of thousands of New York City households do?

MS: I actually believe that but I can’t point you to one study that actually proves that the absence of housing hurts the economy in the long-run. I think McCall’s report just cited our report for that, and I just said it. I didn’t have any empirical data, and so it goes. I shouldn’t admit it. But it is certainly sensible to believe that if we don’t get some control over our housing crisis, our long-run economic competitiveness is going to be hurt. Employers are going to have to compensate their workers. They’ll have to pay higher wages so people can afford the housing in the city. Or what they’re going to have to do is pay higher wages so people can come from New Jersey. There is no way around it. It makes sense to me that this is the case. My colleagues in the academy, however, have never given me any good studies that I can cite to on that.

DY: I also think the flip of it is true, that the best way to make housing affordable is to get somebody a job. An affordable apartment isn’t worth very much if there is no job there, so we have to have an economy in the city that has jobs. 129,000 is a lot but not enough for people…besides Wall Street, law firms and advertising agencies. We have to have a more diverse economy because we more than anybody have a more diverse population.

I’m just thinking back to what Michael was saying about how the loss of these jobs is part of a long economic trend, and that you can’t fight the market. I believe that. In the long-run, the market will win out. Sandy made that point persuasively with DUMBO and Williamsburg. In the long-run, the market will win out. But in the long-run, we’re all dead. We can affect things in the medium-term and I don’t think we should abandon efforts to do that.

SH: We have long believed that a series of capacity constraints – its not just housing – we don’t have the transportation system to move very many more people; we don’t have the transportation to move more goods. Being next to the BQE may be considered good transportation for New York City, but in the rest of the country, that is not considered good transportation. In case any of you have been on the BQE…..and it is not just the BQE. There are studies about building a new rail tunnel, of course, which is another couple billion dollars. Then you need to do transfer facilities inland. There were studies to do a more expanded port in Sunset Park. There are lots of things that if you could afford to do them all, you would do them all. But how do you incrementally increase capacity per square foot? Michael is right – one of the things we need to do is increase housing in every way shape and form.

The city is being as aggressive as it possibly can. It is historically the most aggressive city in the country in terms of assisting housing production. And it has spent more of its own money in the last 15 years than every other municipality in the US combined (over $5 billion). The Mayor’s plan is not all the City’s money but it is another $3 billion that is going to be devoted to affordable housing. Could there be more? Well, if we had morerity, but the Port Authority subsidizes every container that comes in there, 85% of them are being shipped back to New Jersey. The Port Authority of NY/NJ subsidizes each of those. On Pier 40 which is on the Westside, one of the proposals for using it was to try to get Fed Ex to come there and bring their shipments in by barge. I’m not an expert on barges. In fact, I know nothing about barges. But Fed Ex decided after looking at it that it didn’t work. I didn’t decide it didn’t work.

AUDIENCE: That’s not true. I’m involved in that.

SPEAKER: Why did Fed Ex back out?

AUDIENCE: They backed out because of their financial situation.

JB: Let’s move on. I have a feeling we have another question coming up.

QUESTION: Are we looking at the environmental implications of losing all of this industrial infrastructure?

SH: Well, again, the City in the last ten years has helped retained about 16,000 industrial jobs in the city. So if you use the 217,000 number that is 8% or 9% of the total industrial jobs in the city that benefit from the City’s programs. The City very much tries to keep its industrial activity here. The assumption that you’re making about what is the environmentally benign and sustainable future, that in fact everything needs to be made here, isn’t necessarily true. You may have more environmental benefit by having a lot of jobs concentrated in a very small place where 95% of the people don’t come by automobile, and use environmentally sustainable buildings, and have their industrial production somewhere else. That might turn out to be the more environmentally sustainable future.

My grandmother, before she lived in that tenement, lived in a village where everything was produced locally. It wasn’t a really pleasant place to live. That is why she came to live here to live in a building where she shared a bathroom with four other families. The way we live and the benefits we get of having our shirt produced in China…the bread that we eat in a restaurant is produced in Sunset Park, but the bread we buy in the supermarket is produced in Pennsylvania…are enormous economic benefits that let us live this incredible lifestyle that Americans live. It is nice having tomatoes in the middle of winter, even if we didn’t grow them in Brooklyn.

MS: To be fair, I think that is a very good point, and I hadn’t added it into my list of points that might be able to justify zoning. It is based upon a whole lot of empirical assumptions, and I don’t know if you’re right, but theoretically if you’re going to lead to trucks coming in and generating pollution, that is not priced by the market. Then there is a role for government to step in with regulation.

QUESTION: Why is this panel so devoid of representation of these other communities and genuine issues tha