Are the Red Hook cranes headed to Sunset Park? by George Fiala

In an incredible overreaction, Kyle Kimball, head of the NYC Economic Development Corporation (EDC), announced that he was abandoning development of Sunset Park’s South Brooklyn Marine Terminal (SBMT), simply because City Councilman Carlos Menchaca didn’t give him what he wanted.

SBMT comprises ten blocks along the waterfront in Sunset Park, southwards from 29th Street. It is an intermodal facility, named because it is capable of handling freight three ways – by water, by rail and by truck. It currently has only one tenant, a municipal recycling center. The rest of it – 72 acres – is currently vacant.
Much of Sunset Park’s industrial area is controlled by EDC. These city owned properties include the Brooklyn Army Terminal, the 65th Street Rail Yard and the historic Bush Terminal. EDC also controls properties in Red Hook, the Cruise Terminal and the Red Hook Container Terminal.

EDC is a city agency. President Kimball is a mayoral appointee. EDC was created to operate independently of local planning areas for the purpose of bringing money and jobs to the city. Their website boasts of the billions of dollars in private investments they have brought into the city.

“By encouraging commerce within the City, managing City-owned properties, administering loans and financing, and facilitating commercial and industrial development, New York City Economic Development Corporation successfully completed hundreds of development projects and implemented many public policy initiatives,” declares their website.

Master Lease
EDC was asking the City Council’s approval to become a “Master Leaseholder” of SBMT. This arrangement switches oversight of publicly owned land from local representation to EDC. They argue that this is what is needed to keep New York competitive – their fast action is what businesses want when they are looking to relocate.

They claim that normal government acts too slowly to make deals that are beneficial for commerce. Having control of a Master Lease allows EDC to make quick decisions about public land without having to go through the community and thus avoid oversight of their political representatives.

EDC fashions themselves after the private sector, as a profit making business. Their website boasts of their “greater operational flexibility than other organizations that provide similar services. This allows our employees to enjoy the experience of both a public and private sector organization.”

EDC has been criticized for being bottom-line oriented at the expense of the public. Social justice groups complain that worker concerns are given short shrift. One of those complaints comes from Bandworkers, an advocacy group for food workers.

A few years ago, EDC and Goldman Sachs partnered on an initiative to provide loans to small food manufacturers. Brandworkers wanted to make sure that that the applicants treat their workers fairly. The food industry has a reputation for exploiting workers, especially the many immigrants in that profession.
EDC would not involve Brandworkers in the loan process, saying that these were matters for regulators, not for an economic development agency.

In Red Hook, many feel that EDC has ignored neighborhood wishes. The Cruise Terminal and the Pier 11 shed are public properties, yet the neighborhood is given very little say in their usage. A few years ago a local group was interested in community and business uses for the shed and were generally ignored. The community has asked for ferry service from the Atlantic Basin, and a local ferry company, NY Water Taxi, was willing to do so. Instead, a competing service, BillyBey was given control of the Basin, without running any ferries.

The Cruise Terminal, which opened in 2006 and at one point had a ships berthed 44 days a year, is currently down to 17 days. Some think that EDC is not supportive of the terminal, that their focus is on the Manhattan Terminal that they also operate.

Public use of EDC’s waterfront is minimal. In 2012, EDC planned to bring a summer concert series to the neighborhood, but cancelled it at the last minute. EDC has made many promises regarding PortSide and cultural uses of the Basin, but never followed through on any of them.

Missing money
Former Comptroller John Liu performed an EDC audit in 2010 and found financial discrepancies on the amount of money they owed NYC – and what was actually paid. Liu called EDC “a powerhouse agency, but we have very little understanding of what comes in and out of it. You cannot see anything that is going on.”
Must decide over the holidays

Just before Thanksgiving, EDC told the City Council of their intent to have SBMT’s lease transferred to them. They demanded a term of 49 years. A December 15 hearing was scheduled by the subcommittee on Landmarks, Public Siting and Maritime Uses to consider their request.

Three top EDC executives appeared before the committee to make their case. The committee includes Councilmembers Stephen Levin and Inez Barron. Carlos Menchaca, who represents both Sunset Park and Red Hook, and David Greenfield, chair of the Land Use committee, joined the regular committee members for this hearing.

EDC’s COO, Zachary Smith made the initial presentation. He was joined by Andrew Genn, Sr. VP, Ports & Transportation and Josh Nelson, VP in their transportation department.

Menchaca, who is just beginning his second year in the City Council, had an earlier run-in with EDC. Vane Brothers, a Baltimore tug boat and barge company that leases space at Gowanus GBX, wanted to rent space on Pier 4 at the Brooklyn Army Terminal (BAT) to store empty barges. That space is currently public space and many locals fish there.

BAT is one of the other Sunset Park properties run by EDC. The neighborhood was upset that EDC would consider leasing part of the pier. Both Menchaca and Community Board 7 approched EDC with their concerns. Faced with controversy, Vane Brothers decided to store their empty barges elsewhere, and EDC, who hadn’t really responded to the community, complained about losing a sale.

EDC’s Dec. 15th presentation to Menchaca and the rest of the council was a bit mysterious. They insisted that it was vital for them to have complete control of SBMT, but when asked why by Menchaca and Greenfield, they could or would not get into any specifics. The most they would say was that their intention was to start off with four or five years of short term leases, and then would seek one large tenant to take a long-term lease for the whole space.

They needed to be able to rent space quickly, or else risk losing sales to terminals in New Jersey and Philadelphia. They insisted that the phone was ringing off the hook with companies looking to use the terminal, but when asked who was calling, they could only name one potential customer, the New York Wheel, who needed a large space to work on the giant Observation Wheel planned for Staten Island.

Menchaca kept asking whether EDC would do anything to encourage potential lessees to hire locally. He was also curious about job training and the preservation of public spaces on some of the land.

EDC’s representatives seemed like exasperated real estate agents who knew what they were doing and incredulous anyone would doubt their expertise and good intentions.

In the end, EDC failed to persuade the council, and a few weeks later the council pulled an expected vote that was supposed to turn over the Master Lease to EDC immediately.

The Daily News reported “The city’s economic development czar is furious.” Kimball was quoted saying, “This is going to send a chilling message to potential operators that Sunset Park may not be open for business.” He seemed to doubt that Menchaca had the knowledge to do his job. Kimball was again quoted in the Daily News: “Sitting across the table it was clear that he didn’t understand what was happening here and he overplayed his hand.”

Menchaca in fact did his homework, and asked pertinent and probing questions, while acting as an honest broker for his constituents. The committee has called EDC back to the table for another hearing on January 27.

Red Hook Containerport
Last September, the Red Hook Container Terminal LLC came before the Parks Committee of Community Board 6. The LLC had leased Pier 9A for a two day music festival without notifying the community. Greg Brayman, President of Phoenix Beverage who also serves as the terminal operator, came to explain the circumstances behind the booking of the festival and stayed to answer questions.

Business has been slow at the terminal, and the additional income from the weekend rental was needed. Towards the end of the meeting, someone asked Brayman about his lease arrangement in Red Hook. “Four years left,” he answered, and then, almost as an aside, said he believed the plan was to move everything to Sunset Park afterwards.

Mike Stamatis, the Terminal President, stood close behind Brayman as he made that statement, but when asked afterwards, disavowed it. Stamatis also appeared at the recent City Council hearing to speak in support of EDC’s request.

The Port Authority (PA) bought the Red Hook piers in the 1950’s when there was still much break-bulk activity in the NY harbor. The containerport was built in the 1980’s, and the Cruise Terminal was opened in 2006. At one point PA planned different uses for Piers 1-6, but faced with opposition from Brooklyn Heights, gave over the land to the city, and it eventually turned into Brooklyn Bridge Park. It is not a secret that the PA would like to be free of the Red Hook containerport as well.

However, the status quo has been maintained, even during a crisis period when the previous terminal operator, American Stevedoring, was evicted. Political pressure to maintain a working waterfront, and the last NYC maritime facility has kept it open.

Those same political sensitivities may be what prevented EDC from giving the City Council any hint of their plans for the South Brooklyn Marine Terminal.
All EDC would say was that they would start out with a series of short term leases, and at some point in the future try and rent the whole campus to one large operator who would make a substantial investment in the facility. If the Red Hook Container Terminal were to move, this would be the timetable.
The Citizen’s Budget Committee
Just this month, the Citizen’s Budget Commission (CBC) issued a lengthy study on the financial future of the Port Authority (PA). The Citizen’s Budget Commission is a non-profit organization that tries to affect public policy especially as it involves NY City and State finances and taxation. They call themselves non-partisan, but their leadership is heavily weighted in favor of business and real estate interests.

The group was founded in 1932 by John D. Rockefeller. Very few, if any labor of social justice interests are posted on their website. Instead, it is scattered with articles advocating higher fares for the Path and bridges and tunnels; denouncing the high cost of municipal garbage collection, and criticizing bonus payments made to city workers.

This bias is obfuscated by the word “Citizens’ in their name and “non-partisan” in their description. The press regularly cites CBC reports as coming from a watchdog agency.

The CBC report looks for ways to reduce losses in PA maritime activities. The great majority of PA run piers are in New Jersey. The Cruise Terminal and the Red Hook Container Terminal are their Brooklyn properties, and the report recommends their closing. “If Brooklyn [Cruise Terminal] and Red Hook were closed and the property made available for development, the amount of vacant land in New York City’s Community Board 6 – including Red Hook, Gowanus, Carroll Gardens and portions of Cobble Hill and Park Slope – would increase more than 175%.”

The report also says that “sale of this land could generate additional revenue for the Port Authority.”

This selling off of public assets to cover operating losses brings to mind NY State’s plan to sell of the money losing Long Island College Hospital to private interests. The LICH sale led to a feeding frenzy among luxury condo developers. This would no doubt increase exponentially if the Columbia Street waterfront opened up to private interests.

However, the report gently avoids that potential controversy, instead hypothesizing “market-rate and affordable housing, commercial, parks and public facilities such as schools.”

While this report focused on the PA, the authors include a paragraph about the city-owned South Brooklyn Marine Terminal. They point out that it is better suited to accommodate maritime traffic, as it is “better connected to the rail network East-of-Hudson.”

Railroads were the subject of a recent Waterfront and Industrial Development meeting chaired by State Senator Velmanette Montgomery. Mark Hoffer of the PA made a presentation of their Cross Harbor Freight program. That program’s goal is to reduce truck traffic in the region.

While most of the country is criss-crossed with freight trains, the only way to cross the Hudson by rail is north of Albany. Otherwise, freight stops in New Jersey and has to be trucked over to the city and Long Island. Congressman Jerry Nadler has been a longtime advocate of a freight tunnel under the Hudson River. Such a tunnel has been envisioned for over 100 years; the original purpose of the PA was to build one back in 1920. Facing too many obstacles, they built car tunnels under the Hudson instead.

The report, called “Cross Harbor Freight Program,” spells out ten options for bringing rail traffic from New Jersey to Brooklyn. Five involve over-the water methods, the other five are variations on a tunnel. The waterborne alternatives can take up to 600 trucks off the road daily, while the rail tunnel can remove as many as 5,000 truck trips. However, the waterborne alternatives are pegged to cost from $100-$600 million, while the tunnel could cost as much as $11 billion.

All the waterborne plans involve the barging of railroad cars from New Jersey to a Port Authority facility on 65th Street, at the intersection of Bay Ridge and Sunset Park. The Sunset Park waterfront is filled with train tracks, many of them even going into buildings, where intermodal facilities were a big thing in the 20th century. The 65th Street train line extends through Brooklyn and connects with rail lines west of the Hudson. Alleviating truck congestion is a major PA goal, especially as it looks ahead to greater volumes over the next 25 years.

At one time, Red Hook was connected by rail to Sunset Park, but those rails were destroyed. Being able to barge trains loaded with containers from Jersey, as well as being able to unload containers in Sunset Park directly onto trains fits in with PA plans.

Red Hook uses six large cranes to unload container ships. The containers are layed out in the yard and trucks then hitch up and take the containers to their eventual destination. The cranes can themselves be put on barges and floated up to Sunset Park for relocations. The workers, all ILA union members, can just as easily work in Sunset Park as in Red Hook. Their main concern is having the work. Less truck congestion can mean more ships (services) coming to load and unload cargo.

Finally, the City Council has just completed a report on manufacturing in New York. This was also presented at the Waterfront Working Group meeting. Titled “Engines of Opportunity,” the report highlights a turnaround in manufacturing employment that seems to be taking place. It is focused on higher paying jobs, and suggestions some changes in existing zoning regulations that have boosted commercial and residential uses at the expense of manufacturing. As more products are being made in Sunset Park for sale both locally and globally, having a nearby intermodal container facility makes sense.

Putting all this together, it seems reasonable to speculate that there is a behind-the-scenes plan to relocate the Red Hook Container Terminal.
Carlos Menchaca, in stopping the EDC express, has started a process in which both communities might have a piece of the opportunities presented by the Brooklyn waterfront.