The Missing Links

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Just three days before the end of his term, Mayor Rudolph Giuliani let New Yorkers know that he was hard at work securing yet another monument to his legacy. On December 28, 2001, he announced that the city was negotiating with the Professional Golf Association to bring a major tournament to Ferry Point Park, a luxury golf course under construction atop a former landfill in the Bronx. The tournament had a lofty goal: It would be a charity event, raising money for the families of police, firefighters and rescue workers killed in the line of duty.

“Such a world class facility deserves a world class tournament,” said Giuliani in a press release. “I’m thrilled that the PGA is exploring how to bring a pro tournament to the Sports Capital of the World and to do so in a way that honors the victims of the World Trade Center attack.”

But instead of becoming a world-class greenway, Ferry Point Park is now looking more like one of the city’s biggest boondoggles. While Mayor Giuliani was inviting the PGA to play at the park, state officials were shutting the golf course development down. The project’s budget has ballooned from $22.5 million to more than $40 million, and it now appears that the golf course might not get built at all. Meanwhile, the endeavor raises serious questions about how private developers were able to take possession of a public park without first obtaining legally required clearance from city authorities.

As previously reported in City Limits [“No Fore Warning,” September/October 2001], environmental problems at Ferry Point Park have included borderline explosive levels of methane gas, stemming from a city dump on the site that closed in the 1960s. Environmental groups also strongly suspect that hazardous waste had formerly been disposed there. When interviewed early last summer, the developers and state officials disputed that the park was contaminated with hazardous waste. They also maintained that the environmental problems, such as dangerous levels of methane gas, had been brought under control.

Yet almost a year later, the environmental conditions at Ferry Point Park appear so threatening that the very survival of the troubled golf course development is in doubt. Engineering plans for the whole project have had to be substantially revised to address environmental problems. Currently, the state Department of Environmental Conservation is reviewing an application by the developers, Ferry Point Partners LLC, to continue operating what is, in effect, a new private dump. Since August 2000, the developers have accepted thousands of truckloads of construction and demolition debris at the park. (A public comment period ended on May 24). According to one of the developers, J. Pierre Gagne, if Ferry Point Partners does not receive permission to continue its waste disposal operation, “We’ll have to explore options, which may include abandoning the project.”

The golf course development was shut down in December because his company allegedly exceeded a state permit allowing them to accept 750,000 cubic yards of construction and demolition debris at Ferry Point Park. Gagne, whose company disputes that it has exceeded the site’s permitted capacity, says that he needs more construction and demolition debris to provide a thicker insulation against the original municipal landfill.

But there are indications that the new private dump Gagne’s company is operating at the park is actually linked to the recent environmental problems. In addition, the new dump appears to be playing a substantial role in financing the construction of the golf course, because the developers are receiving financial benefit from the disposal of the debris at the park.

The environmental problems at the park are not only threatening the future of the golf course; they are also becoming a major financial liability for the city. The developers’ contract allows them to pass on to taxpayers a significant part of the cost overruns associated with the environmental problems. “It’s a dangerous site,” says Andrew Goldberg, a staff attorney for the New York Public Interest Research Group. “We don’t know whether they have the wherewithal to finish it. When it’s public property, how can you go forward?”

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Four years ago, Mayor Rudolph Giuliani and Parks Commissioner Henry Stern announced plans for a private company, Ferry Point Partners LLC, to develop a 222-acre section of Ferry Point Park, overlooking a picturesque bend in the East River, next to the Bronx-Whitestone Bridge. According to a 1998 press release from the mayor’s office, the golf course should have been open this past spring. Ferry Point Partners, which includes golf superstar Jack Nicklaus and developers Jonathan Stern, Gagne, Paul Kanavos, and Dan Bythewood, subsequently signed the largest-ever city contract providing for the private operation of a municipal park facility.

The developers’ contract with the city contains big plans for the former dump site. The project includes an 18-hole tournament-quality golf course, an 850-person capacity banquet hall, a riverside restaurant and a park encompassing almost a mile of city waterfront.

The contract also puts the 222-acre section of the city park and its new facilities under the private management of Ferry Point Partners for 35 years. While the developers will be operating a variety of commercial ventures at the park, the city will get a cut, either an annual minimum rent totaling $69.5 million by the end of the 35-year contract, or a percentage of the revenues. But nowhere in the contract to develop the park does it make mention of using the site for waste disposal.

After a year and a half of work, Ferry Point Park still looks more like a dump than a budding golf course. On a visit this winter, plumes of black smoke billowed into an otherwise clear sky from a fenced-off area behind a construction trailer. In another area, plastic bags and sheets weighted down with rocks had been placed over piles of grayish dirt, after residents of a nearby housing complex repeatedly complained about the dust blowing in their windows. Chunks of concrete and long pieces of twisted metal lay scattered about.

No work has been done on the golf course in over five months, a serious setback to a project with a troubled history. State environmental officials have repeatedly threatened to take action against the developers for numerous violations of the waste management permit, including the disposal of construction debris contaminated with substances such as metal and asphalt, which by law cannot be dumped in New York City. There have also been problems stemming from the original dump, such as the borderline explosive levels of methane gas, which were so worrisome to state officials that they shut down the whole site for three days last October.

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Having a private company build a golf course at its own expense and then provide revenue to the city was a good arrangement, says former Parks Commissioner Henry Stern, who signed the contract with Ferry Point Partners. But Stern indicates that he had had reservations about Ferry Point Partners LLC before the contract was even executed. One of his concerns surrounded the developers’ demand to charge $80 to $90 greens fees, comparable to those at a private suburban course. Stern says that he had wanted the greens fees set at $40. (The green fees for Ferry Point Park, which the city regulates, have yet to be established.)

Stern also says that he was disturbed by Ferry Point Partner’s use of what he terms their “political muscle.” According to Stern, the developers “tried to establish their own relationships with city officials in order to improve the deal from their point of view,” he says, “and although I disapproved of it, there was nothing I could do about it.” Stern declined to identify the city officials.

Ferry Point Partners has also spent a significant amount of money in lobbying fees for their project. In 2000 alone, the developers spent $162,578, according to lobbying records at the City Clerk’s office, the fifth highest amount of any company in the city. City law requires that money paid to a registered lobbyist for all services involved in doing business with city officials be registered as lobbying fees. (All of that spending consisted of legal fees, says Jonathan Stern; “We’ve spent zero on lobbying.”)

In order to take legal effect, the Ferry Point Park contract had to be registered by the City Comptroller. But the office of former City Comptroller Alan Hevesi initially rejected it. In a July 13, 2000, letter to the New York City Parks Department, Hevesi’s office gave several reasons, including an unspecified Department of Investigation inquiry and missing documents, and the fact that it had not been approved by the city’s Franchise and Concession Review Committee.

Nevertheless in August 2000, the Parks Department went ahead and allowed the developers to start work anyway. “It has to be registered somewhere along the line,” says Assistant Parks Revenue Commissioner Joanne Imohiosen. Because the Ferry Point Park contract involved no initial outlay of funds, Commissioner Imohiosen says, the comptroller’s refusal to register the contract back in 2000 “has no practical effect.”

Ferry Point Partners had already been working at the park for almost a year when a pending lawsuit from environmental groups challenging the legality of the deal apparently spurred the Franchise and Concession Review Committee to finally approve the deal at a special meeting on June 1, 2001.

The comptroller then finally registered the contract, on June 5, 2001. Three weeks later, Paul Kanavos and Jonathan Stern contributed $1,000 each to Hevesi’s campaign for mayor. In a recent interview, Hevesi, who is now running for state comptroller, said he couldn’t remember his office’s objections to the contract.

Imohiosen says that the contract with Ferry Point Partners was put through an exhaustive review process. “This is the most vetted project in the history of concessions in New York City Parks,” she asserts. “If some little piece of paper isn’t quite right, which I’m unaware of, it was fixed. This has all been in the public domain for years now.”

But some important documents are still missing from the Mayor’s Office of Contracts. City law requires Vendex questionnaires, available for public inspection, to be filled out for every concession agreement with the city over $100,000, before a contract is even signed. On the forms, businesses must disclose whether they or their executives have run into problems with government agencies in the past. But twice–the second time just this April–the office has rejected Ferry Point Partners’ filings for being incomplete.

A concerned city official or citizen might have good reason to want to learn more about Nicklaus’ company, Golden Bear Golf Inc. The company was delisted from NASDAQ for failing to meet minimum capitalization requirements, and it walked out of a contract to build a golf course in Florida for Donald Trump. In March 2000, several months before the Ferry Point Park contract was signed, Golden Bear settled a class-action lawsuit for $3.5 million with shareholders after it had to revise misreported loss figures from $2.9 million to $24.7 million for its golf course construction unit. Shortly after the lawsuit, Nicklaus took Golden Bear Golf private.

While the developers have not yet managed to build a golf course at Ferry Point Park, they have been quite successful at operating what is, in effect, a new dump. Over 750,000 cubic yards of debris, from hundreds of construction sites around the city such as the Horace Mann School and the New York Coliseum site, have been dumped at the park. Until DEC closed it down, Ferry Point Park was the only permitted disposal site in New York City for uncontaminated construction and demolition debris also known as “clean fill,” according to Tom Kunkel, special assistant to the commissioner for DEC.

According to Gagne, the debris serves both as protection against the underlying municipal dump and as a base layer for the new golf course. But environmentalists charge that the disposal fees amount to a sizeable public giveaway to the private developers, while taxpayers still have to foot the bill for environmental cleanup. “The city could have built this project itself by capturing the revenues from the disposal of construction and demolition debris,” says Leslie Lowe, former executive director of the Environmental Justice Alliance, who has fought the project for the past two years.

The amount of debris that has been dumped at Ferry Point Park is worth close to $17 million in disposal fees at the rate of $675 per 30 cubic yards charged by Browning Ferris Industries, one of the city’s biggest commercial waste hauling firms (which does not dump at the park). But Ferry Point Partners won’t divulge exactly how much of a financial benefit the company is receiving from the disposal of construction debris on public property. “It doesn’t make money,” Gagne says. “What it has helped us do is reduce the cost of the project.”

Until contacted by City Limits, former Parks Commissioner Henry Stern didn’t even know money was being charged for the disposal of the debris. Stern says he had been under the impression that the developers were paying for the cost of the whole project through the raising of private capital. “If there are unexpected revenues, they ought to be shared with the city,” says Stern, who left the Parks Department in early February to run a good-government group called New York Civic. “Certainly the developer should not be the sole beneficiary.”

Joanne Imohiosen, who remains in the department, says “I don’t have an idea” of what the developers were making in dumping fees. Imohiosen contends that such information is not pertinent, because the developers are “taking this horrible dump and making a wonderful recreational facility at basically no cost to the city.”

But Ferry Point Park is actually turning into a multi-million dollar financial liability for the city.

As it stands, the only fully completed feature at Ferry Point Park is a mile-long trench filled with stones that extends along one end of the park. The trench is supposed to vent methane gas that special monitoring wells–placed at the edge of the site after construction began–have identified as being at explosive levels. Decaying garbage underneath the former dump generates methane gas; the trench is intended to keep it from migrating to the residential neighborhood of Throgs Neck across the street from the park.

“Nobody had quite known, nor could they have known, what was out there–the landfill was closed and capped 30 years ago,” says developer Jonathan Stern. He says the methane problems at the edge of the golf course are linked to the large amount of construction debris being deposited at the site, which compresses material from the original dump and press the gas out at its edges. “Imagine a sponge,” he says. “If you push down on the sponge, the water’s going to come out the side.” He adds that his company has spent about $1 million building the trench to address the methane problem. “We’re probably a year behind, and 90 percent of that being a year behind is because of the environmental difficulty with the site.”

The expense of addressing unforeseen environmental problems is the primary reason the cost of the project has jumped from $22.5 million to over $40 million, says Jonathan Stern. He also says that his company’s contract allows him to bill the city for most of those costs. “The city is responsible for everything that involves environmental remediation over $50,000,” says Stern.

Despite the terms of the Ferry Point Park contract, city officials are taking steps to cut potential losses. On December 28, 2001, the same day that Mayor Giuliani announced negotiations with PGA officials, the city’s Franchise and Concession Review Committee voted to amend the contract with Ferry Point Partners. According to Imohiosen, the city is putting a $6.9 million cap on the amount that it will reimburse the developers for fixing environmental problems at the park.

But as recently as this past May, lawyers for the developers were taking the position that the city is still responsible for the cost of cleaning up Ferry Point Park. According to Ed Wallace, a lawyer with the firm of Greenberg Traurig, the $6.9 million is only a “working cap.” Says Wallace, “If the number went higher, we’d be entitled to have it raised.” At press time, the FCRC amendment was not even legally enforceable, asserts the office of new City Comptroller Bill Thompson, because it had not yet been registered by the comptroller.

The developers are eager to get back to work. In February, Ferry Point Partners submitted a three-volume application to the State Department of Environmental Conservation for permission to take 550,000 cubic yards of additional construction and demolition debris. The application argues that the additional construction debris will have a negligible environmental impact on the site.

Unmentioned in the developers’ application is any potential financial benefit of the additional debris. At the rate quoted by Browning Ferris Industries, 550,000 cubic yards of debris is worth another $12.3 million in disposal fees.

The developers say they are addressing the environmental issues. But environmentalists remain unconvinced, contending that city and state officials as well as the developers blundered in the initial environmental review, which failed to anticipate the need for costly environmental remediation. “The concession agreement leaves the taxpayer on the hook for the environmental problems created. And what if Ferry Point Partners walks?” asks Leslie Lowe. “In this time of budget deficits, where is the city going to find the funds to stabilize the evironmental mess that could be left behind?”

Alex Ulam is a Manhattan-based freelance writer.