Annual Report 2014
Priorities for a New Administration
On January 1, a new era dawned on New York City. Bill de Blasio was inaugurated as the 109th Mayor of the City of New York, and he was joined by a host of newly elected officials citywide.
Throughout his campaign and during his initial months in office, Mayor de Blasio has advanced a progressive vision for New York City. He has pledged to address the plight of those left behind in the new world economy and is making it his mission to create opportunities for prosperity and advancement for all New Yorkers.
While some have speculated that the new Mayor's platform represents somewhat of a repudiation of the Bloomberg administration's pro-growth economic development strategies, the reality is that New Yorkers are experiencing the natural changes in leadership styles and priorities that customarily come with a new administration.
Mayor de Blasio's focus on equality of opportunity and a brighter future for all New Yorkers is a worthwhile and largely attainable goal offering great potential benefit to the City's future. As long as infrastructure investment and economic development are key elements of the overall strategy, it is worthy of the design, construction, and real estate industry's support. After all, when the City prospers, so too does our industry. And vice versa.
On the following pages, the New York Building Congress highlights four priority areas for collaboration between the building community and our leaders in City government to bolster New York's economy while creating the opportunities that will help fulfill the Mayor's progressive agenda.
Infrastructure Investment
New York City must continue to invest in the infrastructure that sustains a thriving metropolis. The Building Congress is calling on Mayor de Blasio and the City Council, as well as their colleagues in State and federal government, to demonstrate their commitment to the physical upkeep and expansion of the City's vast and aging network of schools, roads, mass transit, water and wastewater systems, and other infrastructure.
In addition to improving quality of life and stimulating economic activity, these infrastructure investments have the potential to create thousands of good-paying jobs for residents throughout the five boroughs.
However, as the Building Congress noted in a recent report, government has relied increasingly on debt financing for the vast majority of its capital funding in recent years. The debt burden for the City of New York-which is the largest single investor in its own infrastructure- currently stands at approximately $100 billion and is expected to grow to $109 billion by 2017.
Servicing this debt absorbs about $5 billion annually out of the City's general revenues and is forecast to rise to $7 billion a year between 2014 and 2017.
As part of his commitment to infrastructure investment, Mayor de Blasio should identify and work with the City Council and State Legislature to adopt new, dedicated revenue sources, which would provide a reliable stream of funds for future capital projects.
The City, under the Mayor's leadership, also should look for ways to stretch its capital dollars by improving how public construction projects are delivered, including through the use of alternative methods of project delivery, such as design-build, and the adoption of more effective and fair procurement policies and practices. From eliminating "no damages for delay" contract provisions to pursuing prompter payments and other means of promoting more balanced risk sharing between the City and contractors, public procurement reform can go a long way to reducing costs and making possible an even greater number of critical infrastructure projects.
Housing
While the fortunes of the City's housing construction sector have improved rapidly over the past few years, much of the new inventory has been geared toward affluent buyers. In response, Mayor de Blasio has set an aggressive target of adding or preserving at least 200,000 units of affordable housing over the next decade. Such a rate is certainly achievable if City Hall is willing to work in direct partnership with the building industry.
Mayor de Blasio has indicated a willingness to allow developers to build taller than current zoning permits in exchange for more inclusionary housing within these projects. It will now be up to the public and private sectors to work together to determine an appropriate balance that can maximize the number of affordable units while also making such developments economically viable.
In addition, the Mayor should work with the industry on ways to restart construction at more than 550 stalled sites that have the potential to create approximately 10,000 units of new housing throughout the five boroughs.
Office Construction
New York City's Independent Budget Office recently estimated a need for more than 50 million square feet of new office space in the coming decades. If successful, New York City would find itself in a position to accommodate approximately 187,000 new office jobs, as well as thousands of additional service sector jobs that cater to office companies and their employees.
As is the case in the residential sector, office construction also benefits the overall economy through the creation of jobs and an expanded tax base that can be used to support the operations of local government. To jumpstart new office development, the de Blasio administration should make good on its pledge to aggressively pursue a major rezoning of Midtown East. The Mayor can also sow the seeds for future economic growth through a series of rezonings, incentives, and streetscape investments designed to spur further development in areas such as Hudson Yards, Downtown Brooklyn, and Long Island City.
Government can also help by reducing the relatively high real estate tax burden on New York City, compared to other U.S. and international cities, and by examining ways to streamline regulatory processes and procedures, which are complex, burdensome, and add to overall development costs.
Storm Recovery and Preparedness
Along with billions of dollars in immediate damage, Superstorm Sandy exposed troubling vulnerabilities that threaten New York City's long-term economic vitality. The City's leaders must act based on the assumption that potentially devastating weather events will occur more frequently and take the necessary steps to be better prepared in the future.
A task force created by the Building Congress found that insufficient power and telecommunications reliability, uneven emergency response, vulnerable infrastructure, and antiquated building systems contributed to the devastation wreaked by Superstorm Sandy- and all therefore require urgent attention in the coming months and years.
The de Blasio administration, working in close coordination with Governor Cuomo, must move aggressively to prioritize and deploy a large portion of the $30 billion in federal money that has been pledged to the State.
What's more, agency officials throughout the administration must ensure that resiliency measures are factored into all ongoing and planned capital projects throughout the City and especially in areas that are at the highest risk for severe flooding.
