Chalmers & Bridge Street Public Session

I attended the public session on Chalmers’ tonight. What follows are some notes and observations along with some commentary.

Overall, the City has two distinct projects underway: the Waterfront Heritage Area (WHA) and the Chalmers project. The WHA project encompasses Riverlink phase 2, Bridge Street reconstruction, Downtown Revitalization, Via Ponte, Pedestrian Bridge and possible relocation of the train station. Chalmers refers to the rehabilitation of Chalmers as proposed by Uri Kaufman or the demolition of Chalmers.

I have to say that I struggled at the beginning of the meeting to digest the various components of the WHA project. The scope of the project is quite large involving multiple stakeholders, multiple funding sources and multiple projects each separate but related in the sense of falling under the WHA umbrella. I think the packaging and marketing of the WHA initiative need some refinement to make it more readily grasped by the public.

To make explaining simpler, I’ll tackle each piece of the WHA separately with some key points from the meeting. Here goes:

Pedestrian Bridge: the funding for this project shows positive signs but this project does not expect to have a signed contract from the state until the summer. This project has no design and no plan in place and is purely in the conceptual phase. This caused some consternation from some members of the public who were seeking the physical start and end points from the South Side to the North Side but as it is strictly conceptual, no answer can be provided as to the physical structure or location of the bridge. The design process alone for the bridge will take 24 months from date of contract signing; as no design is available, no discussion of construction followed naturally. At best, a bridge would exist in 2012 assuming 24 months design  + 12 months construction.

Riverlink Phase 2: funding in place within a few months.

Bridge Street Reconstruction: a 2 phase project with first phase involving infrastructure (road to curbs) and a second phase involving street lights, sidewalks and ‘greenery’. Based upon some questions, the belief that the second phase would involve redoing part of the first phase work is not true. Currently finalizing design with DOT which is expected in 2-6 months. Apparently some ofthe twists and turns with the project involve navigating the funding streams for these projects.

Chalmers

The key driver for the viability of the Chalmers project depends upon the environmental investigation and assessment of the site. According to Saratoga Associates, a key part of this is termed a “Focus Site Investigation” (FSI). According to Saratoga Associates, the expectation is that the remediation will likely be moderate given current findings at the site. However as Chalmers is now slated for rehab versus demolition the environmental standards are higher as the FSI must demonstrate that no contaminants can enter the air stream within the residential footprint of the building.

Saratoga Associates confirmed presence of lead, asbestos, PCB and underground tanks at the site. On the spectrum of remediation, these are quite remediable.

The FSI becomes crucial on several levels. First, the property cannot be transferred  unless the remediation is complete. Second, the city under terms of its grants must be the entity performing the remediation so until the FSI is complete and the remediation is complete, Uri Kaufman cannot proceed. Finally, if the FSI were to surprisingly present severe contamination and remediation costs, the FSI may make the financial case impossible for redevelopment as the costs would be excessive. Again this does not seem likely but it is still a possibility. Finally finally, the granting of the option does not put state moneys at risk as the grant money does not have a sunset date although it is not clear if it is a grant in perpetuity either.

The plan for Chalmers includes 180 apartment units to be rented at $1100-$1800 per month for a period of 5 possibly 7 years with each unit approximately 1000 to 1800 square feet. At the end of the 5 to 7 year term, Kaufman would convert from rental units to condo units. It is the conversion to condos that gives Kaufman the investor an exit strategy and the financial return for the project.

The structure of the deal as rental to condo allows Kaufman to leverage the HUD Section 221 d(4) financing. (Please google to find out more). This HUD  section is not Section 8 and are, from my research, distinct programs. As an investor, Kaufman gains nothing , or more aptly loses a lot, by going toward a Section 8 route.

As to a Chalmers timeline, Kaufman projects starting construction in 18 months, completing construction 14 months thereafter. As a baseline, Harmony Mills in Cohoes is entering Kaufman’s 9th year.

In terms of tax revenues, the picture is not clear for the first 5 years of the project as Chalmers would be subject to several Empire Zone programs for reduced assessment and tax rates. However once converted to condos the assessments would be full value.

Commentary

The meeting should erase two memes concerning Chalmers: no one on the South Side supports redevelopment and the South Side should exclusively decide the fate of Chalmers.

First, the “no one on the South Side supports Chalmers” meme. Just because you repeat something on the radio over and over does not make it true. I think the highlight of the night was Chet Watroba conflating the C&D landfill with the Chalmers project and then expressing the meme of the utter lack of support for Chalmers from the South Side. Immediately a number of hands from South Side residents supporting Chalmers rose to the air thereby rendering Mr. Watroba’s meme moot and a blatant falsehood.  Mayor Thane then challenged the veracity of Mr. Watroba’s statement given the immediate rejection of his statement.  Recognizing that he’d been totally pwned Mr. Watroba replied (paraphrasing) that people raised their hands just to be nice to Mayor Thane as she’s just a one-term mayor anyway.  Nice. When you have no cogent argument or analysis, you just take the cheap shot (and you get a radio show). Well done. I will say most of the audience winced and groaned at such pettiness.

The second meme would have us accept that no one but the South Side should have a say in the fate of Chalmers. This is pure rubbish on many levels. It may prove useful as a polarizing strategy but it is indefensible.

I thought the for and against was fairly balanced perhaps with a slight edge to the pro-Chalmers side.

I have to say that I have some cognitive dissonance in trying to understand the anti-Chalmers crowd. I don’t know where knocking Chalmers down gets us in terms of economic growth or development. How does an empty lot move us forward? I heard nothing that monetizes the city by having an empty albeit remediated lot.

I must voice one criticism of an otherwise good presentation from Mr. Kaufman. Mr. Kaufman compared the difficulty of revitalizing demolished sites such as Chalmers to Ground Zero. As someone supporting Chalmers and Mr. Kaufman’s efforts, I found this a poor choice of words and metaphors and cringe inducing.

Finally, I’d like to recognize the strawman strategy on Chalmers which goes something like this: Kaufman knows this project won’t work as high end apartments so it’s a red herring to convert to low income section 8 housing. Or a similar meme is that Kaufman will fold and then HUD will take over and convert to Section 8. Again, the economic incentives for Mr. Kaufman to compromise flipping rentals to high paid condos just so he can fool the city does not stand any critical analysis. I just don’t get it.

Long post and time for Colbert.

Cheers.

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