Since President-elect Donald Trump announced a $1 trillion infrastructure upgrade for the U.S., many have questioned how exactly that could happen. But leaders in New York City’s real estate industry are championing Trump’s talk of using public-private partnerships to make the plan a reality.
At a panel at NYU Schack’s Capital Markets conference last week at the Pierre Hotel, Bill Rudin, CEO and vice chairman of Rudin Management, pointed at former Mayor Rudy Giuliani’s work in converting old buildings to residential, offering tax incentives, and doing infrastructure improvements in Lower Manhattan after 9/11 as a “roadmap” for Trump.
“If the government does it’s thing, the private sector will come in and invest,” said Rudin. “You can’t go it alone.”
He cited the Tappan Zee Bridge, La Guardia Airport, Brooklyn Navy Yard, Cornell Tech and Atlantic Yards as examples of projects that are happening because of the partnerships between the public and private sectors.
Rudin also spoke about public-private partnerships on Bloomberg TV a few hours before the panel, and was optimistic that they would be successful, especially without a divided Congress.
“That’s why you need the private sector. The private sector is taking on the responsibility of cost overruns so the government and the taxpayers aren’t on the hook,” said Rudin, in a discussion about the renovation of LaGuardia Airport. “They’re incentivized to work hard and come in under budget, and if they don’t, it comes it out of their pockets. It’s a business deal and I think the president elect has that experience negotiating those deals.”
Maryanne Gilmartin, whose company Forest City Ratner built Barclays Center in Downtown Brooklyn and is in the process of building several residential buildings in Pacific Park nearby, admitted that even in the best of circumstances, the process of completing infrastructure in NYC can be an onerous task.
“Infrastructure is an ugly business in this town,” said Gilmartin. “It’s the iceberg; it’s not the 20 percent you see, it’s the 80 percent you don’t.”
When Forest City Ratner was constructing the Barclays Center, part of the plan included renovating a subway entrance in front of the arena, which they had budgeted $12 million for. When it was finally finished, after two years, they had spent $73 million.
“It took us two years to renovate the subway entrance, which is the same two years it took us to build a billion dollar arena,” said Gilmartin. “That’s the problem with infrastructure.”
Moderator Robert Blumenthal, vice chair and managing director of Deutsche Bank Securities, asked panelists what their top investments would be in “shovel-ready public improvements” in NYC that would maintain the city’s competitiveness.
Rudin said building a direct link to major airports was a project long overdue. He cited the late John Zuccotti’s proposal to connect Newark Airport to Lower Manhattan.
“It could be done relatively quickly, in five years, and it’s ready to go,” said Rudin.
He also advocated for the Brooklyn Queens Connector, the de Blasio administration’s proposal for a streetcar service along the Brooklyn and Queens waterfront. He suggested that project could use similar financing to Hudson Yards and the 7 line extension.
Scott Rechler, of RXR, noted that there are several “shovel-ready” projects ready to go forward, including the Gateway Tunnel under the Hudson River. Others that have been identified include the redevelopment of Madison Square Garden and Penn Station.
Bringing in the private sector brings in “innovation and discipline,” and they find ways to deliver projects better.
“As we go forward, the more we guide ourselves with public private partnerships the better we’ll be as a country,” said Rechler.