The Seaport’s Dilemma

Howard Hughes proposal could fund South Street Seaport Museum at unpopular cost

16 Nov 2020 | 01:50

The Howard Hughes Corporation presented development plans for the South Street Seaport Historic District during a Community Board 1 landmarks and preservation committee meeting last week, which included the construction of two 470-foot towers consisting of a mix of affordable housing units and market-rate condos as well as plans for a new building for the long suffering South Street Seaport Museum.

From the start, board members were clear that the discussion should focus on the question of whether the project fit into the architectural context of the historic, so it did not become clear to many committee members until the final 15 minutes of the nearly 5-hour meeting that the $50 million HHC said it would invest in the museum would not necessarily fund constructing the new headquarters plotted for the corner of John and South Streets.

Instead, the museum would use $40 million to create an endowment of operating funds and $10 million to renovate the existing building as well as build a glass structure that would link the historic galleries to the future construction. In the museum’s view, the money would not only allow for it to open for the first time since Hurricane Sandy in 2012, but it would also ensure its longevity.

“The vehicle of the endowment is the difference between a museum that is sustainable over the long term or not, and my prediction as a professional nonprofit leader for nearly 30 years, is that at the end of this pandemic, and the resulting economic fallout, there will be a very high correlation between endowed museums and survival,” said Captain Jonathan Boulware, president and CEO of the museum, during the meeting, which took place over Zoom. He added that this investment would be a foundation upon which the museum could raise money to fund the eventual construction of a new museum building.

Hypothetical Idea

Members of the committee, however, said this information changed the entire perspective of what had been discussed over the past several hours. Since HHC is not bankrolling the construction of a new museum, Community Board 1 Chair Tammy Meltzer reasoned, the designs presented at the meeting were more of a hypothetical idea than an actual proposal. She wondered why the committee was considering the museum plans at all, considering there is no guarantee — even if the city gives HHC the go-ahead for the project — that the designs for the building would ever materialize in physical brick and mortar at the John Street lot.

“If you’re doing general concepts of it, but you’re not doing the plans and helping with the construction of the building then that’s something that may never happen,” said Meltzer.

Committee member Vicky Cameron seemed doubtful that $50 million would even be enough to cover construction cost anyway.

“So this is just pie in the sky because there’s no way they’re ever going to build that building with $50 million,” said Cameron.

Committee chair Bruce Ehrmann was also skeptical of the investment agreement, saying he had seen many proposals similar to HHC’s to fund the museum, but that the sponsoring facility had always gone bankrupt before the museum ever received the money promised.

Saul Scherl, president of the New York tri-state region at HHC, said during the meeting that they had tried to make the plans clear from the beginning and that they were not trying to hide the fact that the $50 million would not fund construction.

Toxins in the Soil

This is all complicated by the proposal tying the museum’s fate to HHC’s plan for 250 Water Street, which currently functions as a parking lot. The land has been mired in controversy for decades. The Landmarks Preservation Commission has rejected nine previous development proposals made by the Milstein family since the 1980s, when they bought the site in a foreclosure sale. In 2018, HHC bought the lot from the Milsteins for $180 million. But the corporation hit a snag in their plans upon discovering mercury, lead and other toxins in the soil — which remain from the 1800s when a thermometer factory sat at 250 Water Street. The site is now a part of the state’s Brownfield Cleanup Program as part of its remediation. At the time, residents and parents of the children of the neighboring Peck Slip and Blue schools criticized HHC for what they called a lack of transparency in how they approached the toxic cleanup.

Plenty of the public who spoke at the meeting endorsed HHC’s proposal — either moved by its support for the museum, the inclusion of affordable housing, or belief that it will bring business and prosperity to the neighborhood.

“We were pleased to see such a range of people attend the meeting to voice their support for turning a parking lot into mixed-income housing — including the most significant affordable housing in Lower Manhattan in decades — for saving the beloved Seaport Museum, and for providing jobs and economic stimulus as the neighborhood recovers from the pandemic,” a spokesperson said about the meeting in a statement. “We are looking forward to continuing the conversation with the community over the coming months.”

Critics, though, weren’t swayed. For starters, they said, HHC’s proposal for Water Street would be out of context with the rest of the district. The zoning within the historic district allows for buildings to be no taller than 120 feet. The pair of 470-foot towers would obviously exceed that. In order to build at that height, HHC will need both variances and air rights transfers from nearby lots, which the city would have to approve.

Critics said that in order to garner much needed support from the community, HHC is using its promised investment in the museum as leverage — but without a commitment to be a part of constructing the new museum headquarters, it seems as though the corporation is only interested in profiting from the towers at 250 Water Street.

“The museum is being held hostage by the city and Howard Hughes. Generally, [the] landmarks [committee] does not consider two parcels that are a couple of blocks away from each other to be in any way dependent upon each other,” said Michael Kramer, who is a member of the Seaport Coalition, an umbrella group that includes Save Our Seaport, residents of Southbridge Towers, and local parents who make up Children First. “We now better understand why they would be linking one proposal with a completely unrelated second proposal.”

Kramer referenced an internal HHC document from October 2019, which listed what the corporation perceived would be the key challenges to gaining approval from the city to build at 250 Water Street. It noted that the height of the towers was controversial, which was followed by a bullet point, stating, “Emphasize linkage of air rights transfer to Seaport Museum’s survival.” The document also said HHC “need(s) to build support through structured community engagement process” in order to “provide political ‘cover.’”

Another HHC document suggested the company would sell the John Street lot assets in 2022 after securing the air rights needed to build at Water Street.

“They never have had any intention of actually developing the site,” said Kramer.

A spokesperson for HHC said that the existence of this memo did not indicate the corporation has an intent to sell, and that the financial projections listed in the memo are the product of routine analysis HHC conducts as a publicly traded real estate company.

“Any speculation about the company or plans for the Seaport properties based on these standard budgeting documents taken out of context is simply an attempt to distract from the importance of this project and our proven commitment to the neighborhood,” a spokesperson said in a statement.

Many obstacles lie ahead for HHC to get approval for these projects, including reviews from the Landmarks Preservation Commission and the Economic Development Corporation, as well as go through the Uniform Land Use Review Procedure.