| Decision-makers who consider moving a business to Lower Manhattan are faced with many enticements, and one caveat, says a recent poll of more than 100 commercial property owners, brokers, agents, engineers, accountants and real estate lawyers. The survey, by accounting firm Marks Paneth, indicates that 70 percent of high-level real estate executives agree with developer Larry Silverstein’s statement that “Lower Manhattan has… remade itself into the new media and entertainment capital of America,” with more than a quarter of respondents saying they “greatly agree.”
But the same research found that about half of these captains of the property industry describe the risk of flooding in Lower Manhattan (particularly in the Financial District) as a “significant factor” in decisions about investing or locating there. “Executives are confident that the new World Trade Center is accomplishing its mission and transforming Lower Manhattan into a media and entertainment powerhouse,” said William H. Jennings, the partner-in-charge at the Marks Paneth real estate group. “But given recent memories of the impact of Hurricane Sandy, it’s understandable that they have concerns about the neighborhood as well.”
Catherine McVay Hughes, chair of Community Board 1 (CB1), said, “the cost of climate change has moved from the research paper to the balance sheet. Real estate investors of all kinds are including the risk of sea level rising and extreme weather events in their analysis. So, too, are insurance companies. Unfortunately, it is usually the little guy that gets stuck paying. Some assume that they don’t need to worry because government will take care of it. So far, the engineering studies to protect our vibrant mixed-use community that also happens to be the country’s fourth largest business district have not even begun.” What has begun are scholarly studies gauging the risk to the community below Canal Street. A 2014 report by researchers at the Stevens Institute of Technology, in Hoboken, and Portland State University, in Oregon, found that likelihood of flood waters rising above Manhattan seawalls has increased more than 20-fold since the middle of the 1800s. This means that the level of flooding Lower Manhattan residents could expect once every 100 to 400 years in the nineteenth century should now be anticipated once every four to five years. (Last fall, Lower Manhattan observed the third anniversary of Hurricane Sandy.) The same report noted that three of the nine highest water levels ever recorded in New York Harbor occurred in the last six years.
A separate, 2015 report by researchers from Penn State, Princeton, and M.I.T. (among other institutions) concluded that a flood reaching slightly more than seven feet above sea level came once every 500 years before 1800. The same report indicated that such floods are now arising every 24 years. (For context, the level of flooding associated with Hurricane Sandy would have been a once-in-3,000 years event before the year of 1800, but is now to be expected once every 130 years.) But these discouraging metrics may also be an indication of opportunity. A presentation prepared by CB1’s Director of Planning & Land Use, Diana Switaj, highlighted statistics from the City’s Office of Recovery and Resiliency that indicate storm-proofing efforts focused on Lower Manhattan will yield a more robust return than similar investments of public funds in nearby neighborhoods. (This appears to result from the convergence of Lower Manhattan’s enhanced risk, combined with the comparatively higher value of the assets located within the community.) Comparing the cost and benefit of resilience measures for the Manhattan Tip (the area south of the Brooklyn Bridge, stretching to the Battery, and then up to the northern end of Battery Park City) with that of the Two Bridges area (the neighborhood situated on the East River between the Brooklyn and Manhattan Bridges), the Office of Recovery and Resiliency found the cost of storm-proofing Lower Manhattan would come to slightly more than $268 million, resulting in a “net present value of benefits” of $5.19 billion. This yields a benefit-cost ratio of 19.33.
For comparison, similar measures in the Two Bridges neighborhood would cost more, at $344 million, but avail less, with the value of benefits pegged at $808 million, yielding a benefit-cost ratio of 2.34, according to the Office of Recovery and Resiliency. In spite of this inviting disparity, however, when the federal government in January awarded $176 million to the City for storm resilience measures Downtown, all of this money was earmarked for the Two Bridges area, with none authorized to be spent on anti-flooding measures for the Manhattan Tip. (The City had requested funds for both communities.) In a story first broken by the Tribeca Trib, the federal Department of Housing and Urban Development (HUD) allocated all of the grant to Two Bridges, because the concentration of low- and moderate-income housing in that area was deemed to more in keeping with HUD’s core mission. Since then, a coalition of local elected officials, including U.S. Congressman Jerry Nadler, Manhattan Borough President Gale Brewer, State Senator Daniel Squadron, and City Council member Margaret Chin have begun lobbying HUD to reconsider this decision. Matthew Fenton
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