John’s Convo with EDC

From John in conversation with EDC

John M (Fri 1/24)

I spoke with Andrew Kimball last Friday and he was adamant that our building is not part of the BMT plan and that the graphics indicating that it is were a mistake. I'm willing to give him the benefit of the doubt about that, but the reality is that we may be at risk as the BMT project develops further even if we are not included right now. 

I am expecting to receive a proposal soon from Davidoff Hutcher & Citron to advocate for as at the city level and potentially the state level as well. Assuming their fees are not prohibitive, we will likely move forward with them. DHC is highly recommended by Michael Hiller and has offered to take us on as a favor to him. 

I have a call scheduled this afternoon with PJ Berg, who is Executive Vice President of Real Estate at EDC. I intend to press him on the economics of the BMT plan, since I would like to better understand where the break even point is in terms of housing numbers and what the incentives will be for BMT to expand beyond its current borders.

I'm also going to see if I can get someone at WXY to talk to me. I'd like to hear from them why we keep showing up on their graphics as a potential acquisition. Speaking from my own experience working as a consultant for city agencies, I suspect that they are going to say they are doing the best they can with no budget and no time, but we'll see.

Financials:

The port operates at a loss and has for years. The capacity is severely limited by the condition of the piers and the cranes, but operating costs like barging materials over to NJ are fixed, so the only way to make the port profitable is to repair and modernize the piers to increase throughput. The necessary improvements are estimated at $1.5B. Some of that (about $300M) will come from federal (unless Trump cancels), state, and city grants. The rest of it would come from leasing or selling the "uplands" (Columbia Street) and presumably the UPS site for development. 7-9,000 is the ballpark number of housing units that makes the math work. PJ said they can fit that into Columbia Street and UPS. I pressed him on the possibility that our building would help boost those numbers, and he said it wasn't being considered, he hadn't modelled it, and he didn't see how it would make any financial sense to acquire a recently renovated residential building just to convert it to more residential.

Here is what really concerns me: I asked about the infrastructure upgrades that will be required for that much new housing. UPS will be especially difficult since there is nothing there and completely new electric, water, and sewer will have to be installed. This is not part of the plan. The utilities will be the responsibility of whoever does the development. Maybe that gets done right, but the fact that it is being kicked down the road is not great.

In my opinion, transportation is even more problematic. Their only answer to that is the "spine" that would run behind our building. Bermed would certainly be better than raised, but either way, I don't see how that works. We already have traffic jams from the cruise ships and the existing port, both of which use that road now. It clearly hasn't been thought through yet.