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City, Hudson River Park Trust Strike $100M Air Rights Deal for Pier 40

 An appraisal by the Empire State Development Corporation apparently concluded that $100 million from Atlas in exchange for 250,000 square feet of air rights from Pier 40 would cover badly needed repairs at the pier.
An appraisal by the Empire State Development Corporation apparently concluded that $100 million from Atlas in exchange for 250,000 square feet of air rights from Pier 40 would cover badly needed repairs at the pier.
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DNAinfo/Danielle Tcholakian

HUDSON SQUARE — The city and the Hudson River Park Trust have struck a deal allowing developers who own the sprawling St. John's Terminal building across the street from Pier 40 to demolish the four-story structure and replace it with five new buildings.

In exchange for being allowed to build a nearly 2-million-square-foot project that includes residential units, retail space and a hotel, the developers will pay $100 million for 200,000 of Pier 40’s air rights and set aside 30 percent of their residential units as permanently affordable housing for seniors and low- and middle-income families, according to city officials and documents.

The $100 million will go to repairing the crumbling pier, which a recent engineering report found is deteriorating at an increasingly rapid rate, city officials said.

“We couldn’t be happier to be working with our partners in government and in the community to help get Pier 40 repaired quickly and provide much needed affordable housing for seniors and families," Westbrook Partners CEO Paul Kazilionis said in a statement.

The new buildings, ranging in height from 240 to 430 feet, will hold 1.3 million square feet of apartments space across 1,586 units.

Previous conversations about a development at this location mentioned 150 to 200 affordable units for seniors. The city is now touting a promise by the developers that up to 476 apartments will be permanently affordable rentals.

The city did not provide information the breakdown of the affordable units or what incomes would qualify. City officials did say that one of the five buildings will be devoted exclusively to affordable housing, with amenities, for seniors.

The northern section of the site will be residential only, while the middle will be a mix of residential plus 160,000-square-feet of retail space and 14,200-square-feet of publicly accessible open space at West Houston Street, which bisects the property. The overpass at Houston will be demolished and replaced with an elevated garden.

The southern portion of the property may be used as a hotel and event space, and could also hold retail. The project will also includes 886 parking spaces, according to a filing posted to the City Record by the developers and the Department of City Planning.

The City Record document is the start of the environmental review process that projects of this scale are required to undergo. That process involves review by the local community board and the City Council, and Kazilionis said he and his partners “look forward to a public and transparent review process.”

The city announced the project with statements of support from the chair of Community Board 2 and local City Councilman Corey Johnson, who was given credit by Mayor Bill de Blasio for securing the "tremendous" deal.

Community Board 2 chair Tobi Bergman lauded the councilman for securing “a real opportunity to save the extraordinary park resource at Pier 40.”  

Bergman, who is currently at loggerheads with the city over their determination to raze a volunteer-run garden on Elizabeth Street to build affordable housing, described the affordable housing at the St. John's site as “of equal importance” to the pier and said it will “help sustain the diversity that is integral to the social fabric of our community and our city.”

The environmental review will also consider a second scenario that would include more retail space with fewer parking spaces.

It will also look at the potential negative effects of both versions of the project on the area, such as the shadows cast over Hudson River Park and the wildlife in the river, and the burden that the influx of new residents, workers and visitors to the area will place on local public transportation and schools.

Notes from a meeting at Manhattan Borough President Gale Brewer's office last year, obtained by DNAinfo New York through a Freedom of Information Law request, showed that developer Atlas Capital Group balked at a request by the BP for the development to include a school, arguing that there are three new schools coming to the area.

Atlas apparently claimed that they had already done an environmental impact study that indicated an additional school would not be needed despite the likely addition of more than 1,000 new families to the neighborhood.

The deal also requires the approval of the Hudson River Park Trust's Board of Directors, who will undertake an "independent appraisal," city officials said, to make sure the price is appropriate for the amount of air rights being sold.

If the project is approved, the Trust plans on commencing repairs on the pier in 2017, city officials said.

The developers also plan to start building in 2017, with the expectation that they will have gotten through the city approval process by then. They plan to break up the construction into three phases, allotting two to three years for each phase.

The review outlined in the City Record document sets a projected completion date of 2024.

Notes from a meeting at Manhattan Borough President Gale Brewer's office obtained by DNAinfo New York through a Freedom of Information Law request showed that at least part of the development won't be able to start until as late as 2026 because former Mayor Michael Bloomberg's company Bloomberg LP renewed a lease in 2012 for a space in the building.

A public scoping meeting regarding the project is scheduled for Nov. 20 at 10 a.m. at the Department of City Planning building at 22 Reade St.

Written comments can be submitted to DCP until the end of the business day on Nov. 30.

Correction: An earlier version of the story mistakenly stated that the southern portion of the property would hold a hotel and that construction on the project was expected to start in 2024. City planning documents listed that year as the "build out date," meaning when the development will be complete, not when it will begin. While City Planning documents also say the southern portion of the project will be a hotel, the developers say they have not yet decided on that.