CE Touts Transit-Oriented Development, Public-Private Partnerships and Bristles Over Indian Point’s Closure
John Jordan | April 2017
A Conversation with Westchester County Executive Robert Astorino
WHITE PLAINS—As Westchester County enters the second quarter of 2017, the commercial and residential real estate markets are robust as businesses and new residents invest in the county.
The county’s biotech and healthcare industries are driving economic growth and creating new jobs in their respective sectors, as well as in the construction trades. Combine that with a host of multifamily and mixed-use real estate projects taking place in the county, particularly in the downtown districts of White Plains, New Rochelle, Yonkers and Mount Vernon, and there is ample evidence to believe that Westchester County’s economy is on the rise.
Westchester County’s success story in the biotech industry continues to center around Regeneron Pharmaceuticals, which recently acquired its property at the Landmark at Eastview and is also pursuing expansion opportunities in nearby Greenburgh.
On the healthcare front, acquisitions and expansions in the medical field have fueled both significant capital investment and local hiring.
Westchester County, which has provided assistance and in some cases key incentives for many of the major projects in development, has embarked on an ambitious plan to harness its own assets through public-private partnerships at the “North 60” property with a proposed biotechnology park, at the Rye Playland amusement park and at the Westchester County Airport.
Real Estate In-Depth recently sat down with Westchester County Executive Astorino at his offices in White Plains to discuss his views on the county’s economy and how the county is fostering and in some cases initiating the county’s next wave of development and prosperity.
RIN: How do you see the Westchester County economy faring this year?
Astorino: I think the economy is getting better and better every year since the collapse (Great Recession from December 2007-June 2009), but the numbers prove that the economy is on pretty strong footing right now. Editor’s Note: Westchester County’s unemployment rate stood at 4.8% in February 2017, according to the New York State Department of Labor.) In February 2009, the county’s unemployment rate stood at 7.5%, up dramatically from the 4.6% rate posted in February 2008).
The county’s economy has far exceeded expectations going back to the dark days because of incremental gains in employment. Right now we have one of the lowest unemployment rates (in New York State) and we are one of the highest in job gains. Since 2010 we have created about 44,000 new private sector jobs. The county has certainly helped along the way. While I don’t take credit for all of those new jobs, I think the county has certainly assisted directly with our IDA (Industrial Development Agency) and LDC (Local Development Corp.) and that is really what they were formed for. I think that maybe because the economy was so bad, many people took advantage of those tools and we have a lot of projects that are underway directly with county assistance in White Plains and throughout Westchester.
RIN: Area commercial brokers believe there is interest in Westchester County from New York City-based businesses that are being priced out of the market there. Do you see interest from New York City firms in Westchester County right now?
Astorino: I remember meeting with Scott Rechler (CEO and chairman) of RXR Realty a couple of years ago at his offices in New York City and we were talking about areas that we thought would be fertile in Westchester for city developers, including his firm, and others to come up and look at. They never (previously) had looked at Westchester. It was not on their radar at all. New York City was their battleground, especially Manhattan. However, you start to run out of room and money in Manhattan and they start to look at secondary markets. With RXR, for instance, we talked about residential and what opportunities might exist and they saw a gem in New Rochelle. Since then they have also gone into Yonkers. We have also been talking about another potential location in one of the other cities…
I have made a concerted effort to go down to New York City. I have talked to real estate brokers. We have had two meetings with CBRE and JLL and we touted Westchester as a secondary market to their brokers. I also spoke at the (8th Annual) Real Estate Expo at the Hilton Hotel in Midtown Manhattan.
So we have really made an effort to tout this market, knowing that it may not be their primary market. But, there is a real opportunity with the rates (office asking rents) being what they are and a very overheated real estate market right now in New York City. Quite frankly, they are concerned that the bubble is going to pop at some point in the city and to insulate them; Westchester is a good market for some of their portfolio.
RIN: You have proposed harnessing the potential of some county-owned assets, such as the North 60, Westchester County Airport and Rye Playland. Can you tell us your thoughts behind the new policy and the status of each initiative?
Astorino: We really worked very hard in the first four years or so on getting the expenses under control and we did that and we still continue to do so. We made the policy decision of not raising taxes so that limits the revenue we could bring in. Sales tax has been shaky at best. We got hit hard in 2014 and 2015 and 2016 was also not a good year for sales tax. We have seen a little bit of life, but we are still not counting on sales tax like we had in the past… I think everyone is realizing consumer behavior is changing a little bit with Amazon and online retailers. Consumers are not buying from (conventional stores) as much. Plus, fuel prices are still very low as compared to what they were five years ago and we get the sales tax off of that. So, two big revenue producers are taking a hit… With our policy of not raising taxes, we have to look at other sources of revenue that are not generated from taxpayers. So, we looked at all of our assets and there are several that we can generate revenue from and that is what we think is the new model. We have to be able to look at everything we have available and see what makes sense to utilize.
Rye Playland was always a problem and we reduced the problem (by finalizing a public-private partnership with Standard Amusements) and long-term it will be much healthier. We still have obligations because we still are the owner and so we have got to continue to put capital projects into that property. But, we have a private company that is going to put $30 million of its own money into it…
Another asset is Westchester County Airport, which is a project we really pushed. The good news is that we believe a majority of the County Board (of Legislators) is on board with this. We are going out with an RFP (Request for Proposals) and there would be probably a 90-day returnable on that. Then we would evaluate the proposals and make a recommendation to the Board of Legislators.
Editor’s Note: The RFP for a Public-Private Partnership for the “Lease, Management Operation, Maintenance and Improvement of Westchester County Airport” issued on April 3rd by the county has a due date of July 14, 2017. The county stated in the RFP that it hopes to select a winning proposer, sign a lease agreement and secure necessary FAA approval by the end of this year. In November 2016 Westchester County Executive Astorino proposed a plan to implement a public-private partnership whereby Oaktree Capital Management, L.P. would manage operations at Westchester County Airport under a 40-year-lease deal. The long-term lease deal was structured to save taxpayers more than $140 million, improve the overall passenger experience, and strengthen environmental protections, according to the County Executive. However, after criticism from the County Board of Legislators over not putting the project out to competitive bid, the county hired Frasca & Associates, LLC, a transportation consulting and financial advisory firm, to conduct an RFP to select a new private operator for Westchester County Airport.
Astorino: I hope we get a lot of responses from the RFP. I think there is a nice consensus that we are all being opportunistic that this is a real potential (source of revenue) and there is a lot of money at stake for the county to receive.
There has been a lot of movement on the North 60 biotechnology project. I think that within two weeks it will be done.
Editor’s Note: True to his word, County Executive Astorino and Board of Legislators Chairman Michael Kaplowitz announced on April 3rd the approval of the $1.2-billion Westchester Bioscience & Technology Center project on 80 acres of vacant land in Valhalla. That evening the Westchester County Board of Legislators unanimously approved the project proposal. The County Executive said that biotech has been a key economic driver in Westchester, including the impressive growth by Regeneron Pharmaceuticals. The strategic location of the North 60 project, near Regeneron’s headquarters property at the Landmark at Eastview, as well as New York Medical College’s facilities in Valhalla, will provide a dynamic cluster that should generate significant interest in the Westchester Bioscience & Technology Center at the North 60.
RIN: The Indian Point closure announcement in January blindsided everyone. What concerns do you have and are you pleased that a Task Force has been established to address the impacts the closure may bring?
Astorino: Quite frankly I think the task force by the governor is window dressing. He should have formed a task force when he was deciding whether to do this or not… No matter where anyone stands on the nuclear energy debate, there are real issues we have to confront by this closure. The Village of Buchanan has 60% of its budget coming from Entergy (owner-operator of Indian Point); 35% for the Hendrick Hudson School District, the Town of Cortlandt gets about 5% of its budget from Entergy and we get about $5 million all-in from them and then you have the special districts, library and fire, so the impact is significant. I don’t think there was any real thought from the governor other than a big check in his political column…
I think if the state had not been the enemy of Entergy for all these years under Gov. Cuomo, it is likely that they would have gotten their license renewed and then they would have made a business decision to either sell to another company that would have seen it as viable, or made less profit. I think they would have stayed in the game had they not had to spend $200 million on this nonsense (the license renewal approval process)…
RIN: Downtown revitalization projects are breaking ground throughout the county? How has the county supported those projects?
Astorino: I think the market being what it is right now is supportive of development. You have some areas that are more pro-active and more pro-development, like White Plains, which has been very good in moving projects along. Harrison has been very good, and Yonkers and New Rochelle have been moving things along as well. You get those communities that see benefits and you are going to get developers that are going to test the waters there. Once they do, now we can all get around a table and hammer something out. We have been able to directly help and I think that has been paying off.
Editor’s Note: In addition to providing assistance to projects in White Plains, County Executive Astorino noted that the county has proffered incentives and assistance for development projects in, Dobbs Ferry, Ossining and other communities outside of urban centers. Astorino also stressed that while the county’s Industrial Development Agency has incentivized major mixed-use projects, such as 55 Bank St. and the Westchester Pavilion redevelopment in White Plains, the county’s Local Development Corp. has provided key assistance to not-for-profit entities that have fueled major development projects at major health care and higher educational institutions such as Westchester Medical Center and Pace University to name a few.
Astorino: I remember when we first took office there was a big debate on which direction to start zeroing in on. Was it the old corporate office parks to try and fill those up? We got pressure from some of the owners and some of the brokers, but while we said we would always assist them, we decided to look at the emerging opportunities in the life sciences and that has paid off.