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April 1996
Extraordinary city report rips Horizons
$40 million gets you a nice hole in the ground in a very historic spot. But that
is only the beginning, says city report debunking Horizons concept
Consultants for Development Downtown, Inc. (DDI),
a city entity entrusted with waterfront issues, released in late January 1996 a report
evaluating the feasibility and desirability of concepts put forth by the defunct
Horizons Waterfront Committee, Inc., an agency set up and funded by County executive
Dennis Gorski and former Governor Mario Cuomo. Governor George Pataki, a Republican,
eliminated funding for Horizons and set up a politically-motivated development agency
of his own, the Empire State Development Corporation. Former Horizons chairman Tom
Blanchard landed there, and many Horizons sympathizers ended up on the board of DDI.
It was of interest then that before the the plan you are about to read below was
made available to the public, and indeed DDIís own ìIssues Committee,î it was in
effect suppressed by ìTechnical Committeeî members, dominated by those favoring a
huge excavation project at the foot of Main Street. One month later, a ìHorizons
Liteî excavation was the centerpiece of the city's latest concept for the foot of
Main Street.
The main body of the January DDI report follows. Bold faced passages are emphasis
added by us.
We have found that the Horizons plan has severe and decisive drawbacks. For a public
expenditure of $25 to $40 million, it achieves only marginal improvements in public
access and other forms of public enjoyment. Moreover, even under the most conservative
estimated costs, it yields a net economic loss: it generates very little direct revenue,
provides only a minimal incremental contribution to land development, and does not
add either to tourism from outside the region or repeat visitorship from within the
region.
Therefore, we are working on a waterfront concept based on an incremental, less risky,
implementation strategy. The concept will provide more scope for public use and public
enjoyment and significantly greater economic opportunity -- both at less
cost and less risk. The resulting Downtown Waterfront Draft Master Plan is scheduled
for completion in early spring of 1996.
In the rest of this report, we evaluate the Horizons excavation plan. We first examine
the plan's cost. Then we evaluate potential benefits in accordance with the planning
principles given in our first report (Working Paper Number One) in this series: we
evaluate the plan's consequences for public use and economic development.
The Horizons Excavation Plan and its Costs
To evaluate the Horizons Excavation Plan, we have relied on the reports, papers,
and memoranda published by the Horizons Waterfront Commission and by its successor
organization, Empire State Development.
According to the most recent information made available (by Empire State Development
in January 1996), the Horizons plan calls for an artificial inlet at the foot
of Main Street at the site of the present Naval and Servicemen's Park and adjoining
parking lot. In addition to the digging of the new inlet and the repositioning of
naval vessels, the Horizons plan calls for the creation of an esplanade and the construction
of harbor pavilions.
Using the Horizons estimates for 1994 and adjusting costs to 1996 dollars (at a 14%
escalation rate), we project that the artificial inlet and selected appurtenances
will cost over $25 million. These costs exclude soft costs (for engineering, further
environmental tests, etc.); city land equity, a Skyway guard structure to keep debris
from falling on pedestrians, start-up operating costs, costs of [a Buffalo Sewer
Authority] pump-station relocation, and additional costs that may have to be borne
depending on future soil contamination tests. If these additional costs are added,
the costs of Horizons inlet project rises to $40 million.
Through this investment, the Horizons plan intends to achieve a variety of benefits
for Buffalo, including public access, public recreation, and economic development.
However, the benefits that Horizons projects depend on a still larger public investment
in national tourist attraction to complement the artificial inlet. Though Horizonsí
proposals for such an attraction has changed over time, it has generally taken the
form of a conversion of Memorial Auditorium into an aquarium/museum complex.
Construction of this complex would require an additional public investment of nearly
$77 million (according to the Horizons Phase III Final Report, but adjusted to 1996
dollars).
The most recent statement on the Horizons excavation (prepared in January 1996) leaves
out the aquarium/museum complex, so it is unclear whether it should be considered
a part of the Horizons plan. If the proposed complex is still to be considered part
of the plan, then it raises overall project cost to over $117 million.
If the aquarium/museum complex is not built, then the Horizons project cannot reasonably
claim its revenues and benefits. Unfortunately, as we shall see, the January 1996
statement of the excavation plan claims the revenue-benefits of aquarium/museum complex,
but does not account for its costs.
To properly evaluate the $25-40 million investment in the artificial inlet and its
appurtenances, we must, by contrast, assume only those benefits that would accrue
to broad categories: public use and economic development.
Consequences For Public Use
Extensive public participation processes conducted during earlier waterfront studies
have identified several principles for waterfront redevelopment. Four of them consist
of issues of public use and public enjoyment of the waterfront: public access, recreational
opportunity, environmental rehabilitation, and respect for the cultural and historic
environment. The Horizons Excavation Plan performs poorly according to these standards.
Public Access
With an investment of $25 million or more, the Horizons Excavation Plan provides
little additional public access to the waterfront. Though the excavation plan would
provide an inlet whose perimeter esplanade is open to the public, the additional
access provided by this esplanade would have marginal public value. The reasons are
as follows:
ï The Horizons Plan eliminates existing shoreline that can already (with low cost modification and repositioning of the Naval Park vessels) provide an attractive waterfront walkway.
ï Of additional pedestrian access created by the Horizons plan, a large proportion is under or adjacent to the Skyway, exposing the pedestrian to overshadowing, noise, and (in the absence of the installation of a guard structure atop the highway) hazards from falling ice or debris. Though the proposed esplanade is meant to be a prime attraction, its most accessible area would offer an unpleasant pedestrian experience. By contrast, the existing configuration of the shoreline minimizes the pedestrian's exposure to the Skyway.
ï As currently proposed, the Horizons plan's esplanade ends near the DL&W train shed, disrupting continuity of access [to areas upstream].
ï The Horizons plan focuses on pedestrian and water-borne access. But pleasure driving is a very popular recreational activity and an important form of access, particularly in inclement weather. The Horizons plan creates no new opportunities for vehicular access for pleasure drivers.
ï Though most visitors can be expected to come by automobile, the proposed inlet has severely limited facilities for nearby parking, requiring visitors to walk a long distance.
ï Intense winter conditions will limit public access. Especially in inclement weather, few will take such a waterfront walk unless it has significant sheltered or indoor attractions.
Recreational Opportunity
The general public makes various recreational uses of the waterfront for fishing,
strolling, sightseeing, scenic driving, boating, swimming, jogging, bicycling, and
family activities. The Horizons downtown excavation plan provides minimal new recreational
activity, and excessively benefits high-income users at public expense.
ï The Horizons plan would create modest opportunities for pedestrian sightseeing and strolling along the proposed esplanade, especially to observe tall ships, ??? naval craft can be accommodated with the present shoreline configuration (after the repositioning of Naval Park vessels), without the expense of excavation.
ï The Horizons plan's most direct recreational beneficiaries are transient yachters, very few if any from the City of Buffalo, who would gain convenient access to downtown. Yachters would gain this opportunity at public expense.
ï Recreational boats do attract strollers in good weather, but such boats are already berthed in abundance at nearby Erie Basin Marina. Though transient vessels do require more berthing space in Buffalo and cannot be accommodated at Erie Basin Marina, there are many other, lower-cost opportunities for providing such space in the City of Buffalo.
ï The true historic inner harbor (the mouth of the Buffalo River) can already, or with low-cost modifications, offer extensive opportunities for observing recreational boat traffic, historic vessels, and freight commerce. No new inlet is needed.
ï Weather conditions would severely restrict outdoor recreational uses. For six or more months a year, the proposed inlet would be iced over and devoid of recreational and tour boats, obviating the inlet's value as a recreational attraction.
Environmental Rehabilitation
The Horizons Excavation plan does not contribute to the environmental rehabilitation
of the Buffalo waterfront, and may even detract from it.
ï The Horizons plan does not highlight or enhance the Buffalo River estuary and Great Lakes ecosystem. Rather, it continues the history of environmental interference in the Buffalo River through new excavation that has no historical or environmental significance.
ï Though preliminary studies are inconclusive, they suggest the possibility that excavation at the proposed site will disturb hazardous environmental contaminants.
Respect for cultural, historic and climatic environment
The Horizons excavation site lies at the historical center of Buffalo. It was in
this general area that the Buffalo settlement originated, the Erie Canal had its
terminus, and Buffalo grew into an enormous inland industrial power. This was the
central location for offloading, related commercial activity, numerous manufacturing
and warehousing establishments, an active port community, and the workplaces and
residences of generations of immigrants.
The Horizons plan does not reflect this local heritage. It does not build on indigenous
history.
ï The concept of the inlet is borrowed largely from Baltimore. The inlet's design and programmed activities reflect an urban, maritime, and climatic history that is very different from, even alien to, that of Buffalo.
ï The Baltimore and Norfolk harbors (from which the Horizons plan borrows) almost never freeze over. By contrast, the Buffalo harbor freezes and is exposed to strong winds. The Horizons plan is unusual and possibly unprecedented -- it calls for the expense of an outdoor site exposed to water, wind, and ice, in a city that already has many miles of winter waterfront. It imports a subtropical waterfront concept into a northern harbor.
ï The dredged inlet turns attention away from Buffalo's living harbor, the mouth of the Buffalo River -- the true inner harbor -- which is vibrant with recreational and industrial activity. For example, hundreds of recreational vessels already use the City Ship Canal and are readily visible from the existing shoreline.
ï The inlet is a cultural import. It is inconsistent with Buffalo's historical street system and does not reflect Buffalo's normal pattern of growth and change. It does not reflect Buffalo's spirit and traditions.
Consequences For Economic Development
Waterfront redevelopment in Buffalo must respond to the city's recent history of
industrial dislocation, job loss, population decline, and fiscal limitations. Among
the principles guiding waterfront redevelopment, considerations of economic development
must have a special place. Buffalo should choose a plan that, while increasing public
access and providing other public uses, maximizes opportunities for economic development.
The Horizons plan is seriously flawed in its economic effects. Even Horizons own
data, which are based on very sanguine assumptions, suggest a lower benefit-to-cost
ratio than that achieved in most other urban development.
Our further analysis suggests that even this modest expectation is far overstated,
and that the project will yield a net economic loss.
Horizonsí Estimates
One way of evaluating the economic benefits of a public investment is by the private
investment that it leverages. According to estimates prepared by Economics Research
Associates, the Horizons excavation plan (including, in this case, the makeover of
the Memorial Auditorium into an aquarium and museum complex) would leverage only
$l.78 for every public dollar expended. This leverage ratio is at the low end, compared
to other urban projects nationally, whose leverage ratios reach $14 for every public
dollar.
Even this modest private investment ratio implies that investors foresee significant
economic development returns from this public investment. Further analysis suggests,
however, that even this modest expectation is far overstated, and that the project
will yield a net economic loss.
Types of Economic Development Consequences
For the sake of clarity, we have to divide the economic development effects of the
excavation project into its component parts:
ïConstruction employment. The digging of the inlet would indeed produce construction jobs, but such jobs cannot be used to recommend a particular public investment, since any arbitrary public works project will have such an effect. Hence, this effect is not considered further.
ïDirect annual revenues and expenditures. The net cost or benefit from the annual operation of the project. All other benefits listed below are indirect.
Land Development. Private residential, commercial or industrial uses could develop
as a result of the project. Ideally, only incremental land development should be
considered: land development that would not have occurred in the absence of the project.
Development that is lost as a result of the project, but would have occurred in its
absence, should be deducted from project benefits.
Enhancement of Existing Uses Current revenue or capital appreciation that the project
adds to other parcels that are already developed. In the present case, the most important
example is Marine Midland Arena.
Tourism Visitors from outside the region, who cause retail and entertainment-based
commerce.
Local Visitorship. Visitors from within the region. Repeat visitors are the most
valuable.
Critical Mass Created through complementary uses between new land development, enhancement
of existing uses, tourism, and local visitorship. This critical mass yields the intense,
urban experience that revitalizes an urban area.
Job Creation occurs as a result of the items listed above.
The sections below discuss each of these items (except construction) in turn.
Direct Annual Revenues and Expenditures
According to Horizons, the excavation plan's direct revenues consist of ground rent,
docking fees, and possibly other sources, adding up to $520,000 in 1994 dollars.
(We exclude public tax revenues from adjoining properties, since these must be considered
indirect revenues).
Note that these revenues are highly speculative. They include ground rent for the
Webster site, even though it already gains ground rent, and only incremental ground
rent should be included (and perhaps even this should not be considered direct revenue,
since it is off the site). The so-called Pavilion B might have a nonprofit occupant
(Naval Park), whose ground rent may have to be subsidized by the city. And, in the
absence of a major tourist attraction such as the aquarium/museum complex, retail
spinoffs are highly uncertain.
These revenues must be weighed against direct annual operating and maintenance expenditures,
for harbor maintenance, dredging, administration, property management, event management,
landside maintenance, public safety, and the office of the harbor master. We have
estimated these costs at $340,000.
Net direct revenue is therefore only $90,000 greater than costs. This should be considered
extraordinarily low for an investment of over $20 million (1994 dollars).
The public investment in the inlet could still be justified, however, for its indirect
economic benefits, such as land development, enhancement of existing uses, tourism,
and local visitorship.
Land Development
The Horizons excavation plan might have redeeming value it is had significant indirect
value for land development. However, according to our understanding of Horizons own
estimates, these indirect benefits are trivial, only $10,575 as compared to Horizonsí
estimate of over $4,800,000.
Horizonsí claim rests on several untenable assumptions.
ï First, recent documentation (January 1996) still uses old data, which assumed that the aquarium/museum complex would be built, spurring surrounding activity. But this expensive facility, costing $77 million in public funds, is not currently proposed, so its benefits cannot be claimed.
ï Second, Horizons assumes extensive office development around the artificial inlet, even though some (the Marine Midland expansion office) are not attributable to the inlet, and other office buildings are highly unlikely because of Buffalo's severe office glut. To the extent that office development can occur, there are less expensive ways to prompt it than through the digging of an inlet.
ï Third, the excavated inlet is given credit for the development of an arena (now known as Marine Midland Arena), even though the arena has already been built.
ï And fourth, the Horizonsí inlet might indeed spur development on the Webster Block. However, the benefits of this development must be balanced against the loss of an equal or better parcel on the excavated site.
This last point is especially important. Of the roughly five acres being excavated,
at least two acres are very valuable for development, and have features superior
to the Webster Block. The site (the one that would be lost through excavation) has
a direct waterfront edge and fine view, and is undisturbed by the Skyway. It is one
of the finest development sites in Buffalo. The Horizons excavation plan would eliminate
this site.
The Horizons plan makes only a trivial net contribution to land development , and
does so at very high cost.
Note this simple principle for public investment for economic development: the public
should try to enhance sites at least possible cost. Buffalo should aim for lower-cost
public investment options, ones that enhance the Webster Block and other sites, without
the excavation of an inlet.
Enhancement of Existing Uses
The Horizons excavation plan has the benefit of enhancing an important downtown facility:
the Marine Midland Arena. If the artificial inlet is excavated as proposed, it will
extend past the Skyway nearly to Main Street, across from the arena's front entrance.
The inlet would enhance the arena's surroundings, both for those entering and leaving
the building, and those patronizing restaurants and other retail outlets in the area,
since their windows are oriented toward the proposed inlet. The arena gains this
amenity at a public cost of $25-40 million.
Marine Midland Arena could be given such benefit at far less public cost. Through
the repositioning of Naval Park vessels, berthing of interesting ships at existing
shoreline (or shoreline undergoing less extensive modification), careful landscaping
of the area leading from the arena to the shore, and other adjustments in streets
and parking lots, the arena could be given a fine view of the true, historic inner
harbor. An excavated inlet is not necessary.
Tourism
Tourists can be defined as leisure visitors from outside the Western New York region.
There is a critical challenge to tourism planning that is often overlooked: coming
from outside the region, tourists choose to go to those places that most effectively
attract them. To bring additional tourists, a place must have attractions that compete
against attractions in other regions.
Our conclusion is that the Horizons excavation plan does not create a competitive
tourist attraction. It will not bring additional tourists to Buffalo. The reasons
are as follows:
ï All tourism projections for the Horizons project assumed the construction of the aquarium/museum complex. In the absence of this kind of highly expensive project, the only remaining attractions in the Horizons plan are the inlet itself and the boats displayed.
ï It is far too speculative to claim that the existence of an inlet under an elevated highway will spur future public and private investment in an aquarium/museum complex. Without a commitment from a developer, such a claim is not tenable. Moreover, investors in aquariums would have to take into account the difficulties being encountered at aquariums in Niagara Falls, N.Y., Camden, N.J., and elsewhere.
ï The vessels and displays of the Naval Park do draw tourists. They do so at present, and can continue to do so in an improved waterfront, without the need for an excavated inlet.
ï Visiting tall ships can attract tourists a few days a year. It is likely that one tall ship at a time can be accommodated at the present shoreline configuration without the need for further excavation.
ï Even these meager possibilities for tourism are restricted by the climate. All outdoor attractions in Western New York are limited to a short season
ï To the extent that Buffalo plans for tourism development, Buffalo should emphasize spring, fall, and winter activities -- the seasons when there are surplus vacant hotel rooms. The Horizons plan, if it brought in tourists at all, would bring them in the summer.
The excavation plan does not add features that compete with attractions located elsewhere.
Though Niagara Falls is nearby, and attracts 6-10 million tourists a year, it, too
manages to retain the tourists on the average for only a few hours. The excavated
inlet is not sufficiently attractive to bring tourists from Niagara Falls to Buffalo.
Local Visitorship
Downtown waterfront redevelopment could make another contribution to Buffalo's development
by drawing visitor from within the region. Since the region's population is limited,
a local attraction can be successful only if it can draw repeat visitors. Our conclusion
is that the artificial inlet will not cause repeat visitorship. Our reasons are as
follows:
ï A major aquarium/museum complex would have drawn local visitors, but that complex is not part of the current (Jan. 1996) Horizons proposal. Given projected ticket costs [over $40 for a family of four], the aquarium/museum complex might have discouraged repeat local visitors.
ï The Naval Park vessels and occasional tall ship can draw local visitors, but they can do so even with the present shoreline configuration. A new inlet is not necessary.
ï Small boats berthed in an inlet do draw recreational strollers and sightseers. However, nearby Erie Basin Marina has a far larger collection of private boats than would ever fit in the newly excavated inlet. The few private boats in the inlet would not add markedly to repeat visitorship downtown.
ï The skyway detracts from the visitorsí experience.
ï To the extent that tourists and visitors would come to the area for special events, they would be constrained by the lack of public event space. The Horizons plan excavates the most of the land that would be appropriate for such a purpose. The only possible outdoor site for such activity would be the proposed skating rink, which is located almost under the Skyway.
ï Transit and lake access to the site are excellent. But a shortfall in nearby parking, and the expense of parking, will discourage repeat visitorship. And the Horizons plan makes no effort to increase facilities for pleasure drivers.
As in other cases above, winter snow, wind, and the icing of the inlet severely limit
the season for outdoor attractions.
Critical Mass Effect
The Horizons plan properly set out to create an ìintense, active, and urbanî activity
center. Its planners were insightful in trying to create a critical mass of downtown
waterfront activities.
However, critical mass must be understood to arise from a combination of the above
elements: land development, enhancement of existing sites, tourism, and repeat visitorship.
The Horizons excavation plan does enhance one existing site, but otherwise fails
to generate incremental land development, tourism, or repeat visitorship -- the
elements that would have to complement each other to create critical mass. The Horizons
plan does not generate critical mass downtown.
Job Creation
To be an effective job generator, the proposed Horizons inlet would have to create
jobs not only during construction, but also upon completion through direct and indirect
employment effects.
According to Economics Research Associates, subcontractors to the Horizons Waterfront
Commission, the permanent jobs (not construction jobs) created by the Horizons ìinner
harborî plan (the excavation plan), would total 4,972. They arrived at this number
by including employment in the aquarium/museum complex (not currently proposed),
the arena (already built), office buildings, retail development, and hotel development.
But as we have seen, these further developments cannot be attributed to the excavated
inlet. Much of it should be considered highly speculative and unlikely, because of
the current office glut, or because of the absence of a major tourism attractor.
The consultants also added indirect employment effects, which they derive with a
1.77 multiplier -- the measure of the ripple effect, through which new
jobs create additional jobs. Hence, their overall estimate is that the ìinner harborî
project will generate 13,786 permanent jobs.
A much mare realistic estimate is that the excavation plan will only lead to the
employment of those working directly for inlet operations: guards, administrators,
harbor masters, maintenance workers -- probably about 10 to 20 jobs. Public
investment per permanent job created could range from $1 million to over $4 million.