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04/21/08 Affairs and Appointments

04/21/08 Affairs and Appointments

Special Note: Capalino+Company in China

Dear Colleagues,

As many of you know, I have just returned from a week in Beijing, China, where I was attending a Global Construction Summit co-hosted by McGraw-Hill Construction and the China International Contractors Association (CHINCA).  China’s Minister of Construction graciously invited me to this conference for the purpose of exploring whether top Chinese contractors might seriously pursue public works building in New York.  With over 450 industry executives from around the world, the meetings provided fascinating exposure to the $4.6 trillion global construction industry.

The goal of my visit was to help Chinese firms appreciate the enormous opportunities that exist in New York’s public sector construction market.  The logic behind connecting Chinese contractors with New York infrastructure rests on a theory of mutual benefit.  To put it simply: New York has vast infrastructure needs and too few public works builders, while China has highly experienced contractors looking to expand their already considerable international operations. 

Spurred by preparation for the 2008 Beijing Olympics, Chinese firms have gained expertise building infrastructure, expertise that may go wanting as post-Olympics China builds fewer roads and railways.  As China’s urban infrastructure boom winds down, New York is gearing up to revamp its aging transport system.  New York’s public entities will invest billions over the next decade in modernizing road and rail facilities.  Such investments, however, must resolve a major obstacle: the relatively small number of local contractors who have the wherewithal to bid on such projects.  Local construction firms may simply be unable to, say, dig all of the tunnels New Yorkers need in the time New Yorkers need them and at a price we can afford. 

This then seems an ideal time for New York to enlist the resources of foreign firms in completing infrastructure projects.  While many countries boast outstanding contractors, China in particular seems a potentially bountiful source of firms that are qualified and eager enough to build in the New York market.  Rapid growth had made China the world’s third-largest construction market, and in 2007 construction accounted for a full 7 percent of China’s GDP.  Firms such as China Railway Group, China Communications Construction, GEZHOUBA, and Shanghai Construction Company all rank among ENR’s top 100 global contractors.

A key driver of China’s construction boom has been government spending on infrastructure – roads, rail systems, bridges, ports and airports.  The scale of building in Chinese cities often dwarfs comparable construction in New York.  Whereas the MTA is currently using four tunnel-boring machines to expand its rail network, there are 90 of these machines at work in Shanghai alone (a comparison that MTA Executive Director Lee Sander first pointed out).  Chinese firms have accumulated tremendous physical capital and expertise in the building of public infrastructure.

As noted, however, going forward there appears significant likelihood of a decline in the pace of infrastructure investment in China.  The 2008 Beijing Olympics have been a major impetus for such investment, and post-Olympics China will probably see a shift of public resources away from infrastructure toward other areas.  With transport infrastructure having been a major item in China’s Tenth and Eleventh Five Year Plans (2001-2010), analysts predict that transport will receive less emphasis in the Twelfth Five Year Plan (2011-2015). 

Potential falloff in the demand for domestic infrastructure has made China’s top contractors keen on exporting their services.  Many have already done so, completing major road and tunnel projects throughout Africa.  Yet as of now Chinese firms have a negligible footprint in New York public works.  Perhaps this is because Chinese firms regard New York regulations – in terms of bonding requirements, scheduling, etc. – as simply too onerous; alternatively, perhaps they are eager and able to pursue New York public works contracts and simply have not yet done so. 

Whatever the reason for their absence, the scale of New York’s transportation investments gives good reason to discuss with Chinese contractors the opportunities as well as the challenges of building in the Big Apple.  This was what I did in Beijing.  If my Chinese counterparts learned half as much from me as I did from them, I will judge the trip a success.

Jim Capalino

Governor Patterson Announces $34 Million for NYC Area Emergency Communications

Governor David A. Paterson today announced that $34 million in homeland security grant funds have been awarded to the New York City urban area as part of the federal government’s Urban Area Security Initiative. The funds are made available through the federal Public Safety Interoperable Communications (PSIC) Grant Program that will help fire, police and other first responders better communicate during emergencies.

The federal funds will support a variety of communications upgrades, including:

  • Technology to enhance communication within the MTA tunnel system
  • A shared communication platform for the first responder agencies within the region and gateway technology to integrate some of the existing legacy systems into the overall communications effort
  • Enhanced public safety communications technology within the Port Authority Trans Hudson (PATH) Railroad system

Read the full text of the Governor’s announcement here.

Albany Leaders Seek Ways to Save OTB Jobs in NYC

Seeking to preserve jobs of 1,500 Off-Track Betting (OTB) employees, Governor David A. Paterson, Senate Majority Leader Joseph Bruno and Assembly Speaker Sheldon Silver announced today that they have directed their staffs to work with Mayor Bloomberg and the New York City OTB to craft a solution that would allow NYC OTB to continue operations.

The Board of Directors of OTB voted in February to cease operations by June 16, 2008, at which date the Corporation will be insolvent and the City would be required to infuse cash into it in order to continue to operate.

Read the full text of the joint press release here.

Chairman Coscia Touts Port Authority as Lead Agency on Moynihan Station

In a speech to a Crain’s Breakfast Forum, Port Authority Chairman Anthony Coscia argued for the primacy of the PA as the public agency best-equipped to oversee the construction of Moynihan Station.  Though not detailing exactly what authority the agency should have, Chairman Coscia emphasized the Port Authority’s expertise at managing expansions of the regional transportation network.

Read Crain’s New York Business coverage of Chairman Coscia’s speech here.

Speaker Quinn Announces Reforms to Council Budget Process

Amid revelations that the City Council has misrepresented over $17 million in appropriations over the past eight years – bypassing the Mayor’s approval by earmarking funds for fictitious organizations and then actually appropriating the money to different, legitimate non-profit groups – Speaker Christine Quinn today announced reforms to the budget process designed to “strengthen accountability and increase transparency.”

Key elements of the reform package include: transforming the Speaker’s program allocations into a competitive, merit-based Request For Proposals (RFP) process; creating an Independent Compliance Office within the Council to monitor budget and procurement actions; and, strengthening the requirements for awarding funds for local initiatives, including adoption of rigorous new certification requirements for recipients developed in consultation with the Office of Attorney General Andrew Cuomo.  

Mayor Bloomberg promptly endorsed Speaker Quinn’s budget proposals. 

Read the Council’s press release here and Mayor Bloomberg’s comments here

Mayor Bloomberg’s “New York City Card” Highlights State/Federal Issues Critical to NYC

Alongside California Governor Arnold Schwarzenegger, Mayor Bloomberg today unveiled the third annual New York City Card.  The size of a credit card, the NYC Card is meant to educate New York’s political donors about Federal and State legislation of importance to New York City. 

This year’s card highlights the following six items:

  • Increased Support for Infrastructure:  Maintenance of the City’s infrastructure is vital to the economic well being of New York City and the whole nation. Increased funds to repair transportation, water and sewer systems are needed to ensure long-term reliability and quality of our infrastructure.

  • Homeland Security:  The City is calling on Congress to increase Homeland Security and Bioterror funding and allocate all funds based on terrorism threat, not pork barrel politics. 

  • 9 /11 Worker and Resident Health: The City is seeking a minimum of $150 million annually in federal funds to ensure that those who are sick or who may become sick as a result of the September 11, 2001 terrorist attacks have the first-rate heath care they deserve.

  • Affordable Housing:  State and Federal legislation is required for targeted and effective financial incentives to produce affordable housing for New Yorkers as part of Mayor Bloomberg’s plan to create and preserve 165,000 affordable units by 2013, the most ambitious municipal housing plan in the country. 

  • Post 9/11 Tax Trade-In: Congress must take the final steps to enact legislation that would allow the City to secure the final $2 billion in Federal funds previously committed to allow them to be used for transportation projects in New York.

  • 2030/Climate Change: In 2007, Mayor Bloomberg unveiled PlaNYC 2030, the most comprehensive effort ever by an American city to attack global warming. Federal and State legislative action is required to create financial incentives to address the City’s aggressive plan to reduce greenhouse gas emissions in New York City 30 percent by 2030, improve energy efficiency and support mass transit.

Read the Mayor’s press release and a full description of New York City Card priorities here.

Council Subcommittee Approves Plan for 125th St Rezoning

After three days of intense negotiationg, the City Council Zoning and Franchises subcommittee voted 10-1 to approve a rezoning plan for 125th Street that is intended to encourage office, residential and retail development and create 9,000 jobs.

Along with two other Councilmembers (Robert Jackson and Melissa Mark-Viverito), Councilmember Inez E. Dickens was persuaded to support the project after the addition of more affordable housing units, a lowering of the maximum height for buildings, and a relocation assistance program for businesses displaced by new development.  The support of the Central Harlem councilmember strongly suggests that the rezoning proposal will pass the full Council.

The council’s land use committee is set to vote on the proposal on Wednesday.  If the proposal passes it will return to the City Planning Commission, which will check the changes to insure they still are within the original scope of the project. A final vote in the City Council is expected by the end of the month.

Read Crain’s New York Business coverage of the 125th rezoning here
Read New York Times coverage here.

Mayor Bloomberg Mixes Praise with Disappointment in Assessment of State Budget

Mayor Bloomberg weekly radio address praised the recent State budget for preserving funding for New York City public schools, restoring a revenue sharing agreement between City and State, and raising State cigarette taxes by $1.25 per pack. 

The Mayor chided State lawmakers for, among other things, refusing to allow the City to include student performance data when assessing teacher hiring decisions, and for failing to allow a vote on congestion pricing.

Read the full text of the Mayor’s radio address here.

Anthony Shorris Resigns as Executive Director of Port Authority

Anthony E. Shorris resigned late Thursday night as executive director of the Port Authority of New York and New Jersey.

In a letter addressed to the Port Authority’s chairman, Anthony Coscia, Mr. Shorris noted the Port Authority’s progress under his tenure to include construction at the World Trade Center, growth in the region’s ports and the overall upgrading of the PATH system.  Mr. Shorris described himself to be “enormously proud of the work we have done together over the past 16 months.”  In a statement, Governor David Patterson thanked Mr. Shorris for the significant accomplishments he achieved during his tenure as Executive Director of the Port Authority.”

Governor Patterson will likely name a replacement for Mr. Shorris during the agency’s next board meeting on April 24.  One candidate receiving mention is Christopher O. Ward, who once served as the chief of planning and external affairs at the Port Authority.  Currently the managing director of the General Contractors Association of New York, Mr. Ward’s most recent public post was Commissioner of the New York City Department of Environmental Protection during Mayor Bloomberg’s first term.

Read the full text of Governor Patterson’s Statement here.

Speaker Quinn Appoints IBO Deputy Director Preston Niblack as Finance Director

Council Speaker Christine Quinn has announced her appointment of Preston Niblack as finance director, beginning May 5. 

Mr. Niblack currently serves as Deputy Director of New York City’s Independent Budget Office.

Read Daily News coverage of the appointment here.

Governor Patterson Appoints and Nominates Judges

Governor Patterson today announced the appointment or nomination of judges to fill several bench vacancies.  Under the New York State Constitution, the Governor may nominate individuals to fill vacancies on Supreme Court, County Court, Surrogate’s Court and Family Court outside of New York City until the vacancies can be filled at the next general election. The Governor’s nominations are subject to Senate confirmation.

Read the Governor’s statement and full list of appointments and nominees here.