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Long Island Contractors' Association

Newsday

Money, labor disputes stall Heartland plan

by Sarah Crichton / sarah.crichton@newsday.com
September 25, 2011

Heartland Town Square -- the decade-old, $4-billion, mixed-use proposal in Brentwood -- is stuck in the mud.

Photo credit: Handout | Artist rendering provided by Heartland shows a public area in the Heartland Town Square, a $4-billion mini-city in Brentwood.
A failure to reach agreements with labor unions, a dispute over payments for road improvements outside the site, and uncertainty about financing is stalling the project, according to the developer, labor leaders and government officials.

Heartland is intended to transform the former Pilgrim Psychiatric Center grounds near the Long Island Expressway and Sagtikos Parkway into a mini-city of 20,000 residents, with shops, offices and access to public transportation -- all targeting young adult and empty-nest renters.

Developer Gerald Wolkoff, 74, best-known for developing the Edgewood Industrial Park in Brentwood, said he has spent $74 million of his own money on Heartland, including land purchases and taxes, as well as legal and consultancy fees.

"My project works. It brings jobs," Wolkoff said. "Standstill doesn't work and that's what we have on Long Island."

Little work done

Government officials, labor leaders and development experts say Wolkoff's inability to navigate the political and regulatory landscape is a major reason the project is languishing. The only site work thus far has been some demolition.

"Instead of setting the stage properly in terms of what's proposed, he [Wolkoff] tried to come down with a fait accompli without any of the key players on board," said Lee Koppelman, director of Stony Brook University's Center for Regional Policy Studies and a former regional planning director.

"It's easy to talk about a multibillion-dollar program, but you have to have all the fiscal issues resolved," he said.

Islip Supervisor Phil Nolan said communication between Wolkoff and the town has not been "as fruitful as it might have been. . . . While we have continued to make some progress, there are still major issues to be determined."

Heartland would develop the 451-acre grounds of what was the state's largest psychiatric hospital into 9,000 apartments, office space, stores, restaurants and landscaped boulevards.

The proposal, cited by the development industry as the largest mixed-use project in the Northeast, would have its own "artists' quarter" and park space.

Under Wolkoff's vision, it would integrate public transportation, including buses and the nearby Long Island Rail Road station, to enable Heartland tenants to minimize driving.

In March, Islip Town officials had expected a couple of milestones to have been reached by now: a town board vote on the final environmental impact statement and a vote on the master plan, local law and zoning changes. None has occurred.

Tough competition

Instead, Wolkoff faces new competition for political backing and state money in a troubled economy with a November election for Suffolk County executive and Islip Town supervisor.

In the next few weeks, Gov. Andrew M. Cuomo's 10 regional economic development councils will recommend projects to receive state funding.

On Long Island, the Ronkonkoma Hub, another mixed-use development centered around the community's Long Island Rail Road station and Long Island MacArthur Airport, and supported by the Brookhaven and Islip Town supervisors, has entered the competition. Several other proposals in Nassau and Suffolk counties also are under consideration.

To help complete the Heartland environmental impact statement, Wolkoff said he hoped to secure a letter of commitment for millions in state funding for work to address increased traffic on major adjoining roadways, including widening Sagtikos Parkway.

No such letter has been issued.

'Major issues' listed

In March, Nolan wrote Wolkoff a letter detailing nine "major issues" to be addressed for the Heartland bid, which requires zoning change approval from the town.

At the top of the town's list was Wolkoff's share of costs for transportation-related infrastructure improvements in and around the project.

Islip officials thought the agreed-upon figure was $75 million, but Nolan wrote in the March letter that he had learned Wolkoff was "only willing to commit the total sum of $27 million. . . . It is our position that the original commitment amount must be maintained."

Wolkoff responded to the town's letter this month, stating "Heartland never agreed to provide $75 million toward traffic improvements."

In interviews, he said he planned to pay for all the infrastructure within his project's boundaries but not major road projects beyond it.

The town argues that because the project will increase traffic on surrounding roads, Wolkoff must pay for some of the costs to offset the impact.

"Clearly traffic mitigation has been one of the largest elements that we're reviewing here -- it remains a key area to be resolved," Islip planning Commissioner Dave Genaway said.

Wolkoff said he's worried about getting financing for the project. Because of zoning demands and Islip's desire to have the project completed in stages -- with the town able to opt out at the completion of each benchmark -- Wolkoff argues it will be impossible for him to secure bank financing.

The town says the requirements are necessary to determine whether to go forward after each phase of the project is completed.

No deal with labor

Another stumbling block is Wolkoff's talks with unions.

After months of discussions, Wolkoff said he won't sign a project labor agreement (PLA) that would guarantee wages and health benefits for workers.

Officials for key construction trade unions, such as plumbers and electricians, said they won't work on the project without one. Union labor is needed to complete a project of Heartland's size, developers and union officials said.

Several weeks ago, Wolkoff said he was trying to secure verbal agreements with the unions. He reached an agreement with the Operating Engineers Local 138, but other groups have been wary.

James Castellane, president of Building & Construction Trades Council of Nassau and Suffolk, said that the more than 30 union affiliates that make up his organization have twice voted unanimously not to work at the site without an agreement.

The labor disagreement takes on added weight with the recent announcement of the makeup of Cuomo's Long Island Economic Development Council, which has until Nov. 14 to identify key projects to submit to Albany for funding consideration.

Castellane, LI Federation of Labor Executive Director Roger Clayman, and Local 138 President Bill Duffy are members of the council's infrastructure work group. That group is expected to make recommendations by the end of this month about what projects should get priority.

Desmond Ryan, executive director of the Association for a Better Long Island who heads the infrastructure work group, said Wolkoff's vision for Heartland may have lost its allure.

"In times of severe budget deficits at state, county and town levels, we can no longer afford to make these community-funded enhancements for a developer," Ryan said.

Marc Herbst, head of the LI Contractors Association, said that while Heartland has encountered "turbulence," time is needed to secure federal and state funding for major infrastructure projects such as road improvements.

"The leaders on Long Island need to stop shooting arrows at one another, circle the wagons and move this project forward," he said.

Heartland Town Square


The Plan

Transform 451 acres in Brentwood, once the grounds of the state's largest psychiatric hospital, into a tree-lined mini city that would house 40 percent more people per square mile than Queens

Attract childless renters -- 18- to 24-year-olds and empty-nesters -- as tenants for 9,000 apartments that would house 20,000 people

Complement housing with 34 million square feet of office space and 1 million square feet in restaurants, hotels, bars, shops and cinemas

The Cost

$4 billion, to be built in phases over 15-20 years

The Problems

Generic environmental impact statement not yet finalized; it is needed for required town approvals on master plan and zoning changes
Traffic mitigation
Securing financing
Labor agreements


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