Will Barry Diller’s “wasted” millions on Pier 55 discourage real estate donors?
October 1, 2017
By Dennis Lynch
Experts say the lawsuits that surrounded the proposal for the floating park could make public-private partnerships less attractive.
Barry Diller said he “wasted” $40 million over the last five years. The media mogul and his wife, Diane von Furstenberg, were trying to sell the city on the 2.4-acre redevelopment of the decrepit Pier 54 site in Hudson River Park into a futuristic floating public park.
But last month, the billionaire pulled his financial backing for the project known as Pier 55. Costs for the park climbed to $250 million, largely due to a drawn-out court battle with a small, albeit dedicated, band of civic activists who make up the City Club of New York. The group, backed by developer Douglas Durst, said the park would threaten marine life in the Hudson River estuary and faulted Diller for not seeking public opinion in the early planning stages.
It’s a crushing defeat for Diller and the Hudson River Trust, the city-state partnership that runs the Hudson River Park, but it could have a much wider impact: Private individuals and organizations may now think twice about pouring money into public projects when a small group can bleed them out in a war of attrition.
“It sets a terrible precedent for people that want to get involved in parks,” said Lynn Kelly, executive director of the advocacy group New Yorkers for Parks. “It’s already very hard to cultivate donors.”
The $130 million Diller and von Furstenberg pledged for the Thomas Heatherwick-designed project in 2014 would have been the largest gift to a park in the city in history. It’s more than the $100 million that hedge fund manager John Paulson donated to Central Park in 2012 and more than six times the $20 million Diller and von Furstenberg gave to complete the High Line in 2011 — which at the time was the largest gift in city history.
The public, press and elected officials, from Gov. Andrew Cuomo to Mayor Bill de Blasio, generally supported the Pier 55 project. But Diller, von Furstenburg and the Hudson River Trust’s president and CEO, Madelyn Wils, took what Kelly described as a “beatdown” from opponents in the three years after announcing the project. Besides burning through millions of dollars, they were characterized by opponents as having no regard for public opinion. Some critics called the plan a monument to a billionaire’s ego, which led to its nickname, Diller Island.
“Barry Diller and Madelyn Wils are in my opinion tenacious visionaries,” Kelly noted. “But you have to ask, how much can one really take?”
The ordeal took a toll on Diller, who was noticeably frustrated in conversations with the press after announcing he was pulling out of the Pier 55 project. When asked if his misadventure in public works would discourage future donors from backing major projects like his ill-fated pier, Diller told The Real Deal, “I don’t know how it would encourage them.”
A weary-sounding Wils said that she spent “a very large portion” of her days over the last six years on the Pier 55 project, and that the Trust’s staff of six also worked to see it through.
The fall of Diller Island comes at a particularly challenging time for fundraising. The testy political climate in the country already has some big-ticket donors weighing more “impactful” projects to support, according to Adrian Benepe, the director of city park development at the Trust for Public Land and former commissioner of the city’s Department of Parks and Recreation. Naturally, few donors are interested in going to court and having their names “sullied” over their gifts, he said.
The city’s parks rely heavily on private contributions. For instance, the Central Park Conservancy, the nonprofit that runs Central Park, took in $50 million in “contributions and grants” in fiscal year 2014 to 2015, or 73 percent of the group’s total revenue that year. Two years earlier, the group’s nearly $150 million in contributions made up 89 percent of its total revenue.
“My concern is that with all the other demands on funders — global issues, climate disaster and domestic issues, [including] concerns that funding might disappear for key programs like Planned Parenthood — that this is not the time to be telling donors we don’t want your money,” Benepe said.
Diller told The New York Times that was part of his decision to pull out. When asked by family members why he was continuing with the project when the money could go to better uses, Diller said “that was a very hard question for me to answer.”
The City Club first sued Diller and the Trust in 2015, in part because it claimed that the Trust failed to conduct the proper environmental review of the project required by law.
Still, Community Board 2 gave the park its blessing with a 43-2 vote in favor of the project in late 2015, after Diller and the Trust incorporated some public input into the proposal.
But the City Club — which also came out in opposition of the Midtown East rezoning and a proposal for a shopping mall in Flushing Meadows Corona Park in 2014 — continued its battle and filed another suit in 2017.
Leadership at the 125-year-old institution maintains that the group’s intention was not to derail Pier 55 but to steer Diller and the Trust toward “compliance” with the law.
City Club President Michael Gruen doesn’t think that the demise of Diller Island will discourage future philanthropists but believes it will spur a “radical change” in the thinking of project sponsors.
“I think that question was effectively answered within a few days of Diller’s announcement by the Whitney Museum,” Gruen said, referring to the potential David Hammons-designed floating art installation planned nearby, at Pier 52. “I think donors will have to be a little more on top of what’s happening in the process, but I don’t think that’s a big deal or will stop anyone from embarking on a major project.”
Community Board 2 Chair Terri Cude said there could be a silver lining in the failure of Pier 55 if private entities learn to involve the community more directly when undertaking large civic projects. “What we need to do is look at what went right, what went wrong, and learn from this so that future projects don’t end up getting, forgive me, sunk,” she said.
It’s still too early to definitively say if and how potential civic-minded donors will revise their approaches to similar projects, if there even will be any ambitious enough that compare.
Wils said she worried about a “chilling effect” the Pier 55 saga may have on donors looking to undertake “ambitious projects,” but she predicted that those who typically gift $10 million to $30 million to partially fund larger projects won’t be deterred.
Benepe echoed the sentiment: He’s optimistic the failure of Pier 55 won’t scare off civic-minded donors.
“Ultimately there’s a risk for a chilling effect, but I don’t actually think that will happen,” he said. “I consider this to be a ripple in an otherwise strong stream of dedicated people who understand and care about parks, [but] we can’t afford to have many of these gifts fall through.”
Clarification: This story was updated to reflect that the Hudson River Trust did not hire a six-person team to oversee the Pier 55 project, but the Trust’s existing six-person staff worked on the project.