FRIENDS OF THE DRYLINE Draft Proposal for Public-Private Initiative

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Overview _______________________________________

The Natural Resilience Fund (NRF) was established as a 501(c) (3) to advocate and develop financing strategies and design/build solutions that can safeguard human life, real estate, critical infrastructure and natural systems from the effects of climate change. Prompted by the aftermath of Superstorm Sandy, the NRF’s efforts parallel the timeline of the development of federal and local resiliency protection initiatives for NYC’s coastal regions. The US Department of Housing and Urban Development (HUD) launched the Rebuild by Design (RBD) competition to solicit and promote innovative resiliency designs for communities most affected by Sandy. From 148 proposals narrowed down to 40 scenarios developed by 10 teams, HUD awarded $335M to the first phase of the BIG U Plan identified as Compartment 1. The BIG U Plan proposes a 10-mile protective storm surge barrier that starts at E 42nd St moves south to Battery Place and north up the west side to W 57th St. Designed in compartments with a mix of design/engineering solutions to reflect existing varied terrain, the plan can be phased. Compartment 1 is 2.2 miles in length from E 23rd St to Montgomery St. The City is undertaking this effort as the East Side Coastal Resiliency (ESCR) Project (Coastal Protection Initiative 21). Incorporating Compartment 2 (Montgomery to Brooklyn Bridge) and Compartment 3 (Brooklyn Bridge to Battery Place) of the BIG U Plan to the City’s efforts would add 2.15 miles of protection to this vulnerable area. Within NYC, the Mayor’s Office convened a taskforce that oversaw the Special Initiative for Rebuilding and Resiliency (SIRR) resulting in a blueprint of 257 resiliency projects. Some of these initiatives referred to as Coastal Protection Initiatives as well as Complementary Initiatives identified by the City located within the ESCR Project area present additional resiliency needs.

Vision _________________________________________

Under the Mayor’s leadership, the City in collaboration with the private, philanthropic and community sector can set the standard for how to develop and implement an effective, integrated resiliency network that protects a dense urban environment — residents and communities, businesses and civic institutions, the natural environment and critical infrastructure. At the core of the resiliency network, as rendered in a video by Squint Opera, the BIG U Plan unfolds as a winding, continuous green and recreational landscape wrapping (and protecting) the lower Manhattan coastline with earthen berms and retractable walls. See Video, https://vimeo.com/117303273. Linked and networked into this core would be other resiliency initiatives. That function can promote community building, fulfill the need for public spaces and stimulate economic development has been proven by the High Line. Drawing from such inspiration, as does the Squint Video, the NRF proposes provisional branding of various resiliency efforts as The Dryline and establishing a public-private partnership known as the Friends of the Dryline to support the City’s efforts in financing and community outreach during the design to construction process.

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Key Dates 2012 Oct: Superstorm Sandy Dec: NYC SIRR Convened

2013 June: HUD RBD launched

with 148 proposals Aug: HUD selects 10 to

produce 40 plans Aug: NRF established

2014 Jan: De Blasio-NYC Mayor June: HUD awards $335M

for C1 of BIG U Plan. NYC takes over C1 as East Side Coastal Resilience Project

Dec: NYC starts Concept Design for ESCR

2015 April: NRF Proposal to

Brand as Dryline & Establish FOTD

April: Investigation RFP for C2-3

Dec: ESCR Concept Stage ends w/ Envir. Review & Permitting to begin

2017 Jun: ESCR Construction

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Defining the Dryline ________________________________________________

During the initial stage, the resiliency network of the Dryline should comprise of the following projects located in the proposed area from E 23rd south to Battery Place (Dryline Area). The Dryline Area may be later extended.

ESCR Project and Compartments 2 & 3 as defined in the BIG U Plan.

SIRR Projects and Coastal Protection Initiatives located within the Dryline Area.

Resiliency measures required by Complementary Initiatives being coordinated by the City with the ESCR Project.

“Interim” resiliency projects as may be identified under the anticipated Request for Proposals process for Investigation of Compartments 2 and 3 (expected around April 2015).

Supporting the Dryline—Friends of the Dryline _____________________________

In 1995, concerned citizens established an organization that became a powerful and effective vehicle for revitalization —Friends of the High Line. Working closely with the City, it is among the most successful public-private partnerships — advocating, financing and repurposing an elevated 1.45 mile railroad spur into an urban oasis of aerial greenway and rails-to-trails park. Through its private efforts, Friends of the High Line raised $150M to finance the park’s construction. The NRF proposes to establish Friends of the Dryline (FOTD) to support and work with the City to plan, engage the community, advocate and, most importantly, secure the financing needed to take the Dryline through the concept, design, environmental investigation, approvals and construction stages. Structured properly the FOTD can also assist in maintenance. The FOTD would follow the City’s lead in planning and design occurring through its Department of City Planning, Mayor’s Office of Recovery & Resiliency, Department of Design & Construction, and Department of Parks. The FOTD can serve as the equivalent to the Battery Conservancy or the Lower Manhattan Development Corporation as a quasi-City Agency. In this way, the FOTD can provide focus to a mission and initiative that will take years of build-out, require ongoing maintenance and result in potential expansion of the Dryline’s footprint. The FOTD would serve as a forum where planning among the City, the community and designers can occur; where design, development objectives and financing opportunities can be aligned; where timely implementation is advocated to reflect the urgency that extreme weather variability imposes on the NYC coastal areas; and where such activities occur in a transparent and collaborative way.

Financing the Dryline _______________________________________________

Cost projections to undertake and complete the proposed resiliency projects for the Dryline impose a daunting financial task. Design to construction of just the ESCR Project, C2 and C3 of the BIG U Plan — 4.35 miles in length along the East River, from E 23rd St to Battery Place — is estimated at $1B. Less the HUD Grant of $335M there would be an initial gap of $665M. Adding to this budget gap is an estimated need for $335M (not to be confused with the HUD Grant) to finance the Dryline’s other resiliency projects for a total budget need at $1B. Generating $1B in private funds would represent a 3x match to HUD funds and likely stimulate new federal funds to expand these efforts. Providing a private financing mechanism enables the City to realize the benefits to front-loading the design, public engagement and due diligence process needed to develop an integrated, robust resiliency network. Planning the entire Dryline resilience network now will save tens of millions of dollars down the road and, with the undertaking of interim resiliency measures, protect large swaths of the Dryline from the damaging effects of an unpredictable extreme weather system. Integrated planning would also result in design/engineering efficiencies that can translate into cost savings; while

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increasing the scale of construction would generate greater financial savings. Implementation sooner rather than later on a phased approach mitigates the risk for cost escalation and takes advantage of the still favorable investment climate. The NRF is exploring these preliminary financing strategies, which it can continue with the City’s support through the establishment of the FOTD. Such efforts can be implemented with a major investment bank of the City’s choice.

Accessing $1B from a consortium of pension funds (which the NRF is sourcing) to finance the activities of the Dryline.

Debt service based on a 3% rate would be satisfied from a progressive surcharge on Property & Casualty policies enacted on properties located in the Dryline Area. P&C surcharges would be based on public works resiliency infrastructure and increased protection against business interruption. They would be structured progressively, based on the financial value of the policies. Up until the time P&C surcharges are enacted and sufficient to pay the debt service on the $1B, interim debt service financing could be provided by an initial zero coupon revenue bond.

Identifying the sites within the Dryline Area that are either vacant, underdeveloped or may be subject to up-zoning or zoning variances (Development Sites) which, under an RFP may be awarded to developers who meet the administration’s affordable housing, sustainability, resiliency and balanced community objectives. In addition, development of these sites would generate additional city tax revenues, which could be further dedicated to retire the initial bond or service an additional bond that may be issued to extend the Dryline’s work as needed.

Leveraging potential Development Sites that are revenue or income producing in conjunction with the private sector to promote economic development, job creation, technology and innovation, and education.

Front-loading Design, Public Engagement and Studies for the Dryline _____________

Front-loading the design, public engagement and due diligence (involving studies on below ground, land surveys, waterfront structures, flood risk and water flow, soil conditions, pedestrian/bicycle use, bridge conditions, and tree assessment) process allows for the development of an integrated resiliency plan. This integrated plan can then be implemented by the City, developers and private owners in a coordinated fashion, or in a phased approach where developers and private owners would benefit from certainty and clear requirements. Upfront planning for the entire 10-mile stretch increases efficiencies in the planning, design, implementation and construction of the Dryline as well as the scale of financial savings due to economies of scale. Maximum efficiencies, as noted, would occur with immediate, rather than phased-in, implementation.

Collaborating with Key Organizations ____________________________________ NRF would work with the various stakeholders within the area of the Dryline as well as link the planning/design functions being undertaken by the City with the financing of the Dryline resiliency network. For more information on the NRF and the proposed core team for the Dryline Initiative, see attached Exhibit A.

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Exhibit A—Development Team

The Natural Resilience Fund (www.naturalresiliencefund.org) is a 501 (c) 3 organization committed to integrating sustainability and resiliency efforts to safeguard property, critical infrastructure and natural systems from the effects of climate change. The firm is developing large-scale financing protocols to effectuate sustainability and resiliency improvements in multi-family and mid-high-rise commercial properties situated near or along coastal strips and other areas adjacent to these cities within the tri-state region of New York, New Jersey and Connecticut. The NRF seeks to develop and provide long-term financing in collaboration with the insurance and utility industries while also supporting resiliency and sustainability efforts undertaken by state and local governments. The NRF was recently recognized by MIT’s Climate Co-Lab Contest as a f inalist in the Adaptation Category. Experts evaluated the proposals on how urban areas can reduce their vulnerability and increase their resilience to climate change. Eric Kaufman, Principal, President & CEO of The NRF, is a co-founder of The New York Wheel (Big Wheel) project, a $465M privately financed PPP. As CFO of the Big Wheel, he helped guide this development destination project through the CEQR, EIS and ULURP processes within an expedited fifteen (15) month period. The Big Wheel was approved unanimously on October 31, 2013 by City Planning, the City Council, the Staten Island Borough President & the then Mayor of New York City. He also helped secure 85% of the Big Wheel’s funding. Eric has bought, sold, financed, developed, managed and acted as contractor for well over $1B in transactions since he began his real estate career in 1982. Through the 1990’s he was the #2 at The Carlton Group, a well-known real estate investment banking firm. There he helped start the firm’s real estate financing division. Eric has advised the Collegiate Church on their real estate holdings since 1996 and converted 1100 apartments to co-operatives or condominiums in the 1980s. He has an A.B. from Vassar College and an M.B.A. from the Wharton School. Joaquin Matias, Principal, Legal Counsel & COO of the NRF, is an attorney, policy and public management executive who has been facilitating PPPs and guiding complex large-scale development initiatives from concept to construction. Joaquin has held senior level positions within the government, non-profit and for profit sectors, including Director of Economic Development for the City of Newark and Executive Director of Real Estate & Economic Development for Rutgers University (Newark). In these capacities he has overseen the pre-development of several large-scale commercial and mixed-use projects. He is a member of the New York Bar with an A.B. and M.P.A. from Harvard University and J.D. from Northeastern University. James Sellinger Principal, CFO of the NRF, continues his successful career in transactional commercial real estate and a track record in formulating creative financial structures within the capital, property and asset markets. He has recently become extremely interested in green housing and is involved in funding ground-up land development for senior housing properties as a Principal of SLD. As former Chairman of the Tenafly (NJ) Planning Board, he was instrumental in advocating its Green Agenda and sustainability and resilience efforts to alleviate storm water runoff. His past positions have included Manager and Senior Underwriter at Merrill Lynch Mortgage Capital, Senior Director at the hedge fund Palisades Financial, Mortgage Banker at Northmarq Capital and Manager with AT&T Real Estate. James has a B.B.A from University of MA, Amherst; an M.B.A. from Cornell University; and completed a continuing education curriculum in Real Estate through the NYU Schack Institute.. Christy Coffey-Patil comes from a financial background, where she spent years managing client relationships and driving sales. Currently she has been integrating concepts developed during her Sustainability Management master’s studies at Columbia University. Complementing her work on resiliency, she is well versed in green design and is an accredited LEED Green Associate.