Edition: U.S. / Global

Fight Over Funds to Rebuild Downtown

Published: September 30, 2002

A battle is shaping up between Senator Charles E. Schumer and Gov. George E. Pataki over hundreds of millions of dollars in federal funds to rebuild Lower Manhattan in the wake of the attack on the World Trade Center.

Mr. Schumer, a Democrat, is seeking to block nearly $700 million in transportation projects being considered by several agencies under the control of Mr. Pataki, a Republican.

The senator said today that these projects were not directly related to the Sept. 11 attack, and he questioned whether using federal disaster aid to finance them would violate restrictions on the use of such aid.

In all, New York has $4.5 billion in federal disaster aid to rebuild transportation systems damaged in the attack. Mr. Schumer said he was concerned that devoting $700 million of that aid to projects unrelated to 9/11 would shortchange the projects directly related to the attack, mainly the construction of a transit center linking the subway and PATH lines around the trade center site.

The projects -- some of which were proposed before 9/11 -- include renovating the South Ferry subway station and the Hoboken ferry terminal, as well as building a concourse to connect two subway lines running beneath Rector Street.

The three projects alone are estimated to cost roughly $600 million, according to a document that the Lower Manhattan Development Corporation compiled in consultation with state and city officials. Mr. Pataki, who created the agency, bears the ultimate responsibility for the redevelopment effort downtown -- though he and Mayor Michael R. Bloomberg share an equal number of appointees on its 16-member board.

Mr. Schumer cannot directly block these projects. But he is urging the Federal Emergency Management Agency to intervene and stop the state from moving ahead with them.

''I don't have any objection to building these other projects,'' the senator said. ''But the purpose of the $4.5 billion is to build a grand new station downtown. That will do more to bring back Lower Manhattan than anything else we can do. To use this money for other projects -- however worthy -- subverts the intention of what the $4.5 billion was for.''

But the Pataki administration and officials at the Lower Manhattan Development Corporation argue that the projects are crucial in the overall effort to revitalize downtown -- even if the need for them is not a direct result of 9/11.

More than that, though, they say that they are consulting with officials in Washington, including those at the Federal Emergency Management Agency, as New York considers which projects to finance with aid from Washington. They also say that the list of projects Mr. Schumer criticized was being refined.

''We're committed to ensuring that Lower Manhattan emerges stronger than ever before,'' said a spokesman for Mr. Pataki, Joseph Conway. ''Together with the city, we've been working closely with FEMA throughout this process -- which is why we'll be moving forward with important projects that will have FEMA's support.''

The dispute is just the latest example of the murky question of how federal disaster aid can be used. It also raises anew questions of just who is in charge of that money: Members of New York's Congressional delegation, who won its approval? The governor, who is in charge of downtown redevelopment? Or FEMA, which has been widely criticized for being too frugal in parceling out the money.

The fight is also being played out against the background of New York politics, with Mr. Pataki seeking re-election to a third term and Mr. Schumer, an early and outspoken supporter of the governor's Democratic rival, H. Carl McCall, the state comptroller.

Mr. Pataki has enjoyed high public approval for his role in the post-9/11 recovery, though he has largely remained behind the scenes when it comes to plans for downtown.

Mr. Schumer's criticisms are reminiscent of the fire Mr. Pataki drew months ago when he went to Washington with his first request for disaster recovery money, a $54 billion aid package that included items that had little hope of success like a high-speed rail link from Schenectady to New York City, and money to directly offset revenues the state lost as a result of the attack.

The fight also comes as the state needs to find ways to shore up the Metropolitan Transportation Authority's shaky finances. The economic downturn has suppressed ridership and revenue, the agency is running a deficit, and many officials have predicted a fare increase after the November election.

The authority, controlled by the governor's appointees, is midway through an ambitious five-year, $17-billion capital plan that critics said was financially uncertain even in the much healthier economic climate that prevailed when it was adopted.

The $4.5 billion that New York has to rebuild transportation systems comes out of the roughly $21 billion that the Bush administration and Congress provided to aid New York's recovery.

Mr. Pataki and Mr. Schumer, who share a cordial, if sometimes wary relationship, agree that the $4.5 billion can be used to pay for a new transit hub that would connect subway and PATH lines. But there appears to be little agreement beyond that point.

Generally speaking, federal policy dictates that disaster money can be used only to rebuild what was destroyed. But New York officials persuaded the federal government to change those rules to give New York greater flexibility so that it could, for example, build something new, like the transfer station for the PATH and subway lines.

Mr. Schumer is arguing that extraneous projects being considered by the Lower Manhattan Development Corporation would exceed even the looser standards agreed to by the federal government. He plans to send a letter Monday to FEMA's director, Joseph M. Allbaugh, in an effort to stop the state from using federal aid for anything other than disaster-related projects like the Lower Manhattan transit hub.

''Does FEMA intend to consider transportation projects that are not directly related to the Sept. 11 attacks,'' Mr. Schumer asks in his letter. ''The South Ferry Station renovation and the Rector-to-Rector-Connector Projects are two examples of current proposals that are not a direct result of the terrorist attacks.''