Book Review: <em>The Conundrum</em> by David Owen

Editor's Rating: A New Yorker writer catalogs the parodoxes of living green, including why driving a Prius may just make things worse

The Conundrum:
How Scientific Innovation,
Increased Efficiency, and
Good Intentions Can Make
Our Energy and Climate Problems Worse
By David Owen
Riverhead Books; 261 pp; $14

Nothing singes the psyche of an eco-conscious do-gooder quite like being rebuked by another eco-conscious do-gooder. In The Conundrum, which catalogs the hypocrisies and paradoxes of living green, the scolder is David Owen. His progressive bona fides are robust. In the 1970s, Owen moved with his new wife to Manhattan, a place he has described as a “utopian environmentalist community” because without a clothes dryer, a car, or even a lawn, their ecological footprint was minuscule. He writes frequently about the environment for the New Yorker, once arguing in its pages that an upside to the global economic crisis was that it decreased emissions. That he also writes for Golf Digest is confusing if not disqualifying.

The tough-love upbraiding in The Conundrum seems mostly directed at hybrid-driving, energy- efficient-lightbulb-screwing locavores convinced that such practices will set the world on a path to green salvation. Owen’s book brings deflating news: Most supposedly sustainable products and eco-living strategies are, he writes, “irrelevant or make the real problems worse.”

Owen’s logic is backed up by an economic principle known as the “rebound effect”: Advances in energy efficiency lower the cost of a given activity, which causes people to engage in that activity more, canceling out not only savings but also environmental benefits. Owen keeps a 1940s aluminum beer can on his desk. It weighs five times more than today’s can of Bud Light. Efficiency gains made beer cans cheaper to produce, transport, and dispose of. The cost of popping a brew declined so that more people can do it, using up more aluminum, not less.

It doesn’t take long for him to establish the Prius Fallacy: “a belief that switching to an ostensibly more efficient travel mode turns mobility itself into an environmental positive.” Owen cites statistics showing that as government officials have moved to increase automobile fuel efficiency, our gas consumption has gone up, not down. We simply drive more miles as a species. He also disses HOV lanes, traffic-control systems, and even smartphone apps for finding a parking spot as “counterproductive from an environmental point of view because they make drivers even happier with cars than they were already.”

The Conundrum is littered with other dilemmas. Air conditioners are more efficient and cheap; ergo, more homes are now air-conditioned. The more affordable lightbulbs get, the more they’re left on. Airplanes are more energy-efficient and faster than at any point in history, and therefore cheaper to fly longer distances. Owen is unafraid of questioning even that most sacred principle of guilt-free green living: eating local, organic food. Well-meaning consumers will drive minivans long distances to buy small quantities of organic food at urban farmers markets supplied by growers who make the schlep in trucks loaded at farms well beyond the suburbs. “If all the world’s groceries traveled from farm to fork in minivans, two bags at a time, we’d have exhausted many of the world’s resources long ago,” the author writes.

Owen’s short book is a contrarian page-turner and can be read in a few hours, making its ecological impact small. Even the most conscientious Whole Foods shopper will see his supposedly small footprint grow. Problems arise as Owen’s book progresses from description to prescription; the solutions offered, while ingenious, are unrealistic.

A stay-the-course, hope-for-the-best strategy is ludicrous to Owen. Instead, he’d like humans to live closer together and holds up New York City as a model. The metropolis is dense, living spaces are restricted, public transportation is (mostly) convenient, and car ownership is low. More important, he says, populations and governments should embrace strategies that effectively force reduced consumption of the planet’s natural resources. He would like us, metaphorically and perhaps actually, to drive Model T’s.

“If the only motor vehicles available today were 1920 Model T’s,” Owen writes, “how many miles do you think you’d drive each year, and how far do you think you’d live from work?” He wants to impose energy frugality by increasing fuel taxes and capping consumption. “Efficiency initiatives make no sense as an environmental strategy,” he writes, “unless they’re preceded—and more than negated—by measures that force major cuts in total energy use.”

Owen is right: The planet would be better off if we cut highway lanes and jacked up electricity rates. But he fails to answer the real conundrum: how to reverse humanity’s relentless pursuit of comfort.

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London Landlords Facing Rents of Zero Turn Offices to Condos

More people will be making their homes among the banks and insurance companies of central London as a shrinking financial industry and the prospect of leasing out buildings for free prompts landlords to convert offices into luxury apartments.

Developers including Axa Real Estate Investment Managers Ltd., Berkeley Group Holdings Plc (BKG) and Heron International Inc. also plan to build homes in the heart of Britain’s financial services industry, known as the Square Mile, after purchasing obsolete commercial buildings in the area.

“The fringes of the City are struggling in terms of letting secondhand buildings,” said Anthony Duggan, head of real estate research at Deloitte LLP. “There will be a number of developments looking at alternative uses.”

London has seen demand for offices slump after banks cut more jobs in the U.K. than in any other country last year. Rents in the City of London will fall 4 percent this year, compared with earlier predictions of a 6.1 percent increase, JPMorgan Chase & Co. said in a Jan. 11 note. Values will drop 7.3 percent in 2012, the bank said.

Axa is seeking older offices or partly developed “brownfield” sites on the fringes of the financial district to turn into housing. Berkeley plans to renovate a derelict office property near Moorgate into 90 residences. Heron is building a 36-story residential tower near the Barbican, and Hammerson plans to develop 253 apartments near Liverpool Street station.

Employment in the Square Mile dropped 8.5 percent last year and it will remain below 1998 levels until 2014, according to the Centre for Economics & Business Research Ltd. The cutbacks and the amount of aging space give City tenants greater bargaining power on rents with owners of older, empty office blocks.

About 54 percent of office space in the City of London and on its fringes is more than 15 years old, meaning it can no longer be marketed as “prime,” according to research from DTZ Holdings Plc (DDTZ).

Some landlords may choose to lease space for nothing to avoid a charge on empty buildings, Michael Marx, Chief Executive Officer of Development Securities Plc, said in an interview.

“I’m feeling more and more robust about that forecast as time goes past,” he said.

Since April 2008, the U.K. government has required office property owners to pay business taxes, equal to those usually owed by tenants, on buildings that remain vacant for more than three months.

Axa Real Estate plans to build homes and offices that will be worth at as much as 100 million pounds ($158 million) when completed Harry Badham, U.K. director of development, said in an interview. The company, which has 40 billion euros ($52.4 billion) of property under management, is looking at buildings and sites in Clerkenwell, Farringdon and Shoreditch.

“Residential conversion of older buildings can be an obvious route to value,” Badham said. Purchases would be by its Development Venture III fund, which has raised 588.5 million euros to date to buy property across Europe, he said.

A separate Axa Real Estate fund is developing an office building at 1 St Paul’s, close to the cathedral, that will include 10,000 square feet (929 square meters) of homes as well as 60,000 square feet of offices and 20,000 square feet of retail, the insurer said in a statement.

“There’s more value in going residential,” said Badham, who said home values were 10 percent to 15 percent higher at St. Paul’s than that for offices. Axa Real Estate may retain flats and lease them to a serviced apartment owner.

Home prices in the City of London typically range from 650 pounds to 1,350 pounds a square foot, Neil Chegwidden, residential research director at Jones Lang LaSalle Inc., said in October. Knightsbridge has the highest average price per square foot in London at 2,007 pounds, followed by Belgravia at 1,982 pounds and Mayfair at 1,960 pounds, broker Savills Plc said in an October report.

The average two-bedroom apartment in the U.K. is about 800 square feet (74.3 square meters), according to 2008 data from Nationwide Building Society. That means a property that size in the City of London is worth 520,000 pounds to 1.08 million pounds based on Jones Lang’s valuations.

Luxury home prices in central London have increased for 14 consecutive months through December, Knight Frank LLP said Jan. 9, making conversion to homes more attractive to owners of empty buildings.

Berkeley, the U.K.’s largest homebuilder by market value, won approval to renovate Roman House, a derelict office near Moorgate, into a 90-apartment building in December. It’s seeking more empty structures or brownfield land in the City to convert into homes, Berkeley (Capital) Plc managing director Piers Clanford, said in an interview.

“There’s interest from the City for a pied a terre and somewhere to stay during the week,” Clanford said. “People work long hours and that’s a target market us.”

Renovating Roman House, which contains a protected Roman wall, rather than building from scratch, saved Berkeley as much as six months in construction time, he said. For other developers, sites will need to be demolished and rebuilt because their layout is unsuitable for homes. When refurbishment costs reach about 160 pounds a square foot, they equal the cost of developing a site, said Iain Parker, head of European offices at real-estate adviser Davis Langdon.

“The environment is almost more suitable for refurbishment and reinvention,” Parker said. “It’s almost like all of the moons are aligning in terms of cost, money being tight, the sustainability agenda” and planning.

Heron demolished a fire station when it tore down the Barbican Centre’s service building to develop The Heron, a 36- story residential tower. The project is less than one kilometer (0.62 miles) from Berkeley’s development and Heron is seeking what it says will be the highest home prices ever charged in the City at about 1,600 pounds a square foot.

New residential developments will deliver better quality than renovating old offices into homes, though winning planning approval can be difficult, said Paul Cheshire, professor of economic geography at the London School of Economics.

“You really should be building houses in the first place because what you’re going to end up with is second-class houses or apartments,” by converting offices, Cheshire said in an interview at the university. “But the planning system may make it very difficult.”

The fringe of the Square Mile is more suitable for residential conversion than the center because housing would “sterilize” the surrounding area, said Ken Shuttleworth of Make Architects. Residents would have the right to impede future development if it blocks out sunlight, and that would reduce the value of neighboring buildings, he said.

Brookfield Office Properties Inc., lower Manhattan’s biggest office landlord, is also looking to buy obsolete City office blocks for conversion to flats, said Martin Jepson, senior vice president for development and investment at the New York-based company.

“Redundant offices are the natural provider of future residential land,” said Ian Marris, partner of London residential development at Knight Frank LLP, by phone. “There’s an acute shortage of supply of new-build homes across all of central London.”

From 2007 through 2011, landlords began turning 19 commercial buildings in the Square Mile into homes, according to research by Savills and London Residential Research. Of those, 14 refurbishments were completed and all the apartments in them have been sold, Savills said. Two of the five projects still under construction are new build.

“The land registry doesn’t report residential index figures for the City because it’s so small,” Lucian Cook, director of residential research said in an interview today. “Scarcity is one of the biggest drivers of price in prime central London.”

The City of London, which has restricted the majority of homes to the Barbican area, had about 11,677 residents in the middle of 2010, according to the Office for National Statistics. That’s likely to increase, according to David Wootton, the lord mayor of London.

“We would like to have more residences,” Wootton said in an interview. “It’s a matter of balance and making sure that small pockets of residential don’t disrupt the business cluster.”

A similar phenomenon has taken place in lower Manhattan, where almost 16 million square feet of space, mostly in older buildings deemed obsolete for offices, have been or are slated to be converted to housing between 1995 and 2013, according to the Alliance for Downtown New York, an organization representing area businesses.

“The goal in lower Manhattan has always been to keep it a globally competitive business address,” said Elizabeth Berger, the alliance president. Beginning in the 1990s, “you saw both the conversion of obsolete office space and the creation of new residential, and the community has grown exponentially. I’m a lower Manhattan resident for 30 years, and when I moved here, about 10,000 people lived below Chambers Street,” she said.

The most recent population estimate is 56,000, according to the alliance.

Hammerson Plc (HMSO), the U.K.’s third-largest publicly traded developer, delayed plans to develop an office block at Principal Place on the edge of the City after talks to lease part of the building to CMS Cameron McKenna LLP prior to construction failed, according to a Jan. 16 statement.

The project was canceled to avoid exposing shareholders “to excessive risk,” Hammerson Chief Executive Officer David Atkins said in the statement.

Hammerson still plans to develop a residential tower with 253 apartments at the site near Liverpool Street rail station and is in talks with companies to develop the tower in a joint venture. One of the companies is Manhattan Loft Corp., its chairman Harry Handelsman said in an interview.

“It’s a sexy opportunity,” said Handelsman, who masterminded the conversion of a disused building at Kings Cross railway into a luxury hotel and residences. “Towers are still a bit of a novelty in London. It’s a way of sustaining growth of a city. It needs to adapt to the high-rise model.”

To contact the reporters on this story: Neil Callanan in London at ncallanan@bloomberg.net; Christopher Spillane in London at cspillane3@bloomberg.net

To contact the editor responsible for this story: Andrew Blackman at ablackman@bloomberg.net

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How to Drink Your Coffee: There's an App for That

I am an irregular coffee drinker. I don’t need it to get up in the morning, but I do need it after a rough night or a heavy lunch. I am also, though, an irregular sleeper. Some nights I find myself wide awake at 3 a.m. Could it have been that cup of coffee I had after lunch? Should I have had tea instead? Would that have been enough to get me through the afternoon?

Well, now, as they say, there’s an app for that: Caffeine Zone, based on research on the “pharmacokinetics of caffeine.” You enter how much coffee or tea you’ve had, when you had it, and how quickly you drank it, then the app sends you an alert when you might need another cup to keep you sharp. It also warns you when the coffee you’re about to have might keep you up at night. On a graph, it maps the amount of caffeine in your body against color-coded zones corresponding to the compound’s metabolic effects.

According to Frank Ritter, the Penn State cognitive scientist who thought up the app, one of the lessons it teaches is that, like many other daily drugs—antibiotics, for example, or nicotine—caffeine is most effective when intake is front-loaded. The first coffee of the day should be the biggest, and drunk the fastest, for a big bump, and the rest of the day’s doses should be smaller and ingested more slowly. You want to stay in that optimum range. “You don’t want to have these big pulses of a whole cup,” he emphasizes. “I say cold coffee is good.” It’s trajectory management: Launch rocket, achieve desired altitude, maintain orbit with tweaks.

According to my Caffeine Zone app, as I write these words 35 minutes after my first sip of Starbucks (SBUX) house blend, I have just entered the forest-green band of optimum cognition. If I don’t re-caffeinate within the hour, I will drop out of the zone. I inform Caffeine Zone 45 minutes later that I am about to redose with a large 16 oz. coffee. The app warns me this will actually launch me past the upper boundary of the “Max Optimal” zone (200 mg of caffeine per kilogram of body weight). It will also keep me wired past 11:30 p.m., the time I entered as my bedtime.

The problem with the way many coffee-drinkers manage their intake, Ritter says, is they don’t think cumulatively. A small coffee at 2 p.m. isn’t going to keep most people up at night, but it will if there’s still caffeine coursing through the system from an earlier couple of cups. Ritter himself thinks nothing of ordering a two-thirds decaf cup of coffee, even a three-quarters decaf cup. “It’s hard for us to do the math because it requires a lot of exponential calculations, but your body does it,” he says. So does Caffeine Zone.

I opt instead for a Cherry Coke with lunch. There is no button for caffeinated soda (there is, strangely, a button for caffeinated gum), but there is a custom feature that allows me to enter Cherry Coke’s dose information and my intake speed (usually the time it takes me to walk from the soda machine upstairs to my desk, which I round up to 5 minutes). My Coke’s measly 34 mg of caffeine, it turns out, will barely keep me above the 150 mg/kg lower bound of the optimum zone. So I add a medium cup of tea after lunch, which keeps me in the optimum zone for much of the afternoon but will, Caffeine Zone predicts, keep me up for an extra half-hour tonight. That’s O.K., 11:30 was sort of an aspirational bedtime anyway.

Of course, the next step might be to connect the iPhone to a caffeine drip and just have it pump a few dozen milligrams of caffeine directly into a vein when I begin to flag. Or maybe I could rig the app to sync with my workstation and track my typing speed, dosing me when I slow, or when it notices I have spent more than five minutes on YouTube. Where do these strange, idle thoughts come from? My iPhone chimes as Caffeine Zone warns me that I have dropped out of the optimum zone. Time for that cup of tea.

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George Takei's Facebook Masterclass

The brightest Facebook star of 2012 hasn’t been the new timeline, a Mafia assassination game, or even the company’s initial public offering. It’s 74-year-old actor, gay rights activist, and sci-fi icon George Takei, best known for playing the cool headed, deep-voiced Mr. Sulu on the original Star Trek series. After launching his Facebook page last October, Takei has gained more than a million followers and his short, visual, fan-generated posts—which range from dogs dressed as Yoda to jabs at Rick Santorum—have rapidly spread to the news feeds of many millions more Facebook users.

Bloomberg Businessweek recently tapped Takei to school us in the art of Facebook curation.

Tell us a little about the growth of your page.

I began with Twitter in January of 2011 but moved to Facebook in October of 2011, as it gave me more of a way to interact and share ideas and laughter as a community. The site really gained traction after the first of the year, when we hit some kind of critical mass of people sharing and reposting, so that all “friends of friends” started joining in. Things really took off after I went on strike for a day [January 17th] to protest SOPA [the Stop Online Piracy Act proposed in Congress]. I think fans realized that the page had become a part of their daily lives, and so they were more eager than ever to participate.

What do you look for when you’re considering a post?

True to my base, I like to find fan-generated images that are in the world of science fiction, especially Star Trek or Star Wars—both are franchises that I have worked in. One of the most popular posts ever was a picture of Nichelle Nichols [who played Lt. Urura on Star Trek] and myself on the bridge of the Enterprise, and we had a fan caption contest, with the fans voting for the three finalists. The winner had Uhura saying, “the captain kisses like a girl.” And I was there saying, “I know.”

I also have a strong LGBT following, so images that have a gay spin to them are common. We’re split about 50/50 men and women, so posts that poke fun at either or both sexes are popular. On top of these, posts that make you think—or speak to the politics of the day or even of the moment—tend to be shared and commented on frequently.

How many submissions do you get per day—and how many, on average, do you post?

I receive hundreds of posts on the wall and e-mails from fans and unfortunately, don’t have the time to look at them all. But when I do, it’s not hard to find very funny material to share. I’ll share six items on a good day.

You’ve managed to capture a fairly large swath of users from different backgrounds. What’s the key to Facebook posts with wide appeal?

I think the fans understand that I am an equal-opportunity Facebooker. That is, everyone needs to be able to poke fun at themselves and not be too serious. We aren’t out to hurt anyone, just laugh together. Things that bring a smile, even if they are a bit naughty or edgy, are my favorites. Like the recent Gay Terrorist picture, with a fine-legged Arab fellow in heels, a full beard and a white dress, named Yomama Been Shoppin. I knew it was wrong, but I laughed anyway and thought: “If I can laugh at this, others should be able to as well.” And I was right.

The intros to each posting are short, succinct, and witty. What are you looking for when you write them? They’re almost Haiku-like.

I’ve had the fortune in my career of working with terrific writers for television, film, and stage, across all genres. Perhaps I am channeling them. The English language is a beautiful, malleable, and glorious tool when used effectively, so I like to put a little more effort into each post.

As the page’s followers have snowballed, how has this affected your posting, or the quality of material?

I like to think not. Certainly the material is shared more often, so I try to be careful to post higher-quality images, so that as many people on Facebook can enjoy them as possible. And I try to proofread more carefully—there’s nothing worse than a typo that 100,000 people point out to you. I also reduced the number of times per day I interact with the site, so that I can give each post and as many of the comments within them their due.

You’re a political figure on many issues, but the page seldom has overt political postings, and politics are more often subtly referenced. [For example, a cartoon with
marshmallow peeps standing around a plate of Fig Newtons, holding signs that say "God Hates Figs."] What place should politics have on a Facebook page?

There are fans from all political spectrums who follow the page, and I wouldn’t want it to become some large bridge for “trolls” to dwell under. Finding material that unites people in laughter is better than standing on a soapbox to disseminate messages that divide. That said, when there is an issue that all of us of good conscience can get behind, irrespective of political affiliations—like same-sex marriage—I am happy to pontificate.

Facebook has filed for an IPO and is valued somewhere close to $100 Billion. Given the spread of your page and the quantity of Facebook users who are forwarding and reposting your posts—and that the Telegraph recently valued each Facebook user at approximately $125—what would you value the page at?

There are certainly more important things than money, and I’m the last person to be able to answer that question. On occasion, I will ask the fans for support of a charity or project, and if they respond with contributions, that’s good enough for me. We were able to help a young documentary maker, for example, get funding for his Second Class Citizens project on gay rights. And we’re doing a plug for The Old Globe Theater and the Japanese American National Museum, both of which are favorite nonprofits of mine.

How has the background of your existing fan base helped this page grow so rapidly?

It appears that sci-fi fans tend to be quite avid Facebookers, so that core has really helped us grow initially. They also like to communicate with one another on the page, since it reminds them that we’re all a little weird, and finding other weird people with the same weird sense of humor is quite comforting. That’s one of the great aspects of Facebook: It can bring people together—in this case to laugh—without forcing you to sit right next to someone else. I’m not sure it’s what Mark Zuckerberg had in mind initially, but now look what’s happened. I’m having the time of my life at nearly 75 years old. But just imagine when all the 20- and 30-somethings today are still on Facebook as grandparents, poking each other and starting Facebook fights. How very droll!

Sax is a Bloomberg Businessweek contributor.

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Fracking’s Toll on Pets, Livestock Chills Farmers: Commentary

Smelling gas one morning, a southern Pennsylvania farmer almost passed out when he went outside to check on his bellowing cows.

One of the animals did keel over, kicking its feet in spasms. A couple of days later, a calf was fighting for its life, the farmer said. It died.

Something awful is happening over the Marcellus Shale, the vast geological formation in eastern North America where energy companies are looking for natural gas.

Hydraulic fracturing, or fracking, a process for extracting gas by injecting high volumes of water and chemicals into deep wells, has sparked complaints about ruined landscapes and fouled groundwater. Increasingly there is evidence, mostly anecdotal, that animals are suffering.

A new study by veterinarian Michelle Bamberger and Robert Oswald, a professor of veterinary medicine at Cornell University, chronicles case studies of dozens of farmers and pet owners in six states over the Marcellus Shale.

Their findings, published in “New Solutions: A Journal of Environmental and Occupational Health Policy,” are a harrowing account of sudden deaths of cattle, as well as reproductive and neurological problems in horses, cats, dogs and other animals.

The Pennsylvania farmers I spoke with have lost cows, calves, a horse, a couple dozen chickens. Many of the animals succumb in the same way: seizure-like symptoms, gasping for breath and a quick wasting away. A Rottweiler and a Dalmatian also fell ill and died.

These farmers are getting out of the beef business, in part over concern that their animals will become delivery systems for contaminants.

An organic farmer from southeast Ohio told me he has abandoned his cash crop, ginseng, for now, concerned that contaminants would enter his product. He began noticing changes around his 20-acre property in 2007, when a fracking operation began dumping wastewater nearby. He lost quite a few deer that were drawn to the brine and antifreeze in the fluid.

Energy representatives dismiss the veterinarians’ study. They say that health indicators have actually improved in areas with shale development.

“The paper is little more than a collection of personal testimonials that cannot be independently assessed or verified,” says Steve Everley, a spokesman for industry group Energy in Depth. “The paper is full of bold assertions about oil and gas development, but empty of any facts or scientific evidence to support those opinions.”

Establishing a causal link between fracking and specific health threats is tricky. Energy companies are not required to disclose the composition of fracking fluids for proprietary reasons, so they don’t.

Like a lot of people who live near fracking operations, many of the farmers I interviewed are in litigation with an energy company and wish to remain anonymous.

“We don’t know what the chemicals are in a lot of these cases,” says Bamberger. “It gets very frustrating when you start saying: What was in the tissue? What killed these animals exactly?”

In 2010, the Pennsylvania Department of Agriculture quarantined 28 head of cattle after they drank wastewater from a fracking site in Tioga County. The fear was that a radioactive contaminant in the water, strontium, would end up in beef.

In December 2011, the Environmental Protection Agency linked water pollution to fracking for the first time, after examining contaminated water in central Wyoming.

Last month the federal agency announced it would test water in dozens of homes around Dimock, Pennsylvania, a hotbed of fracking activity. It also told New York it would need to improve safeguards for drinking water before tapping into the Marcellus Shale.

New York placed a moratorium on fracking in 2010 so it could revise the rules governing the practice. Bamberger and Oswald are among those who contributed to the tens of thousands of public comments on the draft regulations, which were closed last month.

Bamberger submitted the published study; Oswald contributed 15 pages of his own to denounce the inadequacy of the proposed rules.

“There are so many flaws in the document,” he says. “It is unlikely to be able to protect us from the industrialization of our landscape and hydraulic fracturing.”

Now, New York’s Department of Environmental Conservation will review comments and revise regulations as necessary. It seems inevitable that the state will be fracking eventually, so the question is whether the industry can proceed safely -- for humans and animals.

New Yorkers should listen to the stories of farmers, hunters and vets before making the same fracking mistakes that are being made elsewhere.

(Mike Di Paola writes on preservation and the environment for Muse, the arts and culture section of Bloomberg News. The opinions expressed are his own.)

To contact the writer of this column: Mike Di Paola at mdipaola@nyc.rr.com.

To contact the editor responsible for this story: Manuela Hoelterhoff in New York at mhoelterhoff@bloomberg.net.

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Rush to Open Sept. 11 Memorial Cost $500 Million, Agency Says

Feb. 9 (Bloomberg) -- Accelerating and redesigning World Trade Center projects so the Sept. 11 memorial could open by the 10th anniversary of the attacks cost about $500 million, a Port Authority of New York and New Jersey commissioner said.

The mass-transit terminal and subsurface infrastructure had to be “resequenced and accelerated” to meet the 2011 deadline, Vice Chairman Scott Rechler said in an interview today. The cost of those two projects, part of the almost $15 billion redevelopment of the Lower Manhattan site, has risen by $977 million since November 2008, according to an audit released Feb. 7. A majority of that increase was due to the rush to complete the memorial garden, Rechler said.

The specifications for the transit hub, designed by Spanish architect Santiago Calatrava, were only 70 percent complete when the project was bid, Rechler said. The decision to move ahead with incomplete plans was part of the “political and patriotic mission that was put in front of the Port Authority,” he said.

“At 70 percent complete, you know you’re going to have cost overruns,” he said. “This is one of the most complex construction jobs in the country, if not the world.”

Rechler and authority Chairman David Samson today spoke to reporters before a board meeting, two days after the release of the audit. Ordered by New York Governor Andrew Cuomo and New Jersey Governor Chris Christie in August, the financial review showed the entire project could cost as much as $14.8 billion, up from $11 billion estimated in 2008.

‘Challenged and Dysfunctional’

The audit called the agency, which oversees the metropolitan area’s airports, shipping terminals and interstate bridges and tunnels, “a challenged and dysfunctional organization” with $19.5 billion in debt and growing.

New York City Mayor Michael Bloomberg yesterday said not opening the memorial by the anniversary would have been an “embarrassment around the world,” and that “the Port Authority had to deliver.”

Most of the increase to $14.8 billion isn’t due to cost overruns, Samson said. The reason is that the authority took on jobs, including the memorial and subway and security improvements that are supposed to be paid for by third parties, including the city, the Metropolitan Transportation Authority and the National Sept. 11 Memorial & Museum Foundation. The net cost to the authority rose by $1.7 billion to about $7.7 billion, the report said.

That $1.7 billion increase includes $537 million for the transit hub and $440 million for the infrastructure, the audit said.

The cost of 1 World Trade Center, the 1,776-foot tower slated for completion next year, was estimated in the audit to cost $3.9 billion, a 27 percent jump from the $3.1 billion estimate the authority made in 2008. Some of that is because the earlier projection didn’t include leasing commission and tenant fit-out costs, the commissioners said.

--Editor: Mark Schoifet, Mark Tannenbaum

To contact the reporter on this story: David M. Levitt in New York at dlevitt@bloomberg.net

To contact the editors responsible for this story: Daniel Taub at dtaub@bloomberg.net; Mark Tannenbaum at mtannen@bloomberg.net

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"What We Want is More Innovation in America" He Said