As president of the powerful New York City Economic Development Corporation, Seth Pinsky has served as something of Mayor Michael Bloomberg’s alter ego, a quasi-bureaucrat deep in the city’s weeds, making deals, getting buildings built and spurring on innovation in a way that one could imagine the mayor, on some days, would rather be doing.
New York City has spent the years since the fall of Lehman Brothers busily attempting to remake itself into the innovation capital of the world. NYCEDC has been in the thick of it, egging on the everything from kitchen incubators to reclaimed infrastructure made into parks to the much-heralded tech campus set to open on Roosevelt Island.
After 10 years at the NYCEDC, earlier this month Pinsky stepped down. In September, the Harvard-educated attorney will start work at the local realty and investment firm RXR. Here, he discusses when the growing dependence on private-public partnerships makes sense, when it doesn’t, why some of his critics seem "blind to reality" and what he’s learned that makes him confident about the future of New York City.
Next City: Since the near economic collapse in 2008, the New York City Economic Development Corporation has aggressively pursued a wide range of projects that bring together government and private interests. Has the nature of the relationship between public interests and private interests shifted during your time at NYCEDC, and if so, how?
Seth Pinsky: It’s been an evolution during the entirety of Mayor Bloomberg’s term in office. If you look at EDC, and economic development more generally in American cities, historically the focus has been a combination of real estate investment and tax incentives. It’s been very tactical. It’s tended to focus on projects rather than on strategies. One of the things that evolved under the mayor, and I like to think evolved under my leadership at EDC, is the notion that strategy is as important, if not more important, than tactics. It’s critical for us to be thinking about the broader trajectory of the economy rather than worrying about this specific company or that specific company.
In many ways, economic development generally and EDC specifically, historically were kind of outclassed by their private sector partners. Their partnerships tended to be very imbalanced. In this administration, we’ve worked very hard at bringing in-house the expertise necessary to ensure that both parties benefit from the partnership. Also, it’s a hallmark of the mayor and his approach to governance that we’re very much data-driven. We’re very analytical.
NC: Some days I work out of a downtown workspace that, it turns out, was first funded through an NYCEDC grant. It seems like every time you turn around in the New York City tech sector, you bump into city government. Did you ever worry that you were baking too much of the city into the industry?
Pinsky: The city has its hands in lots of different pots, but we’ve been careful to calibrate its involvement. We’ve been an important catalyst, but the city has not been the sole, or in many cases even the prime, ingredient. Take the incubator network. It’s very different from the networks you see in other cities. The city is not actually running them.
We asked why New York was seeing less tech entrepreneurship than in other places, and one of the things that we heard was that it was hard for people to meet one another, there weren’t support services and space was very difficult to obtain. It wasn’t the city saying "x." It was the city saying to the private sector, "We have a goal of ‘y,’ and what are the ways we go about achieving ‘y’?" Then we offered relatively small amounts of money — I think the entire network has an investment in the mid-to-high single-digit millions of dollars — and offered that as start-up capital. But we’ve been careful to say that the city isn’t going to be operating the spaces and we’re not going to be there to give ongoing operating support. The city’s imprint is there, and the city helped to turn them into a network, but they’re not overly dependent on the city.
NC: Can other cities use the same strategies in their own development?
Pinsky: Your choice of words is important. The strategies that we’ve employed in New York City are replicable. I think that the tactics might not always be. The particular strengths and weaknesses that New York City has are very different from most other cities.
The examples that strike me as being least effective are cities that are being too prescriptive, that rather than setting out the goals that they’re trying to achieve, they’re being very specific about how they believe those goals can best be achieved. Cities are chasing this business or that business without having it be part of a broader strategy.
NC: What’s the current state of the planned tech campus on Roosevelt Island?
Pinsky: First, it’s important to remember that the Roosevelt Island project is one of three that is coming out of the Applied Sciences competition. The Columbia project has launched its new center and is in the process of moving forward with the expansion of its engineering school, which is very exciting. NYU is very quickly, with its partners, hiring staff and getting its Center for Urban Science and Progress off the ground.
And then on the Roosevelt Island campus, Cornell and Technion are actually operating in Google’s offices right now. They’ve already had either a semester or a year completed with what they call the beta class, and they’re hiring more faculty members and expanding the student body. The expectation is that the keys to the campus will be handed over to Cornell and the Technion before the end of this year, and construction will begin very shortly thereafter.
NC: From your tenure, what projects and approaches were especially successful and what projects haven’t turned out as well as you would have hoped they might?
Pinsky: The work that we’ve done in the technology sector has been very successful. We’ve built strong partnerships with academic institutions and private sector players. More broadly speaking, the work of our Center for Economic Transformation has been very innovative, and I would point to a number of our development projects where we’re literally transforming areas of the city outside the Manhattan central business district, like Coney Island, the north shore of Staten Island and Willets Point in Queens.
In terms of things that haven’t been so successful, one of the things that we’ve tried very hard to do is to pilot programs before we take them to scale. We’ve launched close to 100 initiatives since the collapse of Lehman Brothers. There are a number of them that turned out not to do exactly what we hoped. But the good news was that with most of them, we’d put relatively small amounts of public resources with the very goal of seeing whether they worked before we would commit to greater investments. It’s the idea of piloting before going to scale.
NC: Anthony Weiner reportedly said this week that, "Most big real estate firms, you know, the mayor is a job on their organization chart." What do you make of that?
Pinsky: That’s just simply untrue. I don’t think that this administration needs to apologize in any way for the level of development that has occurred in the city.
We have mayoral candidates talking about the importance of infrastructure, and they’re looking at things like roads and bridges and subways, all of which are extremely important. But another very important part of the infrastructure is our housing stock and our industrial stock. And all of those are incredibly old, especially when compared to cities with which we’re competing for business. What this administration has done is to use the power of government to make strategic investments in infrastructure to allow development in parts of the city that have not seen development in decades.
Of course, the developers have to make a return for them to be willing to make an investment, but the taxpayers are making a huge and positive return on these transactions as well. And unlike in the past, when administrations didn’t understand the motivations of the real estate industry and were giving subsidies that weren’t needed, and weren’t ensuring that the public was getting the benefit of the bargains that they struck, this administration has made sure that the investments that we make are the absolute minimum investments that are needed to spur private sector activity.
NC: We’re seeing an increase in private investment in public parks, not only in New York City but around the world. Is that a good thing?
Pinsky: Parks are very much like housing and office space, and the other non-traditional parts of the city’s infrastructure that the Bloomberg administration has been paying close attention to. When most people talk about infrastructure, they think about basic infrastructure: Transportation, health and safety. But we use a much broader definition. It’s also the private infrastructure that makes so much of our economy run, and it’s what I like to refer to as “magnetic infrastructure” — the kinds of things that attract the best and brightest to the city.
One of the things you hear people talking about in Washington is, “Cut, cut, cut, cut, cut.” And what people forget is that, when done intelligently, capital expenditures by government is not just spending, it’s investing. Something like the High Line is a great example of an expenditure that also is an investment. The city put in something like $120 million for the first two phases of the park, and it spurred $2 billion in private investment in the area around the High Line and created an incredible amenity for the people of the city.
NC: But the High Line is in part of the city — Chelsea — where people might have the money to invest in a park and the desire to see something wonderful develop. Do you look at the rest of the city and think that you’re not going to have the private investment that you have in Lower Manhattan, necessarily, and therefore the rest of the city’s infrastructure is going to lag behind?
Pinsky: No, because that’s not been the reality of the Bloomberg administration’s investments. Where it’s possible to use private dollars to supplement public investment, we’ve done that, whether it’s on the west side with the High Line, or in Brooklyn with Brooklyn Bridge Park. But where that has been less possible, the city has made significant investments, and the investments that we have been making in parks, or in cultural institutions, or in educational institutions, those investments have occurred in all five boroughs. If you look across the five boroughs, there’s not a corner of the city that hasn’t been impacted by this investment strategy in one way or another.
NC: [Public Advocate and mayoral candidate] Bill de Blasio recently came out with a plan for New York City’s tech industry that in many ways said, “Let’s keep doing more of what the city is doing.” But one criticism was that "these new job opportunities in tech and other high-skill sectors have largely gone to recent arrivals to New York City." What do you make of that?
Pinsky: There’s always the opportunity to improve on the initiatives that we’ve launched, so I certainly welcome an ongoing dialogue with the mayoral candidates. That said, the administration has not just been focused on new businesses and new institutions, but has been looking to grow the technology capacity among city residents. But I would also say that the industry is an industry that is important not just for Ph.D.s and engineers, but also is important for the many people that the industry supports. A university campus is not just made up of researchers. It’s also made up of support staff and maintenance people. Universities tend to pay higher wages than are paid in the general economy for equivalent positions.
NC: What do you make of the critique that NYCEDC has focused on big development projects with a ton of parking, not necessarily places that people can walk to and that are well-integrated into the fabric of street life?
Pinsky: It’s a critique that in no way reflects the reality of the record. The fact is, if you look at the major development projects that the city has undertaken under Mayor Bloomberg, whether it’s in neighborhoods like Willets Point or Coney Island or St. George in Staten Island or Hudson Yards, the city has either developed these projects around excellent public transportation access or as actually invested in the public transportation that will be necessary to allow people to commute. Anyone who thinks that this has not been a public transit-friendly administration is either blind to reality or has some sort of alternative agenda to push.
NC: Is the quasi-governmental “economic development corporation” model necessary in running a city like New York?
Pinsky: I don’t know that I would go so far as to say that it’s necessary, but I think that it has been an extraordinarily valuable tool. It is amazing to me how many people from other cities have come to me over the years to ask about the EDC model, because they compare it to what they have in their cities and realize just how much more effective it is than the models that they have.
The flexibility it has as a quasi-governmental entity is a real benefit. The fact that, historically, it has a professional staff is a real benefit to the city. That it has the benefit of generating — and requirement to generate — its own operating revenue has instilled a certain amount of discipline and independence that is helpful.
NC: What have you learned about New York City from your perch in city government that the average New Yorker might not appreciate?
Pinsky: One is the range of New Yorkers have in their economic lives — the fact that there really is no average New Yorker. And that even when things are going well, broadly speaking, for the city, that there are both opportunities and challenges for the city to do even better.
Two, I would say that the energy, enthusiasm and dynamism of the city’s economy are amazing to watch. It was so interesting to go through the experience of the Lehman Brothers collapse and watch the city’s economy remake itself in the face of extraordinarily challenging circumstances.
And the third thing is that it really is so heartening to me to have seen the civic-mindedness of New Yorkers, whether it was dealing with the economic recovery or dealing with the recovery post-Sandy. The desire of people in this city from the most successful business people to the most humble individuals to give of themselves and to help the city move forward is something that I never expected to see on the scale that I saw it, and that I think bodes very well for the future of the city.
NC: In a line or two, what are you going to be doing at RXR Realty?
Pinsky: The idea is to invest private capital in emerging sectors of the New York metropolitan area, including not just geographic areas but also industries and asset classes. For example, we’ll look at historic Main Streets in parts of the city, and suburban regions, that have good core infrastructure but for one reason or another have suffered from underinvestment in recent decades. We’ll seek to bring private investment back to those communities.
NC: Any preference in the mayoral race?
Pinsky: I’m not going to touch that one. [Laughs.] I prefer the candidate who is going to be the most successful mayor of New York for the next four-plus years.
NC: That answer kinda ate itself.
Pinsky: Yup. [Laughs.]