Governors Island: Local, State, & Federal Governments Play Deal or No Deal

Abstract

On a helicopter flight to a ceremony at the United Nations in 1995, President Clinton and New York's Senior Senator Daniel Patrick Moynihan flew across New York City's lower harbor. According to Moynihan, the helicopter swooped by a small ice-cream cone shaped island and

‘Castle Williams, Fort Jay, the great lawns, the barracks – the McKim Mead & White barracks – all but leapt up at us. “What is that?” asked the president. “Governors Island, sir,” I said. The federal government had occupied it free of charge for on to two centuries. There was a one-dollar exchange in the 1920’s. No matter.

Mightn't we have it back?

Done! said the president. For one dollar. To be used for public purposes. Mostly public purposes, I demurred. At which moment we were setting down at the East River helipad.

I went to the ceremony, ducked the reception, and was off to our Manhattan office, where I called the mayor and the governor. They were out. But the deal was on.’

But the transaction was hardly complete. Seven years later in 2002, differing valuations of the island and the plans to develop it were preventing agreement on the fate of the land. Six hundred yards off the shore of Manhattan, Governors Island had been a military base for 200 years. When the Coast Guard left in 1996, the island became a ghost town of landmark forts and houses as well as deteriorating outbuildings and playing fields. For some, this open land in the midst of New York Harbor represented an opportunity to build an extraordinary development. Others saw the potential liabilities; the island was connected to the mainland only by ferry and the buildings needed millions of dollars of maintenance each year just to keep from collapsing.

The political players had changed since President Clinton and Senator Moynihan's helicopter ride. Clinton was no longer President, his wife had taken Moynihan's seat in the Senate and Michael Bloomberg had replaced Rudolph Giuliani as New York's Mayor. What remained the same was that the city, state, and federal government had yet to reach a deal. The question of what to do with the island and who should do it remained very much open. Indeed, there were those within the new Bush administration and the Congress who believed in scrapping Clinton and Moynihan's deal and selling the island to the highest bidder be that the local government or a private developer.

This case was prepared for inclusion in Sage Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.

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