Audit Report on the Efforts of the Roosevelt Island Operating Corporation To Maintain and Rehabilitate the Landmarks on Roosevelt Island

AUDIT REPORT IN BRIEF

This audit determined: whether the Roosevelt Island Operating Corporation (RIOC) maintained, or caused to be maintained, the landmarks in the open space areas on Roosevelt Island (Island); and whether RIOC attempted to obtain financing for landmarks rehabilitation as well as the extent to which such rehabilitation took place. RIOC is a public benefit corporation created in 1984 to be responsible for the operation, security, and maintenance of the Island.

Regarding the lease requirement that RIOC stabilize and rehabilitate the five existing landmarks on the open space areas, RIOC has taken some steps to maintain or stabilize four of the five landmarks. In addition, RIOC has obtained, or attempted to obtain, financing to rehabilitate all five landmarks.

However, during the audit period and contrary to the lease agreement, RIOC had not taken adequate steps to stabilize the Smallpox Hospital landmark, although the landmark was cited by engineers as needing emergency stabilization, and State grant funding was available for that purpose. A 1995 engineering survey commissioned by RIOC found that the Smallpox Hospital was unstable and that there was potential for catastrophic wall collapse. RIOC applied for and was awarded a State grant in 1997 to perform emergency stabilization of the Hospital. However, RIOC refused the grant, anticipating that it would instead rehabilitate the landmark and develop the surrounding open space area. However, RIOC rejected a proposed rehabilitation project for the Hospital in 1999 and had taken no steps to stabilize the landmark. Subsequent to the audit scope period, in May 2003, RIOC commissioned an engineering study to determine the emergency stabilization that is needed for the north wall of the Hospital (Phase I) as well as the overall stabilization that is needed to make the entire structure stable (Phase II). Phase I is expected to be completed in June 2003.

In addition, the financing method by which RIOC sought to rehabilitate the Smallpox Hospital landmark (as well as the Octagon Tower landmark) may have disregarded the letter or intent of the lease. RIOC has sought to rehabilitate these two landmarks by soliciting proposals for commercial or residential development on the open space areas in which they are located. The General Development Plan (GDP) of the lease states that open space areas are to be developed as parkland. Moreover, RIOC’s efforts to undertake stabilization or rehabilitation of these landmarks through development may have delayed important stabilization or rehabilitation work at the Smallpox Hospital landmark that could have been funded by other means, such as governmental grants or tax-free bonds. Subsequent 2002 State legislation explicitly states that the Island’s open space areas are not to be developed for other than park purposes. At the exit conference, the RIOC acting president strongly asserted that RIOC’s current policy is to be in full compliance with that legislation regarding the Southpoint Park site, in which the Smallpox Hospital is located.

We make three recommendations, all of which are listed below. RIOC should:

• Abide by its contractual obligations and continue the process after the engineering study to ensure that it stabilizes the Smallpox Hospital.
• Continue its recent policy to ensure that any project to rehabilitate Island landmarks and to develop the open space areas fully complies with the legislation and with provisions of the City lease.
• If RIOC desires to seek development in areas not currently allowed by the City lease, RIOC should obtain approval from the City to amend the GDP before entering into any binding contracts with developers.

RIOC agreed with the audit’s recommendations.