Owner of the Year

Is the NYC School Construction Authority the Region’s Most Important Builder?

Interview by Jack Buehrer

It’s going to be tough for the New York City School Construction Authority to top its 20th year of existence.

Located on the last undeveloped site in Lower Manhattan’s Battery Park City, PS 276 will, upon completion, be the greatest example yet of the School Construction Authority’s commitment to sustainability.

Two decades removed from its creation in 1988, the SCA in 2008 opened 18 new schools – the biggest one-year total in its history – bid out 25 more and continued implementing its aggressive green building standards set forth in the NYC Green Schools Guide and Ratings System. The agency is wrapping up its most recent five-year, $13.1 billion Capital Plan and is readying its next one which is expected to total more than $11 billion, keeping its pipeline filled with future jobs, while the rest of the industry is slowing down – or halting completely. In the last three years, the SCA has obligated more than $3 billion each year, paying out more than $2 billion.

“I think our volume is extraordinary,” says Sharon Greenberger, president of the SCA. “And it will continue over the next couple years and then we’ll see what happens with funding going forward, but we still have a lot of these projects carrying over into the next several years.”

That volume – both in 2008 and in the foreseeable future – has turned the agency into one of the most desired project owners to work for throughout the tri-state area. Combined with a decided commitment to sustainability, a much-lauded mentor program for MWLBE firms and greatly improved administrative processes, the SCA’s importance to the region’s ailing construction industry has earned the agency the honor of New York Construction magazine’s “Owner of the Year.”

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On a chilly afternoon in late March, New York Construction sat down at the SCA’s Long Island City offices with Greenberger and several of her senior staff members – VP and General Counsel Ross Holden; VP of Administration Michael Van Biema; VP of Architecture and Engineering E. Bruce Barrett; VP of Construction Management George Toma, VP of Environmental and Regulatory Compliance Vinicius Castagnola and Senior Director of Capital Planning Liz Bergin – to discuss the agency’s big year, its future and its role in the region’s construction industry as it heads further into dark economic times.

NEW YORK CONSTRUCTION: A lot of people we’ve spoken with have told us that over the last few years it’s gotten easier to work with the SCA. How has this agency changed over the years that would prompt so many contractors and associations to say that about you?

SHARON GREENBERGER: I think we’ve focused our performance generally and specifically we’ve looked at making sure our payment performance – our rate of payment to contractors – has improved over the years, but it’s also remained steady over the last three or four years at 90 or 95 percent which is significant and probably higher than any other state or city agency. Some of our business operations – whether that’s the change order process or administrative processes by which companies come and get pre-qualified or pre-certified to work with us have improved, and by improved I mean the turnaround time has improved, the communication has improved, and the quality of our work has improved. These are some examples, I think of how it has become easier for people to work with us.

LIZ BERGIN: I think we’ve worked very hard over the last few years to go in that direction. That has been one of our goals, to make it a better place for contractors and consultants.

NYC: Had contractors, in your eyes, had problems working with the SCA, historically? Predating you guys, I mean ten years ago, fifteen years ago …

The 47, 685-sq-ft Early Childhood Center 361 in the Bronx is incorporating the attributes of its unique site to create rarely-seen urban educational features such as clear sky sightlines and basement spaces with natural light. (Image courtesy of SCA)

SG: A lot of people in this room have been here for a long time (laughs)! But I will say this: I think the issue is that five years ago, four years ago, two years ago, there was a lot more competition in the market and so we had to work very hard to make sure that we were getting the top quality contractors and other suppliers and everybody else to work with us. And I think we recognized that to do that, it had to be easier or as easy if not better to work with us then anywhere else. So that became a motivating force in terms of looking at everything – operations, administration, all the ways in which it would become better to be our partners than anyone else. And I think what we’re seeing now is sort of the fruits of that labor. Not only do we have the top contractors coming back – in part because of our operations but because now with the economy shifting, people aren’t afraid to come back because they’ve heard from others that this is a better place to work. And we’ve seen this in the bids that come in, we’ve seen it in the contractors that bid, and the quality of the firms that bid.

ROSS HOLDEN: I think also we have allowed maybe more readily than some other agencies, groups of contractors or other constituents to meet with us either to voice concerns that they have or work through problems. And I don’t know whether other public entities – because I’ve only worked for this one – as frequently agree to meet at Sharon’s level or the level of many of the other people here in this room. So I think they understand and see that there is really a two-way street, their voice will be heard. Even if there are not a lot of results, at least they feel as though they had an audience and I think that makes people feel good about things. We’ve also done a lot of outreach and going out to speak, and I think at the end of the day that really does give people a friendlier feeling about the school construction authority to the extent that we’re explaining how we do things and they have a better handle on that process it makes their work easier, too.

SG: So it’s not just performance it’s really, I think, accessibility – they can come in and see all of us – and transparency. I’ll give you one other example. We started last year a monthly bidder’s list … what are we calling that now?

MICHAEL VAN BIEMA: It’s a Look Ahead.

SG: Right, the Look Ahead

As available space becomes harder to find, the SCA is forced to build on many challenging sites, including the sloping Mott Haven site in the Bronx, which faces active rail lines and formerly served as a manufactured gas plant. (Image courtesy of SCA)

MVB: We provide information on the web about projects that are going to be bid out over the next six months and it’s updated every month so firms can easily, if they’re interested in doing business with us, plan and gain access to that business.

NYC: Can you talk a little bit about the roll that the SCA is going to play – or already is playing – during the lean times for this industry? One of the things that kept coming up when we’d talk to contractors during the selection of the Owner of the Year was “They’re going to have a lot of work in the ground.” How does the SCA see its role from a business standpoint in the New York City construction industry?

SG: From a volume perspective our numbers mean dozens of new schools and hundreds – five to six hundred a year – in capital improvement projects. On a volume basis I don’t think you’d find anyone else doing that kind of business. And that’s been the last three years and will continue over the next couple years and then we’ll see what happens with funding going forward, but we still have a lot of these projects carrying over into the next several years.

NYC: Now, your capital program ends this year, right?

SG: Our current plan ends July, 1, yes.

NYC: What’s the status of the next plan?

SG: We have a draft out there of the next plan that goes into effect on July, 1. It’s an $11.3 billion plan, which is reduced from the $13.1 billion plan that’s currently in place, but it’s still significant.

NYC: How did you do with the plan that is expiring this year? Were you able to hit the goals you set five years ago?

SG: I think we’ve hit all of our major targets. We said we’d create 63,000 new seats and we have in process 55,000 of those seats. The gap is from seats we had to push out into the next plan because of the budget constraints that were placed on us six months ago. We said we would obligate funding for over 2,000 [capitol improvement] projects and I think we’re at 2,300, so we met that. We also set a goal of obligating $100 million a year for the last three years for our mentor program which helps our emerging MWBE firms and we’ve met or exceeded that all three years, so I’d definitely say we met all our targets.

NYC: Have you, in the last year or so since we really started see and feel the economy turn, had to deal with plans getting scaled back or jobs being slowed or put on hold indefinitely or anything like a lot of the private owners are seeing?

SG: I would say the opposite. Because we have funding in this plan, we want to make sure we use all those dollars as appropriately as possible. So we’ve sped up the design where we’ve needed to so we could put those projects out to bid this year. I think what we’re also seeing is the decline in pricing, which also frees up more resources to put into other projects. So I think we actually are not seeing that kind of result from an economic shift.

NYC: Is the SCA seeing any stimulus money?

SG: We don’t know. I think the original allocation that was set aside for school construction was drastically reduced. There may be funding available for bonding …

Severalnew projects, like the Metropolitan Avenue School in Queens, are slated to open in 2009 and 2010 making the SCA one of the busiest agencies in the region in terms of new construction. (Image courtesy of SCA)

LB: It’s only bonding, and we are working with [the New York City Department of Education] and City Hall on some of the other categories to see if we can, in fact, do projects together, but we’re really restricted by the bonding piece.

NYC: The SCA has been very aggressive in terms of its green standards. Can you talk a little bit about the Green Schools Guide and Ratings System and how sustainability informs how you go about any job.

BRUCE BARRETT: [The Guide and Ratings System] was created to comply with Local Law 86 and we have now over 50 projects that are either in design or construction that are following the green schools guide. About half of them are new school projects and about half are boiler and controls projects.

SG: And that’s 90 percent of the total city projects that are in place.

BB:: Yeah. At the end of every calendar year, the mayor’s office puts out a report and at the end of last year the SCA had a total of 49 projects and the other 13 agencies combined had fewer than that. But all of our green requirements have been incorporated into our standards. So they’re being applied to all of our projects that use those standards. And we try to make it very easy for our consultants to both use our standards and achieve compliance with Local 86 and to comply with our process. They don’t have to go outside to the U.S. Green Building Council. They deal with us. We have submission requirements and reviews at basically every milestone during design and then during construction. It’s a more interactive process with them, more prescriptive.

NYC: Is it assumed at this point that when you go to work on an SCA project that you have to be well-versed in green or sustainable design and construction practices?

BB:: All of the applicable projects, which means any projects that are major renovation projects or new schools over $2 million in value, have to meet the equivalency of LEED certification. And if the project is over $12 million, which is virtually all of our new school projects, they also have to meet the 20 percent energy cost requirements, which actually was the biggest lift for us. It was a lot of work because we had to pretty much reinvent our whole heating, ventilation and air conditioning system, which we did. And we did in a way that we could consistently implement across all of our projects.

SG: Bruce is also being shy because [in February] the Green Schools Standards were awarded a Sustainable Building Industry Council Award in Washington, D.C.

NYC: That’s fantastic.

BB:: Yes, for Policy and Program. We were pretty excited about that.

NYC: Before everyone was talking about the economy, everyone was talking about green and some contractors and subs were intimidated by working on green projects and some embraced and have run with it and never looked back. What has been the response from the contractors and designers that have worked with you who now know that to work with you they’re going to have to be up to speed on some things that maybe five years ago they wouldn’t have?

SG: I think Bruce can speak to this a little more but one thing is that the education piece is important. They all have to understand before they walk in the door that its part of the process of working here, now. Most of them now have somebody on site, or are supposed to have somebody on site who understands these issues. We do a capacity forum that we have internally with all of our contractors every year to showcase the projects that are going to go out to bid. And now all of them have to comply because they were all designed after January 2007. And each time we have all of [our contractors] in the room we actually go through what the Green Schools Standards mean and what it’s going to mean to them in terms of construction changes and on-site issues that they may have to take care of.

GEORGE TOMA: In general, [the response] has been very positive. Almost all of them want to comply. For each project there is a team on site and we train them. They come for a meeting here and we explain to them what’s required, what documents we need, what type of work they have to do, and by giving them all this information ahead of time before they start, everyone knows and can anticipate what to do. And that’s worked well so far.

BB:: The requirements are all in the contract. The submission requirements are all handled as regular construction submissions.

SG: And it’s all online. Everything we do is online.

NYC: One thing that has been very noticeable these last couple of years has been an increased number of partnerships between this agency and private developers. Is this a necessity because of space and/or funding, or is this just a continued evolution of how you do business as needs and restrictions change?

SG: We’ll just say yes (laughter). Actually, I think it’s a combination of innovation and necessity. It is harder to find space and we’re competing against residential developers. Less so, now, but we were competing with them. But we’re also recognizing in terms of our planning, when there are big developments going up they’re going to create need and demand and we really needed to be in on the ground level, so to speak, when those developments were in their beginning planning stages. So we’ve worked very aggressively and closely with City Planning and Housing Preservation and the Economic Development Corporation to make sure that as these new projects are conceived that we are a part of those conversations. For instance, when Atlantic Yards was first being tossed around, we made sure we were at the table during the negotiations with Forest City to say, “School must be a component of it, the cost must be absorbed at some part and we have it agreed in writing that that’s a piece of it. So it is in part out of necessity because we don’t want to go back after the fact and have to look for space, but also, it’s strategic. It’s making sure we’re anticipating the demand or the need that is going to come online and figuring out how we can be a part of the planning early on.

The SCA opened a total of 18 schools in 2008- a record for the agency- including (clockwise from top): the Elmhurst Educational Campus in Queens, Adam Street High School in the old Brooklyn Family Courthouse and Gregorio Luperon High School in Washington Heights (Images courtesy of SCA)

NYC: Does this go hand in hand with your work on charter schools, as well?

SG: That’s a little different. I think you’ve seen a growth in both areas. You’ve seen a growth in mixed-use development that can include schools and you’ve seen a growth in charter schools. And that’s partly a part of a DOE programmatic priority and partly because there are other partnership organizations that have funding that want to create charter schools.

RH: The Department of Education conducted a procurement to find charter school developers who had some funds but not enough to build an entire school. Charter schools only get a certain stipend per student, so the department of education wanted to prime the pump, if you will by offering funding to charter schools that wanted to build their own facilities. So we’ve done four or five partnerships with charter schools whereby they’ll do the construction and the SCA will provide the funding through a funding agreement-type vehicle and we are in that way helping to develop charter schools throughout the city. Like I said, we’ve already done four or five, but we’ve also got about four or five more in the pipeline.

NYC: Is there a challenge looming on the horizon that you can see coming? Perhaps not one that you’re having to deal with yet – or perhaps it is – but one that you’re having to prepare for?

SG: I think there’s a funding challenge, yes.

LB: I think it’s a space challenge, too, for finding new sites for capacity. Then, as operating dollars shrink, you know, you have deferred maintenance which increases the capital need. So it’s both, really.

RH: We build schools where the seats are needed. That means areas where the population is still growing. That makes that much more difficult to find appropriate sites. Trying to compete with the influx of people looking for residences and businesses makes it very challenging for us.

NYC: Are there areas of greater focus for you, geographically?

SG: Ever year we look at trends in enrollment projections, new development and where we have capacity and where we have overcrowding. That’s how we come up with our assessment of where there is what we call “seat need” across the 32 districts that comprise the city. And we update those annually. Most of the city had seat needs in the current capital plan. In the next plan, I think about two-thirds of the district have seat needs. There are some districts where it’s harder to site schools. There are a couple of neighborhoods in Brooklyn like Bay Ridge, Park Slope and Sunset Park. There are a couple of areas of Queens, too, like Forest Hills, Jamaica or Jackson Heights.

NYC: And what makes it difficult?

SG: To find an appropriate site?

NYC: Yes.

SG: Size, it has to be feasible from an environmental perspective, it has to be close to transportation and able to accommodate all the programmatic needs we have.

NYC: How big a year was 2008 for the SCA?

SG: We opened 18 new schools, the most we ever have in one year.

BB:: And we bid out 25, I think. It was pretty amazing.

RH: And it was 20 years since the SCA was created.