Hudson’s Kramer Builds Game-Changing NYC Cornell Tech Highrise

David, Hudson Companies—along with the president of Cornell, former New York City Mayor Michael Bloomberg, and current Mayor Bill de Blasio—recently celebrated the groundbreaking of Cornell Tech on NYC’s Roosevelt Island. What is Hudson’s involvement in this first phase of Cornell’s development? 

David Kramer: Cornell Tech was the winning bidder of an RFP put out by the New York City Economic Development Corporation. The whole Cornell campus will eventually entail a 30-year, multi-phase build out of over $2 billion, but the first phase is three buildings: an academic building, now to be called the Bloomberg Center; an incubation/office building by Forest City/Ratner, intended for lease to private industry and Cornell Tech; and our residential tower.

Cornell selected Hudson three years ago to be the residential developer and owner of the building through an RFP after Cornell was designated. They wanted the tower to be privately financed. It will be 26 stories with 500 beds, including two floors of faculty apartments. We don’t call it a dorm because it’s housing for masters students, PhD students, and faculty. 

In ceremonies and commentary about Cornell’s residential tower, you’ve said the goal is “to set a new standard for high-rise residential design, technology, and innovation.” Elaborate on how you’ve pursued your goal.

When we met with Kurt Kleinman, the Dean of Cornell University’s College of Architecture, Art and Planning, his direction to us focused on the campus celebrating innovation. Cornell’s expectations were more than just a standard apartment building.

In thinking through the right type of building for a campus that honors innovation, one of the first things we came up with was Passive House construction, which could be a game-changer for the residential industry.

Hudson had considered building multifamily, midrise projects to a Passive House standard, but we had decided not to pursue it because there was a cost premium and we didn’t have the comfort level. There’s often a conflict in a developer’s DNA between wanting to do something exciting, innovative, and different, but also wanting to be safe, without having to worry about new untested technologies that may not work. With pioneering efforts, you’d rather be the second person to do it so that you don’t have to learn all the lessons personally. 

In the US, Passive House activity started with single-family homes, then advanced to midrise buildings, but did not continue to high-rises. I posed the question to our team, “Has anyone completed a high-rise Passive House building before?” It turned out that a new one had just opened in Vienna. While I was vacationing there with my family, I tracked down a Passive House consultant who gave me a tour of a bank building—a high-rise office—and a dorm, both built to Passive House standards. 

Austria treats energy savings and efficiency like it’s a national security issue. There are thousands of Passive House buildings there. Passive House can reduce energy usage by 60-70 percent in a building. As opposed to LEED, it’s based on actual results. You don’t get a plaque when you’ve built the building—you get the certification once they’ve tested the building, after it’s complete. LEED is point based, while Passive House is based on a calculation of 38.1 kiloBTU per square-foot per year. Everything—from the envelope design, to the HVAC system, to the roof, to the appliances, to the energy delivery system—has to meet that standard criteria.

Austrian and German designers created Passive House to answer the question, “What is the standard we must impose upon our built community to combat climate change?” If the answer is 38.1 kiloBTU per square-foot per year, there’s a good argument for why that should slowly become the new standard. 

As a developer, how did your personal visit to Vienna and its Passive House standards inform Hudson’s plans for the Cornell Tech tower?

In Vienna, I walked through a dorm and asked students what they thought of the building. They’d say, “The building is great!” I’d ask, “Why is that?” Typically, they’d say something like, “Because there are plenty of washers and dryers in the laundry room.” 

The success of a Passive House is that people don’t even realize they’re in one. It’s equivalent to making sure that the first drivers of the Prius had a comparable driving experience to a regular car. I was glad not to hear that the building got hot in summer and cold in winter because the HVAC system wasn’t sufficient. 

Vienna reinforced that the Passive House world exists. It’s not wild and crazy. If an Austrian bank could do an office building to Passive House construction, why couldn’t we do it on the Cornell Tech campus?

Elaborate on the planning of Hudson’s Cornell Tech project—to be the tallest, greenest tower in the world.

Designing the tower began with the building envelope. Ours is a 15-inch insulated wall. We’ve already done a mockup of it that has been built in a factory in Bethlehem, Pennsylvania. The most important Passive House concept is that air does not get into the building. We’re using triple-pane windows that will be delivered to the factory that is preparing the exterior wall. They’ll be installed, so that when the metal panels arrive on site, it’ll be a full window wall. All elements of the façade are constructed so that there are no nooks and crannies, with a focus on insulation.

On the coldest day of the year, you can walk around in your T-shirt in a Passive House because it’s not cold when you’re standing next to the window. There is a conscious reduction in thermal bridging.

If your envelope is akin to a thermos or an igloo, and you introduce fresh air so that the building can breathe, then you have a building that can materially cut down on its energy usage. Our engineers believe that, given the thickness of our façade and human activity, students won’t need to turn on the heat even on very cold days. However, we have designed the building so that you can jack up the heat on a really cold day, and you can adequately cool the unit on a hot summer day if you’re having a party in your studio apartment with 30 students. Even if you only need a certain design load, you still want to design for that summer party. If residents are not happy with their climate control and complain, all the Passive House press releases won’t be all that helpful.

Does building to Passive House standards involve a significant cost premium? 

The premium is probably 5-6 percent. There’s also a little more brain damage—although, with each Passive House building, there’s less.

There’s a savings both in building expenses and for residents, who pay their electric bill (including air conditioning). New York City buildings typically pay for heat. The hope is that there is a payback. As Passive House construction continues, there are even some architects who believe they can do Passive House midrise buildings without any cost premiums.

With the Cornell Tech tower’s plans now public, are there other Passive House projects and Hudson prospects in New York’s future?

We just responded to an RFP from the city to do affordable housing and proposed building to a Passive House standard. I doubt we’re going to be the only respondents suggesting that. 

Over time, you’ll begin see the exact same thing that happened with LEED and Enterprise Green Communities: Passive House will slowly become the standard. It starts with the public sector’s criteria in RFP processes and through re-zoning. 15 years ago, buildings needed to be LEED. Then it became LEED Silver. Soon, it will be Passive House. 

Last month, TPR featured an interview with New York City Economic Development Corporation’s Tom McKnight. What is the value of a public agency like NYC EDC in supporting groundbreaking economic development projects like Cornell Tech? 

EDC has always been a special agency in New York where you can get big transactions done with some of the most talented people in the public sector. 

Right now, I’m doing two game-changing projects with EDC. As a private-sector developer, you often rely on your public agency partner to undertake a transaction in a straightforward, rational, reasonable way, which isn’t always the case. 

Incentivizing a new applied sciences campus is a game-changing idea, as is the second project I’m working on with very talented EDC staff: taking over a library site and developing a project with both a new library and a big residential component above it.

McKnight noted that the EDC didn’t start with the notion of developing on Roosevelt Island. It started with the realization that New York City had not done a good job commercializing academia. The EDC then sought projects to address that deficiency. How did Roosevelt Island become the site for Cornell?

The NYCEDC chose four different locations, then told the applicant pool, “We want you to consider bringing an applied sciences campus to New York City. At any of these four locations, we will provide you with $100 million of city capital and freelance, and a 99-year ground lease.”

The locations included Governor’s Island, Roosevelt Island, and the Brooklyn Navy Yard. Stanford and Cornell, the two frontrunners, gravitated toward Roosevelt Island because it had the best subway access of all of the sites. 

EDC was initially focused on Governor’s Island. I don’t know if they would have gotten the same response to that site, because Governor’s Island is accessible only by ferry and is less a part of the New York City grid. Roosevelt Island is now on the F Train and accessible by the tram to 60th Street and 2nd Avenue. 

Cornell selected Hudson, with our partner Related Companies, in part because Hudson and Related have been working on Roosevelt Island for the last 18 years. We were designated back in 1997 to build a nine-building community called Riverwalk. We just finished our 7th building: Riverwalk Point. We had also done a lot of housing for Weill Cornell Medical College, Sloan Kettering, and NYU. That meant we had experience building on Roosevelt Island and experience building for a Cornell affiliate.

Reflecting on your long-term involvement with development on Roosevelt Island, it’s been reported you’re the de facto mayor there! What drew Hudson Companies to Roosevelt Island initially?

It’s true that we’ve built seven buildings there, and also won a master lease competition to operate all the retail spaces on the island. I may not be the “mayor”—but perhaps I’m the “head of the chamber of commerce.”

Roosevelt Island had an RFQ to pick a developer to build 2,000 units in a new neighborhood. Half of New York City responded because it was an exciting opportunity. Hudson was one of the two developers chosen. When we had won this fantastic designation, I thought, “Now what do we do? Does anyone want to live on Roosevelt Island?” 

For decades, it had been a blind spot in the city. Lifelong New Yorkers, such as myself, had never been there. It’s not as though you walk by Roosevelt Island on the way to the Upper East Side. It’s a bedroom community. Until the F train started running there, you could only take a tram. It was like outer space. 

The tide turned for us when we started approaching the eastside medical institutions you could see from our site—Sloan Kettering, Cornell, Rockefeller, Hospital for Special Surgery, and Lennox Hill. We said “Do you need housing? How would you like it on the land all your patients can see out of their windows?” We stumbled on this huge demand: eastside medical institutions were landlocked, growing, in need of housing for their people, and happy to have a secondary campus on Roosevelt Island. The first 400 apartments we built were for Sloan Kettering and Cornell. That helped serve as the catalyst to create a community. Residential condos and rentals followed. 

In our wildest dreams 20 years ago, we would never have assumed we would be selling condos for $1,000 a foot or that we would be renting market-rate apartments for $60 a foot. That development led to building a tower for Cornell and to us operating 41 retail stores. It’s a good development lesson: Sometimes you just have to get your foot in the door and then you figure it out.

What’s the value of leadership from the mayor’s office for projects of Cornell Tech’s scale? Did the project have any difficulty surviving the passing of New York City’s mayorship from Bloomberg to de Blasio?

Bloomberg’s vision and staff originated the RFP, but now it’s being built in the de Blasio administration. 

There aren’t many things where both de Blasio and Bloomberg see completely eye to eye. One of the keys to de Blasio’s victory when running for mayor was demonstrating that he was a departure from the incumbent. While he did not talk frequently about agreeing with Bloomberg, the one project he always pointed out was Cornell Tech as an example of economic development. 

Bloomberg’s resources were always a help for him as mayor. There were many examples of his ability to privately fund pilot programs, or other things that were supplemental to the business of running government. It’s no surprise at all that, among these many philanthropic efforts, he would literally put his money—$100 million—where his RFP was.

To better understand the capabilities of Hudson Companies, share Hudson’s new Brooklyn Public Library project, which the press has said will be the borough’s very own Flatiron Building.

As I mentioned, this is another EDC-initiated project. Like the applied sciences campus, it started with the Brooklyn Public Library asking itself, “How can we prepare ourselves for the 21st century?” This meant thinking differently about funding.

 Libraries are like parks and the arts—they always get screwed when it comes to government funding. The library system in New York is chaotic in that there are three separate entities: the New York, Queens, and Brooklyn Public Library systems. Throughout the city are libraries with deferred maintenance and without working air conditioning, handicap access, or nearly enough outlets to plug into.

The Center for the Urban Future has done some remarkable studies on libraries and what they need to do to meet the needs of the next generation of library attendees. Some people say libraries are irrelevant, but that couldn’t be further from the truth. Libraries today are teeming with kids and adults—on computers, doing research, and keeping community rooms at capacity with ESL meetings or various uses. 

When the Brooklyn Public Library asked itself how to help its funding stream, it noted a suggestion in the Center for the Urban Future’s report: A few libraries—though not many—were sitting on developable air rights. That turned into an RFP to build a development using up all the air rights on the site, but also including a new library at its base. 

Hudson’s project will increase the library neighborhood branch to 21,500 square feet. We’re paying the library $52 million for the land, which the library system will spend on eight or nine different branches around Brooklyn—renovating those libraries and doing a lot of needed improvements, including ADA compatibility. 

The project is in Brooklyn Heights, so the library is taking advantage of that neighborhood’s land prices to help branches throughout the entire borough. 

EDC was looking to both maximize land value to the Brooklyn Public Library and also maximize affordable housing for the city. This was another RFP that spanned from Bloomberg to de Blasio. When the new administration came in, the new EDC director came back to everyone to say, “Sharpen your pencils and maximize how much affordable housing the project can accommodate.” When we made our highest and best offer, it wasn’t just the $52 million. It wasn’t just that we paid to relocate the library to an interim location for the three years we’re in construction. We also offered up 114 units of affordable housing within the same community board, which is double the amount of housing the zoning required. 

David, Hudson Companies, with funding from New York City’s Pension Systems, has also been involved post-Sandy in looking for development opportunities for replacement housing.  Please elaborate for our readers. 

The New York City Pension Systems is capitalized at $170 billion. There’s always been interest from the city pension systems in using its capital for economic development within New York City, along with its most important function: maximizing returns for pensioners. 

After Hurricane Sandy, we set up a separate account with the New York City Pension Systems—basically the pension money of teachers, cops, firemen, and municipal employees. It’s a $200 million account intended to focus on developing outer-borough workforce housing, particularly in neighborhoods affected by Hurricane Sandy. There’s an emphasis on earning the kind of institutional returns attractive to an institutional investor, but also doing the right thing for New York City with this seven-to-10-year fund.

It’s a terrific story: We’re developing in transitional neighborhoods, which we hope will get better over time. Who better to benefit from the appreciation of transitional neighborhoods in New York City than the public sector? 

Two of our first projects are ground-up new construction in a Flatbush area called Prospect  Lefferts Gardens. We’re building new market-rate rental housing—but I wouldn’t call it “luxury” as it’s not in a fancy neighborhood. It’s middle-class housing that will still be profitable for investors. 

Allocating pension money to this effort has been a positive amidst the tragedy in the aftermath of Hurricane Sandy.

Lastly, you’ve served in a number of civic roles in New York and specifically, Brooklyn, including with the Brooklyn Bridge Park Conservancy and Brooklyn Navy Yard. Why and how? 

I come from a long Planning Report tradition of having a great interest in our municipal challenges. Brooklyn Bridge Park and the Brooklyn Navy Yard were fantastic urban stories. 

I’ve been a big booster, supporter, and soldier in the Brooklyn Renaissance for the last 20 years. It’s satisfying to be involved in great organizations that are helping develop exciting projects.