Dick Lutz

Tell us about this motion and resolution. I hadn't known about that when we scheduled this [interview], but it certainly is a topic of some considerable interest.

Leo Kayser

Probably the fact that that's now been made a matter of public record is what makes it possible and more comfortable for me going on the record with you now, because it's one of the major elements, but just one, in what we're trying to do with respect to the... Well, I don't want to speak for the administration or the Board. I'd like to speak just as my own opinion, personal opinion, and the weight it should be given is based upon the merits and logic of whatever I have to say. Unless the Board as a whole acts, I can't speak for the Board and I can't speak for the administration out there.

DL

By "administration," you mean the RIOC administration.

LK

The RIOC administration, or any other administration. I can only speak for myself, if that's understood. So I don't want to use a royal "we" here, except I don't like to "I" it too much either. Let me just speak with what my views are.

I came in and started making an analysis of the problems out at Roosevelt Island, if I could just back up a bit before I answer your question. One of the problems is that there's basically a disconnect or disenfranchisement of the population out there, the people who live on the Island, from the traditional mechanisms of government within the City of New York. That exists because of the current unique structure and, just for purposes of putting that in context, we have a Lease from the City of New York, which owns the Island in fee interest – has title to the Island – under a 68-year – what's left of it – a 68-year Lease, which through a series of assignments now exists in, has been leased to, the Roosevelt Island Operating Corporation, which is RIOC.

There's been a waiver, under the legislation that set up RIOC, and under the terms of the Lease arrangement, with respect to zoning, a waiver with respect to Uniform Land Use Reviews prior to development. There is a tax-exempt status that exists with respect to the land out there. There are provisions for payments to the City in lieu of taxes under certain circumstances, theoretically, provided you're making certain levels of money. There is debt outstanding between RIOC and various entities of the State of New York. There have been renegotiations in the past with respect to that indebtedness, the latest one being under something called an Allocation Agreement, which I've not seen yet even though I've asked for it.

People have not paid much attention to that indebtedness because there has not been the ability or facility of the Island to pay it. But it's certainly out there to the tune of several tens of millions of dollars.

There has been a deterioration in the capital structure of the Island since the time I came on board. I don't know how many millions of dollars of work need to be done, but it is not in the hundreds of thousands, it's in the millions of dollars of needed repairs, and work in different capital areas. And the people out there don't have a say with respect to how any of this stuff is treated except indirectly, through the fact that there are some residents out there who are appointed by the Governor to the Board, confirmed by the Senate, and that's basically it, and people have a right to articulate their positions but, as you know, I've not been satisfied with the degree of give and take and responsiveness that exists there, but we are making some movement, I hope salutary in nature, to opening things up to more of a dialogue, restructuring those relationships. So we are beginning to look at all the different problems. We're trying to address them. You can't do it all at once, you've got to look at each area sort of discretely.

Coming back now to this resolution, another one of the problems that I've looked at is the way in which the Island has been developed up to now. Some of these projects have been very controversial, which are afoot but it's too late for us to act on. The way things have been done is that they've put out RFPs [Request for Proposals] and negotiated with developers and selected the projects they thought fit best, for whatever reason, and negotiated Lease payments over a long period of years, and actually, at Board meetings I've raised some questions, at the last meeting or two when developers testified, as to where the risk really lies... I think there's much too much risk still retained by Roosevelt Island Operating Corporation, and not enough risk being put upon the developers, who are developing the project, giving them too much flexibility, too many options to opt out and not perform, and there's no assurance that the price we're getting under these arm's length negotiations when you negotiate the nature of the project and what the Lease payments are going to be, that you're getting real value, full market value for the properties. I'm critical of that. I know other people on the Island have been critical of whether we're getting full value.

So this resolution was to retain a marketing agent. We're going to do it in a competitive manner and in conformity with the law for doing it. We're doing it the same way that Battery Park City has done it, so that's the parallel that we're using in terms of retaining a marketing agent, to basically sell our 68-year sublease, in discrete areas. In other words, we have a number of places – anything that is not already encumbered, we have a right to sell – all subject to the General Development Plan (GDP), which was the resolution that makes it express that whatever is going to be done is going to be subject to the Lease with the City and subject to the General Development Plan, and is still going to be reviewed with respect to environmental impact later, still has to be before the Board, the Board still has to approve that. There'll be public hearings with respect to any project that ultimately comes out of this, these sales of sublease...

Let me say "sales sublease." It's a sublease we're letting out. When I say "a sale," the idea is to take a lump-sum payment up front. We're capitalizing it. It's still a sublease, and we have full authority to do that under our Lease with the City, but instead of taking payment over time, we're going to take the capitalized stream of income and take those payments up front. Now there's a great advantage to us, several advantages, to doing it. One, the risk shifts entirely to the developer. Two, the Board or administration is not making a subjective review of who is appropriate and not appropriate to be a developer, because you don't need to; it takes the politics out of who can come in to do it or not do it. You have an objective standard, which is cash. Three, the administration and the Board does not make a determination as to what is the best project or is not the best project, subjectively. Whoever's going to bid on the particular projects will have their conception of what they can do. They will do their calculations as to what net incomes will be, and returns on capital, and so forth. They will do it in terms of a neutral market-based approach, and they have to make a determination – they are going to have to know it's going to have to be in conformity with the General Development Plan, because that will be the parameters under which the sublease is let out, and they know that ultimately it's going to have to be approved, to meet Environmental Impact Review.

[PHONE CALL interruption brings up the United Nations Development Corporation Board (UNDC)]

DL

On that general subject, you sit on a number of Boards.

LK

Well, I started out on the United Nations Development Corporation Board. About five years ago the Governor appointed me to that, the first time, and I have been involved in the privatization efforts there. In other words, the idea is that this is just a real estate holding company. There was no reason for any of that real estate to be held in a governmental entity. And we've sold off the United Nations Plaza Hotel – that was for $102 million. We've sold off 633 Third Avenue, there were about eleven floors, I think we had, in that condominium, that was sold for 50-odd million dollars. We've sold off buildings on First Avenue, one of which was to Bhutan, which got some press because people were raising objections as to – some people got Bhutan confused with Burma, but they were looking at human rights issues, but that got cleared up, finally approved after about a two-year delay. And we're in the process now of trying to sell off the balance of three buildings. And then we'll be out of the business of managing real estate over there. And what you do, by the way, when you sell these buildings off, is they go back on the tax rolls, you broaden the tax base, that property then becomes a part of your economy in the private sector, which stimulates your... When you have too much of your capital resources owned by the government, it really puts a dampening effect upon the vibrancy of your economy, and one of the reasons, in my opinion, why the economy in the northeast, and particularly in the New York-New Jersey area has not been as exuberant as in the South and other parts of the country is because so much of our capital structure is owned by government – just billions of dollars of capital structure owned by government – which could be privatized and used as collateral for other projects if it were in private hands, because government people are not that creative. They don't have the incentive. They want to see to it that things are run honestly and well and that they don't get criticized, but risk-taking and risk-reward evaluations and things like that – those equations just don't happen in a great natural fervor.

DL

So you're applying the same kind of philosophy as the UNDC work to RIOC to a certain extent.

LK

Well, I would not want to say it's the same. It's quite distinct and different. There are very different considerations. One, you don't have a constituency within the United Nations Development Corporation. This is pure bricks and mortar. There's not the issues of living conditions and quality of life and any of those things that you have [on Roosevelt Island], so that's very distinctive.

There are some general principles which I do bring to the analysis, which is that I suppose I still hold to Jeffersonian ideas that while you need government and government brings order to the relationship of people, that to the extent that government has a cost attached to it and you have to have taxes associated with it, and those taxes fall upon the economy as a whole, they generally filter down and hit lower-income people the hardest, even though they may not be where the taxes fall, ultimately, the people who are hurt most by the cost of government are still your lower-income people, no matter how progressive theoretically your taxes are, it's still a tax on capital, a tax on labor, and it ultimately falls upon the poor people. You can try to redistribute it, which is the liberal progressive philosophy, in order to keep it from hitting those lower-income people so badly, but the fact is that as you begin to recycle percentages of the economy through a governmental filter with all sorts of social planning and the best of ideas and the best of objectives, there are inefficiencies which creep into that process: bureaucracy, all sorts of costs that get into the structure, and then a terrific amount of infighting and controversy as to how you divide up that pie, which has been sort of scraped off the top – skimmed, that's the word I'm looking for – you're skimming a certain part of the economy into a governmental public sector, and then people fight over it, and those fights become very politicized and subjective, and that's what's led, in the socialist countries in Europe, where so large a percentage of the economy is in government, is why you have these ethnic groups at each other's throat, and the political process becomes, really, taking bread out of somebody's mouth and putting it in somebody else's mouth. That's why you have so much of the ethnic conflict in places like Yugoslavia, which is a highly socialized part of the world.

This country has been able to avoid a lot of that by trying to keep the private sector as large as possible and keeping the public sector as small as possible, but in this part of the country, in New York, we have a large public sector, and it does get into the public structure of the system. I mean, you see it in the ethnic politics we have in New York, and you see it, which is much more so up here than in other parts of the country, and you see it in Roosevelt Island in the issues that people raise out there – what their concerns are – so I think there are going to be all sorts of benefits that come from people knowing that there's going to be a private sector solution which is non-discriminatory, not arbitrary, and people who have the initiative – you don't have to have the capital yourself, if you have the ideas and the initiative and it makes economic sense, you can get the capital through putting your deals together, and people on Roosevelt Island will have that opportunity as will anybody else, I mean, it's open access to where capital comes from in these projects we're talking about.

DL

Is it fair to conjecture that your economic and political philosophy on this is pretty parallel to Governor George Pataki's? My guess is that... Let me put it this way: You're seen, to some extent, as Governor Pataki's shock troops, sent in to straighten things out, and I'm just wondering to what extent you'll own up to that.

LK

Well, I think that the Governor is going to have the ability to review the realities as they occur. So he hasn't approved of anything that I'm doing, nor has he disapproved.

DL

But your guess is that he would approve...

LK

If we were successful in satisfying the interest of the people on Roosevelt Island, and the people on Roosevelt Island on balance are pleased with what happens, I don't know that the Governor would want to disappoint people out there, if they were pleased. If they were displeased with what's going on, you have a Governor who's very open-minded and will listen to all sides. I'm probably much more of a purist, in terms of theory, than the Governor is. I'm not an elected public official, and I'm not balancing all the interests of the State and I don't have the degree of complexity and concerns that the Governor has to have. So I think it would be inappropriate to suggest I'm... I don't know where I fit in with respect to the Governor's overall balancing of a very complex job that he has as a Governor, which is far beyond something that I could do.

Robert Laux-Bachand

So I guess the question would be more specifically, you haven't really gone into the specifics of this proposal with the Governor?

LK

No, all the Governor knows is that the... I've had like two seconds of comments with him to let him know where we're headed.

RLB

But he does have an interest in general terms in what should happen on the Island. Have you talked, just in general, in terms of what the future should be with Roosevelt Island?

LK

Well, in terms of what specific discussions I've had or haven't had with the Governor, I would think it would not be appropriate for me to discuss that here, as I mentioned to you, Dick...

DL

You've said that before.

LK

And I think that what we're doing on the Island is going to have to stand on its own merits, and the Governor will have to, is available always to review those merits as we go along, and if he thinks that it's not meritorious in some way, I'm sure the Governor will let us know that, and if he thinks it is, we'll just keep proceeding. But I think it's not going... Let me say that these things that we're doing here are not going to occur, if in fact there is any rationally-based objection that somebody can bring. Everything we're doing here is open, and if somebody has an objection to this, I would be the first to want to hear it, and the Board as a whole, I would think, would want to hear it, and the administration would want to hear it, before it ever got up to a higher review.

RLB

When you just look at the resolution, it doesn't really tell you very much and I think it might be helpful to just kind of spell it out. In other words, it seems like this is the first step in a process, and I was just wondering if you could lay out in succinct terms what you see as the steps of what this is supposed to lead to.

LK

I certainly am prepared to do that. But before we do that, if I could back up to the question of the degree of awareness of the State administration. We have two people on the Board who are head of State agencies. The chairman of the Board is the State Housing Department, Department of Housing and Community Renewal (DHCR), and the State Budget Department. So you have two people on the Governor's Cabinet who are on the Board. In addition, I have made reports to appropriate people within the chain of command, as well as whatever I may have said directly. And nothing is being done without people being aware of it. Now...

DL

You want to go into those steps that Bob...

LK

Yes. Now let's go back. The idea, I think, is... The overview is to bring the Island back into the City of New York – make it a part of the... I think to eliminate this RIOC ultimately, at least as being, as cutting people off from their normal rights as citizens of the City of New York, and the protections they normally would have as citizens with respect to what goes on... so they're not disenfranchised any longer – they have the same enfranchisement as any other citizen of the City of New York.

The fee interest that the City of New York still has, which is a reversionary interest at the end of the 68-year Lease...

DL

Explain that.

LK

A reversionary interest is an interest that one has at the end of another interest. In other words, for 68 years the City of New York has been divested of ownership by way of a Lease, but at the end of that Lease, ownership reverts to the City of New York.  That's what a reversionary interest is.

That reversionary interest has some value now. And if it were held in private hands, as opposed to government hands, it would broaden the tax base of the City of New York and the City of New York would get some tax revenue on that reversionary interest, whatever it is, 68 years out. It would be discounted to present value which probably would be a fairly small value at this point, but nevertheless some value, and the highest value that reversionary interest would have would be in those people who have a 68-year leasehold interest in front of the reversionary interest, so that they have some degree of certitude that 68 years hence as to who will have title of the underlying ground. So we have not done this yet, but I am going to propose at some point that we open up a negotiation with the City of New York so that they can sell off their reversionary interest and the City would receive some money out of that, but it also would enhance the... if we were to give right of first refusal, or some other kind of rights to people who were buying the – bidding for the 68-year subleases we're talking about – it would enhance the value of those 68-year subleases to some extent, I should think. It would give us a cleaner transaction. It's not an impediment if the City does not want to do that, but there's no reason I can think of why the City would not do that. There's no great benefit to government having title as opposed to the title being in the private sector, because government then receives a tax on what's owned in the private sector. And it's managed... All you're really doing is changing where management comes from and where decision-making is, and all of the decisions in the private sector are subject to laws which are passed in a democratic way, in a democracy. So people who have private ownership still are subject to public regulation and laws and they pay taxes.

DL

Let me see if I understand this clearly. If I can summarize it and you tell me where I'm going wrong here... What you're doing is you're taking the value that the City has, at the moment. You're saying to the City, in some fashion, we're going to pay you that value in present terms, looking out to the eventual value.

LK

Who's the "we" here?

DL

Whoever is executing this plan – the State, presumably.

LK

No, no. That reversionary interest is in the City now.

DL

No, I understand that. But what I mean is somebody, as you're going through this process of creating these subleases, is making what amounts to a payment that goes to the City.

LK

No, not the subleases. The subleases, the payments for that go to the Roosevelt Island Operating Corporation. It's the reversionary interest that the City's just sitting on, doing nothing with, for 68 years. And I'm suggesting they should just divest themselves of that diversionary interest now, receive some money for it. That money that would go to the City would come from the private sector – whoever bids for the reversionary interest. I'm suggesting that the people who have the interest in paying the highest price for that reversionary interest are the same people who might have the sublease in front of it.

RLB

Right. But the capital goes to RIOC.

LK

Not on the reversionary interest.

RLB

No, but I mean that on the sublease it does.

LK

On the sublease it does.

RLB

On the sublease the capital goes to RIOC, but the City would get the benefit of privatization via taxes which, from whatever might be developed of these properties, if they wanted to do...

LK

No... Let me see if I can keep it clear, clean for you. The 68-year Lease right now is tax-exempt. So whoever bids on that 68-year sublease is getting a – if we're selling ten acres, if we're subleasing ten acres, they're getting ten acres where they pay no taxes for 68 years. Now they compute that into the value of what they're getting, and that gets capitalized, and that benefit goes to RIOC, because RIOC is what owns that 68-year Lease. It's the reversionary interest... I was giving you more of a... where I would like to see this thing end up, but giving you a full picture of Roosevelt Island, which... I'm suggesting there's no reason for the government to own any of it.

DL

So at the end of that 68 years it's all private.

LK

Yes.

DL

Except...

LK

I would make it all private within the next two or three years, if I had my way, except for the City hospitals and so forth...

DL

And the streets.

LK

Yes, of course, but that would become part of the City of New York's... In other words, you'd make a deal with the City of New York to keep the streets. We're looking at... For example, we have a budget right now on the Public Safety group... We're paying over $2 million a year in Public Safety. We have almost 40 people on payroll for a population of, what, 8,000, approximately, now. One of the things I would like to look at and I think other people on the Board will be looking at, is there a better way of – first of all, people paying for that, half of it comes out of their rents – If we could reduce that cost and still keep the quality up, we could get some rent reduction for the people on the Island. We also would increase our cash flow within the RIOC budget.

These are things that need to be looked at. I don't know where you come out. But they certainly are worthy of scrutiny. But whether or not you need a separate Public Safety unit, or whether or not the City of New York as a whole, we could make a deal with the City, with that $2 million, where part of it goes to the City to give us additional police protection, and we can beef that up, so that you get a better quality... I don't know these things. I don't know how people perceive the current arrangements and so forth, but all of this needs to be looked at. And then maybe it's all rejected, but not to look at it, and consider this stuff, when you see a $2 million budget, with 40 people on the payroll, for 8,000 people. I mean, facially, it seems to me out of line. But I could be very wrong on this. But I'd like to hear about it.

RLB

It is a big police force for 8,000 people.

LK

Also, you have people... things falling between cracks, between jurisdiction of the City of New York Police Department and the Public Safety group, and sometimes things don't get adequately administered to because one group throws it off on the other group, and therefore you don't have an evenness of jurisdiction, just so there's a flaw in the structure that exists out there, so that although you're paying $2 million a year, keeping your rents higher than they otherwise would be, and draining off other resources, but you may not be getting as high a quality... you may not be getting as good Public Safety response as you would get if you had a unified jurisdictional system.

DL

Or not as efficient.

LK

Maybe. I'm not saying anything in absolutes here. I'm just saying it's worth scrutiny.

DL

Let me ask how you would do that scrutiny, because this issue is going to come up.

LK

With a subcommittee of the Board, probably composed of all three people who live out there, plus maybe one other Director who doesn't, and let them work with the administration to let them devise the way they would look into it as a subcommittee, and I'm sure there would be... I wouldn't be on it, because I've got my hands full doing other things, but I think that it would behoove them to have hearings, have input from other people on the Island, but that may be anecdotal, but we still need to have some way of... You'd also negotiate with the City, see what your alternatives are... see how many additional police the City would assign if we were to pay them a million dollars a year, plus what they're currently giving us, and we take a million dollars a year and pass half a million a year, if we could, along to rent reduction. Now, you'd need to negotiate with the housing corporations and make sure that it just doesn't go into their pockets, so that you get a pass-through to the tenants, or make some deal with them where they save a little bit and the tenants save... But all those are subject to negotiations.

DL

Potentially pretty complex.

LK

Actually, it's not that complex. It's a matter of bringing people together to reach agreement, where it's win-win-win all the way around. If you can get efficiencies... It's the same thing as expanding a larger pie, it makes agreements easier. If you have created efficiencies in the way things are done, there's more that you can give to everybody, and parcel it out in some way. It's a much better way of handling things.

RLB

You mentioned early on that this was sort of modeled after what was happening with Battery Park City...

LK

Only the way we're selecting the sales. The method by which we are going to retain a marketing agent. That's what's being...

RLB

A question I had was, is there any prototype, or do you know of any comparable situation where you've taken a so-called utopian or planned community and tried to change things in this way, or is this in a sense a unique situation and sort of a market experiment?

LK

Well, in the past the planned communities have been private, most of them in this country. If you go to other places like – you know Reston, near Washington?

RLB

Yes.

LK

Reston was done by Robert E. Simon. Bob Simon did that. He did it entirely through private financing, no government, and so you didn't have the problem of government to start with being in the picture with special arrangements. Most communities around this country have been private, so what's unique here is that you had the government starting out to do it this way to begin with. And one wonders, really, you know, it was done because they tried to have a certain mix of income levels and things like that, and there were certain governmental objectives to do that, and I'm not going to comment as to the wisdom of that. That was a political decision, but when you get those political decisions then you end up with some fairly convoluted structures, and you live with them or don't live with them, but you also begin to see the downside to the structures in terms of inefficiencies, people being disenfranchised, debt being accumulated in the public sector, as opposed to the private sector, risk being on the taxpayers. There are things that aren't debated so much in this part of the country. You notice we just had an election in this country. And it has been evident, a difference in perspective in populations in certain parts of the country, which have shown up fairly dramatically in the way certain states went and other states went and where things were close. Things were not close where we are here, but if you were to take the popular vote, in the United States, and basically exclude New York City and its environs from it, you'd have an overwhelming popular vote, say, for Bush. But only by putting in the population here do you get the large shift in popular vote. It's because there is not much intellectually, there is not much discussion as to the some of the accepted principles by which government occurs in this part of the country, as opposed to the rest of the country.

And, by the way, I'm highly critical, personally, of the New York Times. The New York Times is responsible for the division to a large extent, because it's such a large and important newspaper, newspaper of record, it's probably one of the finest newspapers in the world...

RLB

If not the finest.

LK

If not the finest, I mean, you have other newspapers that... but the New York Times is so one-sided these days in its presentation, it's myopic in terms of the role of government, and the structure of this country in terms of its federal structure. When you get into the federalism cases, in the U.S. Supreme Court, if you look at the 5-4 divisions, the four judges who are basically trying to keep government centralized and diminish the role of the States all come from the northeast. The other five judges are from the West or the South. It's totally regional. Something that the New York Times never points out. And if you go into this concept of strict construction, which the New York Times seems to think poorly of as a judicial doctrine, it was the lack of strict construction in the Dred Scott case which led to the War Between the States, because a strict construction there would have led to the freeing of the slaves, and including what was referred to in Dred Scott, in terms of the Negro race – that was the way it was referred to at that time in the... the Court actually was saying "the unfortunate Negro race" is not included in the Declaration of Independence because the people who signed the Declaration of Independence owned slaves at the time so they could not have meant what the words said. Strict construction, though, would have said those words meant exactly what they said, would have included all people in – all men being endowed by their Creator with certain inalienable rights, among them being life, liberty, and the pursuit of happiness – but it was a loose construction, a liberal construction, of the Tanney Court which did not include Negroes within the protections of the Declaration of Independence and the privileges and immunities clause, at that time, of the United States Constitution, so...

RLB

I think I understand the point you're making.

LK

The point I'm making is that strict construction, giving the words meaning... This country is based upon documents and ideas, by the way there was a phase-out... There are so many misconceptions in this part of the country with respect to our founding documents and so forth. There was a phase-out of slavery in our constitution. It was to be phased out as follows: You could not bring slaves into the United States if Congress was to prohibit it, which everyone knew it was going to do at the time it was written and in fact did do. You're familiar with that provision.

RLB

No.

LK

Well, there was a provision that said that Congress could, after 1808, but not before, but after 1808, could prohibit the importation of persons into the United States as slaves. And that was legislated so you could not bring slaves into the United States after 1808. Next, the decision that got up to Dred Scott had to do with natural-born citizens. If you were natural born, you would then have the privileges and immunities protection. You would have been a citizen, with the privileges and immunities of the United States, as a citizen. You're familiar with that, of course. And the Declaration of Independence holding that all men are created equal was incorporated into the Constitution through the privileges and immunities clause. That was agreed upon in the Dred Scott case. So they only left out, read out of it, Negroes being protected, but if you had been able to have been born in the United States, you'd have been a citizen with the privileges and immunities, you'd be a free person, you would not have been a slave, you couldn't bring slaves in after 1808, so slavery would have been phased out. One of the unfortunate things is that you didn't get up to the U.S. Supreme Court until 1857 because of issues of standing that were... and who could have standing to raise these issues. Finally, they came up with a way of getting it up there, and you end up with this terrible decision, which led to the War Between the States. But, so the conception that people... they've tried to suggest that the documents and ideas of this country were not as highfalutin' as, in fact, they were, because people have not really looked and scrutinized a lot of the history here.

DL

I take this to mean that you are a strict constructionist.

LK

Of course. I don't believe, like Al Gore, that the Constitution is a living, breathing document which expands and contracts as one chooses to with the changing of the times., We have a provision for amending the Constitution, which you can amend with concurrence of three-quarters of the States and concurrence of two-thirds of both Houses, or a constitutional convention, but you don't... you've got to construe the words to mean what they say and not judicially legislate in the Constitution, or you don't have any rights. It all becomes subjective. You don't have any rights. It all becomes subjective. It all becomes illusory. And then the courts have usurped the initial protections that you have.

DL

Let me ask you a parallel question that kind of spins out of this strict constructionist...

LK

Right.

DL

Economically, it seems to me that you're square in the center binding of Adam Smith.

LK

Yes, I am.

DL

And that you believe very strongly that the power, the decision-making power, of the marketplace should be relied on as the primary decision-making – perhaps after the rule of law, perhaps after the rule of contracts – but in any case it should be the primary guide for the economic decisions that we make.

LK

I'm sort of... it's the natural-law principles. The law of supply and demand, things like that, and because I was an honors divisional major when I was at Yale in politics and economics, I'm somewhat schooled in this stuff...

DL

Yes, I want to hear you on that.

LK

And I think there's a consensus. Even Bill Clinton would agree that the fundamental basis for American economic policy now is market economics. We have Bill Clinton selling market economics. There is a broad consensus in the United States for market economics, which is essentially classic economic theory, so fundamentally, we have an overwhelming consensus in the United States and not only that, the United States has prevailed in this premise with the rest of the world now. We have Russia moving to market economics. We have China moving in that direction. The whole world, with the exception of a few places. We had Bill Clinton in Vietnam this past week selling market economics to the Vietnamese, opening up their economy, letting people make their own decisions, bargain for themselves, not have the government interfere with that. There's a little bit of a lag in certain corners of New York in this area.

DL

Expand on that. What do you mean there?

LK

Well, to the extent that Roosevelt Island Operating Corporation had been sort of through a command influence, reviewing what they had considered with this little group of elite people, reviewing what they considered to be the best projects, and then approving the developers and then trying to sell it from a P.R. point of view to the population, but if the population doesn't buy it, too bad for the population out there – that's where you're disenfranchised, that's what's been going on. That's not market economics. That's a political decision-making process which has obviously created a lot of consternation among a large group of people on Roosevelt Island. They're not happy with it, but of course they don't analyze why it is they're not happy with it. What's the origins for their not being happy with it?

DL

And you say it's because it's not market economics.

LK

Yes. And I'm not a pure... We still have democracy. We still have government regulation. We still have review processes with respect to environmental impact. What I'm talking about, you start with a platform, a fundamental basis for market economics, which are your basic efficiencies, then you want to interfere as little as possible there but nevertheless there is interference through certain review processes because you want to smooth off the harsher edges which may occur from a pure, unbridled... We're not talking about unbridled competition. We're talking about it in a framework of certain parameters that are enunciated in advance, in this case, subject to a General Development Plan, which we have to work with, subject to environmental impact review, which we have to work with, so there's not a pure situation here, but the bidding is within that framework, so the opportunity for people to come in on a non-discriminatory basis, subject to the parameters, is there. So Adam Smith, these people in terms of classical economics, while they were – keep in mind the context in which they were articulating their position – you had despotism, you had a mercantilistic situation with kings and princes and potentates of all types sitting on the thrones of Europe and the emperors of China and the Emperor of Japan and the colonial systems of South America and Africa at that time. And with governments preventing people from doing business with other regions and with all sorts of barriers set up, and they were articulating to try to get out of this system so we could have what fortunately the United States has now, through a series of wars, through blood loss, through our Constitution, through our ideas here, have prevailed to move out from that.

Our documents are based on classical economic theory. John Locke, who was a political philosopher in that area, who wrote on civil government, was the predicate upon which Jefferson, and Madison and these fellows wrote the Declaration of Independence and wrote our Constitution.

DL

Let me ask you to relate that very specifically to Roosevelt Island, and this may not be the right question to ask with regard to that, but are you a strict constructionist with regard to the GDP?

LK

Yes. Now, I've read the GDP with some care. And the Lease, and I think you have to read everything strictly. But there is a lot of flexibility built into those documents with regard to the words themselves. For example, one of the areas, there seems to be some, I think, misconception among people, is that there are provisions in the GDP for open space. There are open-space areas. Now these open space areas were there, that means those were open space areas that were not specifically planned for, in other areas of the GDP. Most of what was in the GDP has been built already. The... You have these open space areas such as Southpoint, the Octagon Park was an open space area, those open-space areas are not, quote, parks. That's a different definition for "park." There's an express provision in the Lease for the Board to develop open-space areas. When you read it you'll see that there's a mandate to develop open-space areas. Open-space areas are not parks. I'm just... I don't have the document in front of me, but I could point it out to you. But yes, very much I subscribe to reading the document for what it says, but not misconstruing it, either. It should be construed, and not distorted, and read accurately and fairly.

DL

Talk about the open space for me just a little bit more. You're saying Southpoint, for example, the 10.3 acres, are open space, are not strictly parkland.

LK

Correct. There are some parklands down there. But...

DL

Parse that for me...

LK

Well, I think there are some areas below Southpoint which are parks – specifically designed to be parks, isn't there? I'd have to go look...

DL

Southpoint itself is the entire end of the Island from...

LK

Well, there may be part of it. I've got to go back and look at the document, but I can tell you that the whole thing is not a park.

DL

So with regard to the Marriott plans... I was trying to pin down...

LK

I'd like to get the document out in front of me, if I could... Let me read the language to you, that I'm referring to. On page 47 of the General Development Plan, Schedule 2. It reads as follows:

The open-space areas will be developed to serve residents of the City as a whole, as well as residents of Roosevelt Island.

In other words, it will be developed. So there's no provision for those... There's no restriction as to how they're to be developed except that they're to be developed to serve residents of the City as a whole as well as the residents of Roosevelt Island.

DL

And you would interpret that to mean, for example, that it could be commercialized...

LK

Sure, it could be anything.

DL

...and it would be serving the residents of the City if, for example, there were a hotel there available for people to visit.

LK

Sure. Also, I think you're serving the City as a whole if it's residential, too, because there's a shortage of residences. The City, economically, needs more space. Anything which adds to the economic viability of the City as a whole would meet the open-space provision of the General Development Plan. Still, that does not suggest that you don't make it subject to environmental-impact considerations and things like that.

DL

There are some people who would say that they interpret that language to mean parkland.

LK

But it doesn't say parkland, so what they're doing is they're reading something that is not there. It's just not there. And there are other express provisions for parkland. Now, if you want your protection for parkland, don't start merging parkland in with other things that can be developed, because then you lose your parkland. That's the other side of not being a strict constructionist. You lose your rights if you want to try to expand, encroach, through a more nebulous construction. Parkland is parkland. You want to start saying it's open space, then maybe it can be developed, too. I'm not saying that, of course.

DL

You may not want to comment on this because it's before a court on appeal, but let's just briefly cover the matter of the GDP calling for a six-acre park between Northtown and Southtown.

LK

Yes, I've read the lower-Court decision on that. The lower court basically uses an old legal doctrine which goes back to Louis Brandeis, which had to do with encroachments of buildings, and so forth, where you sought injunctive relief. And Brandeis said – I don't remember the case but it was one of the landmark cases for where courts invoke equity – and what they're prepared to do with respect to their equity. The encroachment which occurred the court found was in the north side. The court was not going to use its injunctive power to cause those buildings to be torn down, which is what the Brandeis philosophy was: It's too late, because when you look at the balance of the burden, balance the equities, and who's going to be dislocated, you're not going to cause those buildings to be torn down. What the lower court said was, it may be that you have some encroachment up there, and therefore you have reduced the size, but that has long gone and it went without criticism at the time, and that should not be used now as an argument to impede the Southtown plan which in and of itself does not encroach. It only encroaches by way of what's happened in the past, on the north side. Well, anyway, that was a court making that determination. Fortunately, I as a Director wasn't there at the time, didn't have anything to do with it...

DL

Your hands are clean.

LK

My hands are clean. I didn't approve the deal, I didn't look at the... but the way the thing was done... the way Southtown was developed – I would have done it differently. I would have done it the way we're trying to do these other sites, which is lump-sum payments up front, risk on the developer, let anybody come up with the plan after the fact. Let them pay their money, buy the thing, buy the sublease, and factor in all the economics of it, and they know what the General Development Plan is, and they have to be in compliance. And we might give some guidance, but...

DL

Take the Southtown situation as a model. What are your criticisms of the way that deal was done?

LK

Well, I don't think I want to go beyond what I've said in the Board meetings, which is that I think there's too much risk that has been assumed by the Corporation; there is no certitude with respect to other phases of the development, the time frame is totally in the hands of the developer. I mean, the deal, in my opinion, wasn't... didn't protect the Corporation as much as it should have been protected. And in terms of what we're getting in terms of payment, under the ground lease... there was a negotiated deal instead of a bid situation. Therefore you don't know if you're getting your full value there that you would have gotten if you had bid it out. I would have bid it out. I would have done it differently. But it's not to... The way they did it was the way things had been done previously. There was a consistency with respect to the way that government agency had worked since its inception. And it's a mentality which is endemic through the governmental process, I might say... everywhere. It's one of the things that makes government suspect to me, because it makes it subject to political influence, and it's why people get all upset about political contributions and influence within government, and all those things.

You see, on another subject, I don't think there ought to be any restriction on what people give. It's full disclosure, and the public knows who's backing who, and everybody has one vote, so you know disclosure is the key thing, no restrictions on giving, and then you have the marketplace of ideas – people have enough money, basically from all sides, to get their ideas out there, and the public has one vote, and let's make sure the voting process is protected. But if you didn't have government doing as much, you wouldn't' have people who think that people are trying to buy influence, you wouldn't have as much to buy.

DL

I want to ask you a question very specifically with regard to Southtown and Southpoint, and with regard to Shirley Margolin, who you cited as an example in the Board meeting by saying that her interests – Margolin Enterprises or whatever... Let's say, for the sake of discussion that somebody or some group wanted all of Southpoint to be a park.

LK

Right.

DL

How could they do it?

LK

They could bid for it. But from an economic point of view, I'd suspect if you could raise $30 million, or $25 million, or what we expect the thing might bring, cash up front, you buy it in, you make it a park.

DL

OK, then the question is, since that's economically very difficult to make feasible, do you see a proper role for government in setting aside land like that, or for RIOC, for that matter, in setting aside land to make it a park in contravention, let's say, of strict Adam Smith economics?

LK

I wouldn't say it's in contravention of Adam Smith economics. Adam Smith didn't say... he wasn't an anarchist. He believed that government had a role, to set parameters and have order in which the market could operate, and if you define what people can do and can't do ahead of time, so you're not taking something from somebody... We have a takings clause in the U.S. Constitution that requires just compensation... If you can take... If it doesn't belong, there's nothing to take, and government has traditionally set aside things which don't belong, if there was a decision to do so. So that doesn't have anything to do with Adam Smith economics – that's a purely legitimate political decision that can be made, but you've got to look at it in terms of overall... those people making the decision in government have to look at it in terms of the overall financing requirements of the Island. And there's a trade-off there. Yes, it could be set aside as park. You could be foregoing 20, 30, 40 million dollars [in up-front money]... that's what I think it would bring, and some significant money. I mean, you're talking about this current [Marriott Hotel] plan here, these folks are talking about paying $2 million a year over 38 years, or $2.5 million, on that plan with the Convention Center and so forth. Well, that puts you immediately at a discounted present-value basis of about $22 million, $25 million, somewhere in there. So we know already somewhat without bidding it out what a current proposal might bear if we change the structure of it. So people on the Island if they were to say, we have all these capital needs that need to be addressed on the Island, we can solve this, we have the facility of solving it simply by bidding out these subleases. We're going to be able to raise, as I mentioned, tens of millions of dollars was what I said in the Board meeting the other day, if you noticed. And we would like the input of people on the Island as to how to allocate this money, this capital, and then the rest of it can be put in trust funds, to get an income stream out of it in the future, of what you don't spend immediately... So you've got to look at what your trade-offs are. So people who want to set things aside and put it in a vacuum, without looking at the other side of the equation, it's like reading The New York Times – you only see one side.

DL

Let me just re-address that one question, then, or ask you to re-address that one question: If a group, say Shirley Margolin leading a group, or any group wanted that to become parkland, what do they do?

LK

Bid for it. The Board's made a determination to market the stuff. If somebody wants it to be parkland, go out and talk to a charitable foundation or somebody who would be prepared to... because that's a tax-exempt purpose. I mean, it would qualify for a charitable purpose. Parkland's generally considered to be a public benefit, and get the grants to bid it in. Museums, by the way, when they want a piece of work, bid for it, to put it in the museum. They put a painting in there. They go in the marketplace and they're bidding as private bidders, and they put the painting in the museum. People make contributions to museums so they can bid for the paintings. It's the same concept. We, and I would be delighted to see it as a park if people could raise that money and people saw that was where it went, and we'd still have the capital for the other purposes on the Island, so people would not suffer on the other side of the equation. If we could get... If you can raise that money for a park, and that's what people want... I'm not against parkland.

RLB

I guess where...

LK

By the way, Miss Margolin came up to me afterwards and thanked me for taking this approach here, because even though she realizes it might be difficult for her to put it together, it opens up... She's not barred from doing it. The opportunity is there. And that's all we can offer, is an opportunity... a fair, even opportunity, and we'll see what happens. The theory, for classical economics, is that you get much better results than you can even envision at the beginning, because you've opened it up – you have not put blinders on to start with, with respect to use and outcome and how different people balance utility, and that you get all that... and it was important for me to enunciate that at the Board meeting, in public, because that gives a certain amount of notice to people, that they can begin the process now, if they choose to, to compete, and we're talking about several months before there would be an actual marketing or bidding process. So the gun's gone off, and people have notice. And I wish the best to everybody in this. And I think we're going to get an excellent result in terms of the other side of the equation, too, in terms of our finances, because we need the capital.

RLB

I guess it's not altogether clear yet to me, some components of this plan. I think I understand the business of the first step is to hire the marketing and real estate people to put together these parcels on the Island in terms of basically...

LK

What's marketable...

RLB

...to market them, and this would be like the Octagon.

LK

They've got to tell us what they think is marketable, too.

RLB

That would be part of it, is to identify what...

LK

Exactly, to identify the tracts and the interests that are marketable.

RLB

So you have that. Then, subject to all these hearings and bids and this sort of thing, these properties are marketed and sold. The money would go to RIOC.

LK

Yes.

RLB

OK, so RIOC is the repository of this capital that can then be used for whatever the purposes of fixing things on the Island...

LK

Or setting up a fund...

RLB

...setting up trust funds.

LK

It probably would be both, by the way.

RLB

Eventually, though, if the City... Eventually if this then leads to Roosevelt Island then becoming just an ordinary part of the City, and RIOC disappears or whatever, what happens to this capital. I mean, what... There would still be some dedicated money for Roosevelt Island.

LK

It all would have to be dedicated to Roosevelt Island, one way or another. The form of which that dedication takes place, whether RIOC as an entity remains in existence simply to hold the money as a stakeholder, those things are yet to be focused on. I would be interested in everyone's point of view as to how... Listen, one of the better things to have to worry about is in what form and who should hold, for the benefit of Roosevelt Island, several tens of millions of dollars. That would be a "terrible problem." That's something we certainly will address, and we'll have their input on it, and I don't know what the result would be.

But you say Roosevelt Island would just be, quote, an ordinary part of the City, and... I think Roosevelt Island is unique, in and of itself, just because of its geography... the fact that it's an Island in the middle of the East River, and where it's located... Roosevelt Island will never be just an "ordinary part" of New York City. The political structure could be rationalized so that Roosevelt Island is integrated into New York, but I think it's going to have a special status, because I've already had discussions. I've had a number of meetings, which by the way, last time I met with the Maple Tree Group and Dick [Lutz], it was before we'd had any discussions with people. We've now met with... I say I, and Joan Dawson, another Director, have met with the staff, general counsel of the Manhattan Borough President, who are in principle, fully supportive of where we are headed here, I'm pleased to say, and they've authorized me to say that, or else I wouldn't be saying it... of integrating this Island back in, and we have to do it in a way which will make the people on the Island feel good about it.

I've met with the City Councilman for the Island, Gifford Miller, and Gifford was the only person I met with, and that was with Patrick Stewart, in that meeting, who was relatively non-committal, and he basically wants to see how this goes with the people out there, and I think if the people are supportive of it, Gifford would be. I told Gifford that we're going to need him. We need him as a political point man to get some of the benefits... in other words, we need some zoning variances and things like that, if we were to go back and integrate back into the City, we need Gifford to be our man to make sure that we can maintain some beneficial status as an Island out there with certain self-government aspects, which by the way the Borough President's office is supportive of, which have to do with the Community Planning Board, which is in Manhattan, which Roosevelt Island is part of, but they indicated support of having a special sort of home-rule status for Roosevelt Island within the Community Board, so that they've had a subcommittee – I think it may already exist but they'd beef it up – and formalize some ideas with respect to Roosevelt Island in terms of its community planning situation, having a home rule feature. And then there are other things that we've discussed which have to do with self-rule operations out on Roosevelt Island, which has to do with Business Improvement Districts and Residential Improvement Districts out there. And there's been sympathetic approach to give Roosevelt Island its own Business Improvement District or Residential Improvement District or some hybrid that would be appropriate for Roosevelt Island so that there would be the ability of people, on a representative basis out there, the businesses and residents out there to continue to see to it that things are maintained at a certain level within their own power. Those are things which I failed to mention to start with, which I had mentioned, I think, to the Maple Tree Group at the outset, that we were thinking about trying to fashion, and I'm pleased to say that there's been a sympathetic response by everyone that we've spoken to on this.

RLB

You've really been doing a lot of lobbying already.

LK

Well, I think you need to... I would not use the word lobbying. I think you need to inform people of what our thinking is, and what we think our needs are, in order to bring about this evolutionary, although a fairly rapid evolutionary change, to integrate the island back into the city and to provide the capital that we need to provide the energy to people, the protections that people have, and the protection for the unique features that exist out there, and to enhance the quality of life of everybody. I don't see it suffering at all, eroding, on any of this. But that's for people that live out there to determine. I don't live out there. You do.

RLB

Yes, I do. I'm very interested in this whole thing, obviously. What sort of timetable do you think is possible or probable for these various steps in this process?

LK

Well, I've been asked that by various folks, and I've said three years. I picked a number out. I thought maybe we could do it in three years. But that's utterly speculative. Also, when you deal with the government, everything takes longer...

RLB

So in theory it might be possible that there wouldn't be any RIOC in three years.

LK

Well, it would take an Act of the Legislature to dissolve RIOC. There's another aspect which I haven't mentioned to you, which is an allocation agreement with respect to debt, where everybody's left us alone up to now. If we had come up with a potful of money, which I anticipate we will have, I do not want the State to suddenly be coming down on RIOC and siphoning off our capital to pay off that debt. Right now the way things have been managed up to now there's been no realistic expectation that there's going to be any repayment of that debt. Now, we've come up with some mechanisms for raising substantial capital. Now, I want to renegotiate with the State with respect to the Allocation Agreement and with respect to that debt, so that we can get a significant forgiveness of debt. We might make some payment to the State in exchange for that significant forgiveness, but I want to get us out from under the debt.

In other words, I'd like to free up those people out on Roosevelt Island from tens of millions of dollars of debt as part of this, also. So if you want to talk about a total balance-sheet improvement of the finances out there. Of course, I'd have to persuade the Governor to do that, and the people in [the State] Budget [Office]. But I've already been thinking about that negotiation and getting going on it. As I say, I've asked Barbara Espejo to give me the Allocation Agreement; she still hasn't done it. I need that document before I can begin thinking about how we want to negotiate the debt forgiveness.

RLB

This is the money that was used to build Roosevelt Island and put all the facilities and things there.

LK

That's correct.

RLB

Is that like a general obligation of the State or is it revenue bonds?

LK

These are revenue bonds, I think, through the Urban Development Corporation, initially, and there is no specific... I'd like to read the agreement first before I... I have some impressions, I've not read the documents. I like to read documents, and I'm at a disadvantage currently from being able to move on that front.

DL

How long ago did you ask for it?

LK

I asked for it at the last retreat we had, which was that meeting in October. Somebody told me she'd been sick or something.

RLB

You know, actually, I think you answered just about every question that I had written down.

LK

I called Matthew Katz yesterday. I had wanted before giving you this interview, actually, to have a chance to meet again with the Maple Tree Group in order to brief them as to where we were since I met with them initially and there has been, obviously, some movement. And I wanted to brief people on the movement there and actually that we've also had an election with the new Roosevelt Island Residents Association with Matthew, who was just elected overwhelmingly, with his running mate, and I really want to give them the benefit of a follow-up prior to this public situation here, just as a courtesy, so I've called him and told him that we've had this interview. I didn't want to say no to you. He told me the next meeting of the Maple Tree Group is Monday, so I'm going to try to make it out there, and meet with them.

DL

You may want to make this off the record... One of the things that the Maple Tree Group has been trying to move toward is professional management of the Island, as opposed to political appointees. What's your feeling about that, in general?

LK

No, I don't mind going on the record on this. I know that the referendum was put back... There was another vote just recently with respect to self-rule again, with the idea of electing the [RIOC] Board, and presumably if the Board was elected that's what they're talking about. The problem... Oh, Pete Grannis, we also met with – a very fine meeting with Pete Grannis. And we discussed, because he had sponsored some of the legislation relating to self-rule issues, just to use that label, because I'm not sure that is a very good label, but in this context all you're doing is, well, you're substituting the mechanism for the picking of the Board, but it's not viable, as I mentioned to the Maple Tree Group when I first met with them. And I think Pete – I don't want to put words in his mouth, but there's an inherent problem with that, as long as this debt is outstanding, that the Corporation owes to the State. The State cannot cede to the people out on Roosevelt Island the ability to elect Directors as opposed to the Governor appointing them, because you have debt on the Island, and there's a fiduciary obligation by the elected political leadership to protect those bondholders, so even though there's been no payment on that debt, and things haven't looked very good from that perspective, pursuant to this agreement I haven't had a chance to get my hands on. But it's unrealistic to think that you can be a debtor and you have the collateral, or at least the credit is in your own hands, and the debt's already out there, and you're going to change the rules in midstream with respect to protection of the creditors – that you're unilaterally going to change that relationship. Now, that's one of the reasons that I'd like to get a forgiveness of the debt as part of this entire process, get this Island out from under that debt, and have the Island have trust funds, and then integrate it back into the City, where you have full political rights and protections, which is a clean way of going, and you still have the uniqueness of the Island, its special status, its special situation with respect to community-planning boards, protections, your own BID and/or RID, and all of these features that will permit that Island to become more vibrant, but with all the protections. You'll be economically sound. In fact, that Island could be wonderful from an economic... it'll be the only significant community in the City of New York with its own trust fund – endowment. I mean, can you... there's nothing... And there will be the ability, maybe, at that point, for people to elect their representatives as to how that endowment is to be used later. But you've got to get rid of the debt first, and set it up within some other structure. But my effort is to see to it that there is self-determination out there. And you don't get it unless you are economically independent. You need the economic independence just to have your own group of people who are in control. If you're subject to the debt and you had to recognize that debt, and didn't have the other resources available to you, what good is your self-election anyway if you can't do anything with it because you're in an economic bind. It's illusory. See, I'd like to deliver something that's real to people out there.

DL

Just ratchet back, if you would, to this subject of professional management vs. politically-appointed...

LK

Oh, yes. Well, I think the BID, or RID, at that point, will hire management. That's what they do. You have professional management. I want to get rid of the political. I would like to see all political appointments, to the extent there is any out there, non-paying... I don't want to see the million or two million or whatever it is for political appointees go... That's another skimming off of taxpayer money, or economic resources. I'd like to get rid of political patronage, altogether, that go with features of government. And I see it done within the structure of a BID or a RID. That's where you get your management. What are you managing? You're seeing that the streets are kept, that the potholes are filled, that everything gets a paint job, that...

RLB

Lights.

LK

Lights... But that's what BIDs do. And RIDs, in other parts of the City. And of course you also, to the extent that we sell the reversionary interest and get a little tax revenue out of that, the City of New York takes over more of the upkeep, because everything's back in the City again, and the City really pays for a lot of this stuff again, too. There are all sorts of benefits that are derived from more efficient use of your resources out there. Fair use.

DL

Do you see any downside at all in this plan?

LK

No.

DL

That's a very direct answer. Any final thoughts?

LK

Let me say what the downside is. It's not in the plan itself, but anyone proposing change is a target. You raise your profile. But somebody has to be a catalyst to enunciate these ideas. Somebody has to defend them from people who rightfully have the right to question. Everything should be question. In fact, I welcome the scrutiny that should be given to any proposal for change, and the ability to defend it. You have to lay it out, let people see the vision, and then get into nuts and bolts, and adjustments have to occur. This is a work in progress, and there will be all sorts of modifications coming about based on objections and criticisms that people have that I anticipate. That's the democratic process. So that one is flexible here, and you try to meet people's legitimate, rational concerns, and the way you get those legitimate, rational concerns articulated is meeting with members of the press, laying out the ideas, disclosing them in the Board meetings that are open, having the more open forums that we're planning to have, and being available to the Fourth Estate, which serves a vital function in anything of this nature.

DL

That's very flattering. Thank you.

LK

I mean it.

DL

I understand. I know you do.

LK

Is there any news here?

DL

Oh, yeah.

RLB

I can't speak for the people who have been on the Island for a while, but it sounds fairly radical compared to a lot of the things that, previously, over the last couple of years, have been going on. It's just sort of a fresh way of approaching the whole thing.

LK

Well, keep in mind, when the United States was founded, with our Declaration of Independence and our Constitution, these were radical ideas at the time, and they still are. They're the most radical ideas in the world. But [what] we're talking about in terms of individual freedom and liberty and marketplace concepts, totally, and democracy that were, 220 years ago, totally radical. And for Europe, until just recently, it's been radical for the last 200 years, all this stuff. This is radical, really.

DL

Thanks for your time. I appreciate it very much.

LK

I always enjoy seeing you, Dick.