An endowment fund to help pay for the Island’s future capital needs would get its first infusion of cash, $4.4 million, under the 2002-03 budget proposed by officials of the Roosevelt Island Operating Corporation (RIOC).

The endowment would be set up as a restricted account, its principal kept intact and growing to generate investment income for Island improvements.

As a State entity, RIOC is required to invest conservatively, in Federal and New York State obligations, and certificates of deposit.  But RIOC President Robert Ryan told The WIRE this week, “We expect it to gain substantially in the next ten years” with continued contributions and interest income.

The contribution is possible because RIOC anticipates a surplus in its capital project fund in the coming year.  The growth of the endowment “does not require a vast buildup of the Island,“ said Patrick Siconolfi, RIOC’s chief financial officer.  But, as Ryan added, “It is contingent upon plans for the community moving forward.”

Ryan’s statement was a reference to the fact that the endowment is a direct result of payments expected this year from the Southtown developers and, to a lesser extent, from the Octagon Park apartments, which are in the final stages of approval.  RIOC is budgeting $6,221,000 of this “new money” this year and, if all goes according to plan, the future streams of revenue will rise exponentially as more buildings come on line in the years to come.

In other words, a major change in the budget – a 19 percent increase in revenue in one year, to about $17.1 million from $14.4 million – reflects a major change in the Island itself as the new housing is constructed.

Siconolfi gave a public presentation on the budget proposal at a meeting of the RIOC Board of Directors last month.  The Board will consider the plan at its April 18 session, and may adopt it then, although the directors could choose to delay a decision to allow for more review and comment by residents.  It covers the period ending March 31, 2003.

Pending the Board’s action, RIOC declined to make a line-item copy of the budget draft available, although Ryan and Siconolfi did spell out what they considered to be the major points of the budget in an interview this week.  “There’s so much good news that people need to know about,” Siconolfi said.

Aside from the endowment, perhaps the biggest story, from RIOC’s perspective, is the fact that Ryan has taken an organization with chronic financial difficulties and put it on a firmer footing, an achievement all the more impressive because most other governmental bodies are struggling with deficits caused by the recession and the aftershocks of the Sept. 11 terrorist attacks.  And, as Ryan stated emphatically, “We don’t collect taxes!”

RIOC closed its books on fiscal 2001-02 with a plus-side balance of $5,967, a figure that would have been $210,000 higher were it not for a major increase in Public Safety Department spending associated with September 11.

Ryan, a former campaign manager for Governor George Pataki, took over in June 1999 and, after 14 deficits in a row, he said, “We’ve finally got this thing turned around.”

The new budget proposal is also notable, the RIOC executives said, in that it breaks out, for the first time, the specific capital investments planned in the year ahead.  The total is $2,338,000, with the major portion, more than $1.3 million, earmarked for Southtown, which will eventually add about 2,000 apartments.  RIOC’s spending in the year ahead for this project will include work on the new sports fields, landscaping, development of a Town Commons, and the extension of Main Street and lighting.

The Tot Lot, which borders Southtown, will also be rebuilt, and the Meditation Steps, which have gotten splintery over the years, will be repaired.  Those project are expected to cost $320,000.

The only general-fund account to be reported in any detail thus far is the Tramway, and RIOC is projecting a loss of $2 million in the year ahead.  The Tram has had steadily declining revenue over the past several years, and RIOC, anticipating that the trend will continue, is budgeting $1.2 million for 2002-03.  This is a decrease of more than $125,000 from the last full year of operation, which ended in March 2001.  Put another way, the estimate is that the Tram will carry a daily average of 231 fewer fare-paying passengers than it did two years ago.

It should be noted, however, that the Tram’s estimated loss of $2 million includes $502,000 of RIOC administrative expenses apportioned to that fund and, under new governmental accounting rules, $175,000 in  depreciation.  Insurance expenses have also increased substantially since September 11, and RIOC estimates that it will cost $300,000 just to insure the Tram this year, an increase of about $100,000.  The Tram is considered an “eccentric risk” for insurers, and this adds to the cost.

On the revenue side,  Southtown is making its presence felt in new general-fund entries, such as $210,000 budgeted for Public Safety.

Of the total general fund of $10.8 million – little changed from the year before – so-called “Starrett payments” still account for the single largest source of revenue.  Starrett Corporation built Manhattan Park in the late 1980s, and its successor owners are expected to pay RIOC $4.4 million in 2002-03.  By contrast, ground rent from two other housing companies, Rivercross and Island House, is listed at $41,000.