Someone droll in Sen. Pat Moynihan's office has provided a one-page "unfinished history" of Governors Island, which sits, like an unloved orphan, in New York harbor, hard by the Statue of Liberty. The history says: "1708: Lord Cornbury, New York's first transvestite governor, builds a mansion on Governors Island, possibly misusing defense funds, including proceeds of New York's unusual wig tax."

Perhaps in Year One A.M. (after Monica), we have to bring up the fact that his lordship, who was not the soul of discretion (he was arrested by his creditors), did have the, shall we say, eccentricity of going about in public dressed like his cousin, Queen Anne. But we are straying from the subject, which is:Why is a perfectly good 173-acre island, with a smashing view and some Revolutionary War constructions, going to waste?

The island, which had a hotel and racetrack in the fun-filled 1780s, became a military headquarters in the 19th century. In 1901, dirt and rock from construction of the city's first subway line were used to double the island's size. On Sept. 29, 1909, Wilbur Wright took off there on the first flight over American waters.

George Patton played polo there, and Mayor La Guardia, affronted by such amusements of the upper crust, tried to wrest the island from the federal government. The Army successfully resisted. In 1966, the Army left, replaced by the Coast Guard, which in 1995 announced that it was departing. At that point, the government entertained a good idea: sell the island.

During an October 1995 helicopter flight over it, President Clinton, in the persuasive presence of Moynihan, offered to sell it to the city for $1, which is less than the cost of a toxic hot dog from a street vendor. The city recoiled from this offer, fearing annual maintenance costs of maybe $25 million. Moynihan summarizes the city's less-than-spacious thinking as, "Who is going to mow the lawn?"

So it came to pass that, in the masterpiece of creative writing called the 1997 Budget Agreement, the government stipulated that the island will be sold for $500 million in 2002. This stipulation is part of Washington's way of creating surpluses - never mind that no one thinks anyone will pay anything like that. (Although Moynihan rightly says, "There are plenty of people in Congress who would sell it to Saudi Arabia if that meant half a billion dollars.")

A telephone call to someone you might think would pay a lot reveals why buyers are scarce. "Ferries don't work," says developer Donald Trump, citing the long struggle toward profitability of Fisher Island in Miami but ignoring the many contented people on Puget Sound.

The usual rule of thumb among developers concerning projects with high risks but potential high yields is that "the second guy in will make money" - after the first guy goes broke. Concerning Governors Island, Trump says, "The third guy in will make money."

A big problem, he says, is that government is chock full of blocking mechanisms. Environmentalists are particularly nimble at litigating development to a money-eating standstill.

It is passing strange that a congested city with a shortage of housing, green space and Revolutionary War landmarks cannot find a moneymaking use for an island that is going to waste within hailing distance of the capital of moneymaking, Wall Street.

Mayor Rudolph Giuliani has suggested building a casino and luxury hotel on the island, making a Monaco off the tip of Manhattan. One argument against this was: Gambling would attract people who would spoil the ambiance of New York City.

Think about that.

Washington Post Writers Group