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Good Jobs New York
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New York, NY 10001
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Issue Brief # 2  November 2000

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Database Details Dozens of Deals Online

In a time when many suffer from information overload, there's actually a scarcity of easily available information about the costly subsidy packages New York City and New York state hand out to keep corporations in the city. Good Jobs New York is working to remedy that situation, with a new database of the city's most expensive "job retention" deals now available online at www.goodjobsny.org. The database, which is continually updated, currently lists 73 pending or completed deals announced since 1987, worth nearly $3 billion in public resources. Profiles of the packages highlight the need to overhaul the process of awarding subsidies. For example:

• The New York City and state governments are planning to give the New York Stock Exchange over $1 billion - $930 million in outright cash grants plus $160 million in tax breaks and energy discounts - to build a new trading floor even though a relocation of the exchange is highly unlikely. (See "Three Good Reasons" below.)

• The city and state governments allocated $5.8 million in subsidies to keep insurance company Zurich Centre Group in New York City - after the company had decided not to move. (See "Unlikely to Leave" table below.)

• Eight companies laid off employees after or just before they received subsidies in the name of saving New York City jobs. (See "Subsidized Layoffs" table below.)

Most of the subsidies, by far, have gone to major finance and media corporations. (See pie charts below. [not available in .htm version])

The database allows users to view lists of the deals chronologically, by size or alphabetically by company name. Profiles of each package detail the amount each company received and, when available, information on the kind of subsidy (sales tax exemptions, property tax abatements, discounted electricity, cash grants, etc.). The profiles also include background information on each company, whether the company received more than one round of subsidies, and the circumstances surrounding the subsidy agreement. The database lists packages worth $1 million and excludes those involving only tax-exempt bond financing.

For each case in which the information is available, the database also details the conditions agreed to by the company in exchange for subsidies. These conditions sometimes include job creation commitments and promises to remain in the city a minimum number of years, etc. For many deals, however, those details are not included. Good Jobs New York is now attempting to obtain more information on the terms of these packages from city and state economic development agencies under the Freedom of Information Law. Good Jobs New York will post additional details as they become available. If the agencies fail to release information, the database will reflect their failures as well.

Taken as a whole, the subsidies profiled in the database make a compelling case for reforming the city's and state's economic development policies. It's clear that our economic development agencies lack a clear business strategy for dealing with companies that threaten to leave and have failed to explore alternatives to throwing money at them. Furthermore, the city's Economic Development Corp. and the state's Empire State Development Corp. by and large operate without input and oversight from the public or the legislators we elect.

Unlike New York City and New York state, numerous states and cities around the country require corporations to report the number and wage levels of jobs created with public subsidies - and to return the subsidies if the companies fail to live up to their promises. The information in our database makes it amply clear it's time for New York to do the same.

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Three good reasons to question the NYSE deal

In December 1998, New York City, New York state and the New York Stock Exchange announced a plan to ìkeepî the exchange in lower Manhattan. The city and state would provide $900 million in subsidies to buy land for and build a new trading facility across the street from the NYSEís old headquarters. The cost has since risen to nearly $1.1 billion, as land owners have raised their asking prices. But the plan has not been finalized yet. Here are three good reasons to reconsider, before itís too late:

• There has been no opportunity for scrutiny of this plan by taxpayers or elected officials other than the mayor and the governor, whose representatives have been privately negotiating with the NYSE for over two years. While the state Legislature passed a bill authorizing this deal, that legislation was passed one day after it first saw the light of day. Only a ìMessage of Necessityî from the governor allowed for the waiving of the constitutional requirement that no bill can be passed unless it has been in print and on legislatorsí desks for at least three days. Furthermore, this bill exempts the project from New York Cityís land-use and other review processes, eliminating the opportunity for public input. While the project involves $705 million in city money, it is being implemented in a way that avoids public hearings or City Council debate.

• The New York Stock Exchange is highly unlikely to move to New Jersey (or anywhere else). Most of the major investment banks that are members of the NYSE have already invested in Manhattan buildings and/or received subsidies in exchange for agreeing to stay in New York. (See securities firm entries in the GJNY database at www.goodjobsny.org.)

• The NYSE and its member companies could easily pay for the new building themselves. The corporations that own the NYSE are extremely profitable and are handing out huge bonuses. The total profits of NYSE member corporations were $16.3 billion last year, up from $9.7 billion in 1998, according to the NYSE itself. In another indicator of prosperity, the securities industry in New York City (dominated by NYSE member firms) paid out bonuses of nearly $12 billion in 1999, up from just under $9 billion in 1998, according to the state comptroller. And, Crainís New York Business predicts Wall Street bonuses will increase another 30%-35% this year.

 

Top 25 Deals The cityís biggest subsidy packages ñ all awarded to major finance or media companies
Corporation	Date	Total Subsidy	Industry
New York Stock Exchange	Pending	$1.1 billion	Finance/Insurance
Chase Manhattan Bank	Nov. 1988	$235 million	Finance/Insurance
NASDAQ/Amex	Nov. 1998	$200 million	Finance/Insurance
New York Mercantile Exchange	Aug. 1994	$183.9 million	Finance/Insurance
Prudential Securities	Aug. 1992	$106 million	Finance/Insurance
NBC (first package)	Dec. 1987	$97 million	Media/Publishing
Citicorp	1989	$90 million	Finance/Insurance
Bear Stearns & Co. (second package)	Aug. 1997	$75 mil	Finance/Insurance
American International Group (third package)	Nov. 1996	$55.7 million	Finance/Insurance
Credit Suisse First Boston	Jan. 1995	$50.5 mil	Finance/Insurance
CBS (first package)	Mar. 1993	$49.3 million	Media/Publishing
Morgan Stanley	Oct. 1992	$39.6 million	Finance/Insurance
McGraw-Hill/Standard & Poorís	Apr. 1997	$34.5 million	Media/Publishing
New York Board of Trade	Apr. 1999	$31 million	Finance/Insurance
Kidder Peabody	Oct. 1993	$31 million	Finance/Insurance
Bear Stearns & Co. (first package)	Oct. 1991	$30.7 million	Finance/Insurance
Equitable/Donaldson, Lufkin & Jenrette (first package)	Aug. 1994	$29.5 million	Finance/Insurance
New York Times	Dec. 1993	$29 million	Media/Publishing
Merrill Lynch	June 1997	$28.5 million	Finance/Insurance
Time Warner/Time Inc. (second package)	June 1999	$28 million	Media/Publishing
Capital Cities/ABC	June 1994	$26 million	Media/Publishing
Reuters	Oct. 1997	$26 million	Media/Publishing
News America/New York Post (second package)	July 1998	$24.4 million	Media/Publishing
Travelers/Smith Barney	July 1994	$22.1 million	Finance/Insurance
News America (first package)	July 1996	$20.7 million	Media/Publishing

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Good Jobs New York - January 2, 2001

Updated January 2, 2001