| Company | Bear Stearns & Company (second package - click here for first) |
| Date Announced | 8/27/1997 (deal closed 12/9/97) |
| Project Site(s) |
383 Madison Ave, 230, 245, 277 Park Ave, 575 Lexington Ave, 2 Rector St, 1 Metrotech Center, 909 Third Ave, 86 Liberty |
| Competing Sites | New Jersey |
| Maximum City Subsidy | $75,001,500 |
|
$45,000,000 in sales tax retention credits |
|
$1,500 per new employee per year up to five years with an overall cap of $30 million |
| Type(s) of City benefits |
Sales tax exemptions -- Up to $75 million |
| Benefits from New York State | 0 |
| Total Benefits Allowed | $75,001,500 |
| Benefits Distributed to Date (according to LL69 Report FY 2002) | $21,526,000 |
| Promised Job Retention | 5,700 |
| Promised Job Creation | 13,300 |
| Total Promised Jobs | 19,000 |
| Jobs Reported in LL69 Report FY 2002 |
0
(Actual New York City employment figures for Bear Stearns are over 6,000 as of 2002 according to The New York Times) |
| Layoffs |
In April 2001, Bear Stearns announced that 400 employees would lose their
jobs. In May 2003, 30 members of Bear Stearn's NYC equity sales and trading departments were laid off. |
| Length of Contract | 50 years |
| Project Purpose | The Giuliani administration granted global investment bank Bear Stearns up to $75 million in sales tax exemptions to construct a new world HQ, a 1.1 million square-foot tower on land near Grand Central Terminal, and to expand its job base. The owners of the parcel, the al-Babtain family of Saudi Arabia, doubled the $55 million price that Bear Stearns originally agreed to in 1995. That means that most of the $75 million subsidy is going to offset the costs of real estate speculation. James E. Cayne, chief executive of Bear Stearns, said that during the company's three year search for new space, it had never threatened to leave the city. |
| Clawbacks | Recapture is supposed to occur if employee levels fall below 5,700 during the 50 years of the contract. |
| Background/Since then... |
More than half of these jobs had already been "saved" in
1991. The 1991 tax benefit package from the Dinkins administration covered
the back office staff at MetroTech Center and the headquarters staff at
245 Park Avenue through 2006. At the same time Bear Stearns was accepting the $75 million in tax breaks, "the five bosses of Bear Stearns were being given personal bonuses that came to $87.5 million in cash and stock" notes Jim Dwyer in the Daily News (12/16/97). In December 2002, Bear Stearns threatened the city that it would move Metrotech employees to NJ when its lease expired in 2004 unless it got a THIRD round of subsidies from the city. In a compromise deal, the Bloomberg Administration allowed the conversion of some unused sales tax exemptions from the 1997 deal into real estate tax abatements for Metrotech. |
| Corporate Notes |
Bear, Stearns & Co. Inc. is a global
investment banking, securities trading and brokerage firm founded in 1923.
As of May 31, 2003, Bear Stearns had total capital of $33.5 billion and total assets of $207.9 billion. According to the April 2003 issue of Institutional Investor magazine, Bear Stearns is the seventh largest securities firm in terms of total capital. In FY 2002, Bear Stearns chief executive James Cayne took home a total pay package worth $28.37 million, according to Newsday (6/23/03) |
| Comments | Thomas Carroll, president of Change-NY said, "A company with the earnings of Bear Stearns doesn’t need the helping hand of the taxpayers. The problem with this approach to economic development is that it always focuses on the companies with the biggest brand names and best political connections. The small and medium-sized companies, which are responsible for more job growth, are often left in the dust." Charles V. Bagli, New York Times, 8/28/97. |
| A note on sources -- Information in this deal comes from GJNY's examination of project agreements obtained through Freedom of Information Law requests, as well as news reports, minutes and notes taken at board meetings, and communication with our allies. The entries are a work in progress. For more information about the documentation behind GJNY's database, or to let us know about any developments that are not yet reflected here, please contact us at gjny@ctj.org or (212) 414-9394. | |
| Date last updated: 07/31/03 | |