CITY POWER

MICHAEL BLOOMBERG'S ascent to City Hall presents an ironic dilemma. Here is a man with a self-described "thirst for information and fascination with technology," a billionaire who made his fortune by providing more people more financial data than anyone else. Yet, as mayor, he inherits a city government that actively discourages taxpayers from understanding its spending policies, especially its huge economic development expenditures.

It's encouraging that Mayor Bloomberg recently said he wants to use "new methods of presentation" and try to make the budget process more "transparent." An area desperately in need of transparency is tax expenditures. Today, the City Council is slated to hold a hearing on the Economic Development Corp., enabling taxpayers and council members to examine the agency's history of corporate "retention" deals - providing tax breaks to companies that promise to stay put and create jobs.

While Bloomberg runs City Hall in a "bull-pen" atmosphere explicitly designed to maximize communication with his staff, the EDC conducts business a la Tammany Hall, hiding details of huge subsidy packages, such as the $1.1-billion New York Stock Exchange deal, behind closed doors. The EDC issues bonds, loans and grants to businesses with the expectation that these companies and their employees will remain in New York City. According to a June 2001 report by the city's Independent Budget Office, the city was very generous in the plush 1990s: giving at least $200 million in tax abatements and more than $5 billion in financing assistance to corporations. The trouble is that you find out about these deals after they've been approved.

Credit Mayor Bloomberg with dismissing former Mayor Rudolph Giuliani's quest to build new stadiums, but he's remained silent on the outlandish New York Stock Exchange deal. Since 1998, in reaction to the exchange's dubious threat to leave Lower Manhattan for Jersey City, New York City and state officials have been negotiating with heads of the exchange to build a new trading floor across the street from their present address.

Keeping the exchange in Manhattan could amount to the biggest proposed taxpayer subsidy in New York State history. Who knew? Even those of us who try to follow EDC's activities closely consider the details a mystery.

For example, the public hearing notice for the NYSE deal by EDC's bond-issuing arm, the Industrial Development Agency, was published in a Saturday edition of the New York Post, in six-point type, and in the City Record, 30 days before the hearing as required by law. Citizens who attended the hearing on Oct. 26 weren't provided with a single sheet of paper about the deal - no background materials or financial information. Two copies of the cost and benefit report were set on a table in the corner of the hearing room, but no one was allowed to take them or make copies. Obviously, informed testimony on this issue was almost impossible.

Lack of public input aside, the NYSE deal grows worse by the week. First, since the city agreed to spend nearly $400 million for properties where the trading floor would be built, the city is paying two of the three current owners, Rockrose Development and J.P. Morgan Chase, $3 million a month in penalties, because the deal hasn't been finalized.

And how serious is the intention to move to Jersey City? According to recent reports, the NYSE is considering buying the American Stock Exchange on Trinity Street. AMEX built a new trading floor in 1998 with tax breaks and grants from New York taxpayers totaling $200 million. It's just one more reason why the NYSE's threat to relocate is implausible. Besides, if the transaction goes through, the merged entity may lay off employees, so that the two huge subsidy packages could actually result in a net job loss for the city.

Does the city even know how the AMEX subsidy deal has performed? No, because subsidized companies aren't required to provide verifiable employment data on their annual reports to the EDC. Today's hearing may raise that issue.

Hence the question: Will Bloomberg, while tightening the budget belt for everything from police staffing to homeless shelters to recycling programs, let an unaccountable economic development process keep taxpayers in the Information Dark Ages? Or will he adapt the Bloomberg philosophy to government, make the EDC track outcomes and let taxpayers see costs and benefits? With New York City's budget deficit nearly $5 billion, there is little time or money to waste. Giving money away to rich companies that want to do business here is not the way to close the gap.