GJNY letter to IDA Board Members
GJNY Testimony on NYSE
Testimony Before the State Assembly
Good Jobs New York
275 7th Avenue, 6th floor
New York, NY 10001
tel: 212.414.9394
fax: 212.414.9002
Testimony
by Bettina Damiani
Director, Good Jobs New York
Public
Hearing of the New York City Industrial Development Agency
October
26, 2001
Good
morning. I'm Bettina Damiani, director of Good Jobs New York, a good
government project that promotes accountability to taxpayers in the use of
economic development subsidies. Good Jobs New York is a joint project of the
Fiscal Policy Institute and Good Jobs First.
The Fiscal Policy Institute is a New York based research and
education organization that focuses on state and local tax, budget, economic
and related public policy issues. Good
Jobs First is a national clearinghouse tracking best practices in economic
development. Good Jobs New York seeks to ensure that New York's economic
development practices are carried out effectively, responsibly and with
accountability to taxpayers. We have documented on our website the largest
subsidies offered to New York City corporations in the name of economic
development. As part of our work, we have paid careful attention to the
evolution of the New York Stock Exchange subsidy.
Prior
to the attacks on the World Trade Center, we and others were in opposition
to the $1.1 billion NYSE "retention" subsidy package saying it was
wasteful for taxpayers and would cost approximately $750,000 per job
retained. However, in light of
recent events, the deal, now perhaps costing upwards of $1.6 billion and
possibly the largest in U.S. history, should be reviewed.
With
the city's growing debt and the projected loss of over 100,000 jobs as a
result of the September 11th attacks, the city must reconsider its sizeable
financial investment in this deal. Undoubtedly,
the NYSE plays a strong role in the economy, and its needs must be
addressed; but any subsidy deal must also speak to the needs of the city and
Lower Manhattan. Curiously, the NYSE subsidy deal would deplete the amount
of office space in the area since the plan requires the demolition of 1.7
million square feet of space to build the NYSE a publicly financed 600,000
square foot trading floor across the street from its current location on the
corner of Wall and Broad Streets. It also calls for the construction of a
privately financed office tower above the trading floor that would have
approximately 1.3 million square feet of space. Hence, the city would lose
about half a million square feet of office space.
To
make room for the new trading floor and office tower, the city and state
have agreed to purchase or take by eminent domain three properties across
the street from the Exchange, costing taxpayers approximately $380 million.
Those buildings contain 1.7 million square feet of now mostly empty space.
This space should be seen as an opportunity to retain business in Lower
Manhattan and fortunately, the city's Economic Development Corporation is
taking steps to do so. It was
recently reported that the EDC is in the process of signing a deal that
would allow the Bank of New York, which was dislocated from two buildings in
Lower Manhattan, to use approximately 40% of the 950,000 square feet of
office space available in the former J.P. Morgan building. However, it seems
the use of this space is expected to last 18 months at the most.
If
the city and state are intent upon proceeding with the NYSE subsidy deal,
they should invest public monies so that the New York Stock Exchange project
is supportive of the overall rebuilding effort and benefits all businesses
in the area. This would require alterations to the current deal.
First, the city should rehabilitate or upgrade as much of the 1.7
million square feet as needed and get it onto the market quickly as
permanent office space. Second, the city could assist in designing a 21st
Century financial center on the World Trade Center site that would include a
relocated New York Stock Exchange trading floor.
Numerous
people, such as Richard Kahan, former president both of the New York State
Urban Development Corporation and the Battery Park City Authority, have
suggested
Privately,
some officials have expressed security concerns about such a move. But we
assume that the NYSE has protected itself as a high-profile potential target
of terrorism, and will continue to do so. The rebuilt complex will again
have many structures, and they could generate economies of scale in both
construction and security.
As
many discussions have pointed out, it would make a lot of sense to use this
opportunity to construct a truly integrated regional transit system in Lower
Manhattan that will enhance the area's ability to draw from all parts of the
tri-state regional labor market that encompasses a population of 20 million
people.
Clearly,
there is a role for public investment in the reconstruction effort of Lower
Manhattan. However, it must focus on rebuilding and expanding the
transportation systems and other public amenities that make the area
productive and attractive for all businesses, including the New York Stock
Exchange.
Thank
you for your consideration of our testimony.