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Federal Task Force on Sandy Rebuilding Cites Need for Community Engagement

August 27, 2013

HSRTF_cover_imageThis is our third and final blog post reviewing the Hurricane Sandy Rebuilding Task Force report Rebuilding Strategy, Stronger Communities, A Resilient Region released last week. Today we critique the report through the lens of community engagement and impacted communities.

The Task Force, chaired by HUD Secretary Shaun Donovan, compiled disaster recovery and rebuilding recommendations from two dozen federal agencies and departments to help prepare for future weather-related disasters.

Our previous posts were about the Task Force’s recommendations on transparency and regional economic development and community development.

Community Engagement and Impacted Communities

We are pleased to see the report’s numerous mentions of capacity building and community engagement in Sandy-impacted communities. However, we still would have hoped for requirements, not just recommendations for how local officials should incorporate democratic planning procedures into rebuilding efforts and how a community can best influence the allocation of Community Development Block Grants (CDBG). The New York Rising Community Reconstruction Program, cited in the report as an example of community engagement in the rebuilding process, may be a worthwhile starting point, but more needs to be done if the Task Force’s goal for community engagement is to be met.  For example:

  • The Task Force’s recommendation for expanding and reinforcing existing workforce and training programs for impacted communities is good. Yet, unless there is significant collaboration and improvement with the notoriously underfunded and confusing landscape of workforce development in New York City this could be difficult to make happen. A good point of reference for improving the system can be found in Re-Envisioning the New York City Workforce System, released in March.
  • Simply encouraging officials to comply “to the greatest extent feasible” with HUD’s Section 3 provision (Section 3 requires beneficiaries of HUD funding to make best faith efforts that funds benefit low-income communities through job opportunities or training) does not improve the existing employment situation for people that need work, or in the case of New York, address the spotty record of implementation at agencies like  the New York City Housing Authority.

A case in point regarding capacity building: The Bloomberg Administration held numerous meetings in Sandy-affected communities via the Special Initiative for Rebuilding and Resiliency (SIRR) project that subsequently released a report to help guide the rebuilding after the end of the mayor’s Administration this year. According to the city, SIRR held more than 24 briefings with elected officials and community-based organizations officials and ten meetings to “solicit input on resiliency priorities.” While these meetings may have been well intentioned, they were insufficient to have been the foundation for the city’s plan to allocate CDBG grants. As mentioned in our earlier post, community engagement shouldn’t be seen as slowing down the allocation of funds, but instead considered as a partnership to ensure funds get to New Yorkers impacted by the storm. Joan Byron of the Pratt Center summed up Mayor Bloomberg and the SIRR report best in this quote in The New York Times:

“His [Bloomberg's] response to Sandy at the human level was appalling,” said Joan Byron, an urban planner who is director of policy at the Pratt Center for Community Development. “But the infrastructure stuff is brilliant.”

This brings us back to the need for broad community engagement to ensure disaster relief funds are allocated at the human level. And the best way to do that is for HUD to expect stronger engagement policies. Absent this, we are greatly worried that billions of dollars in disaster aid will bypass those that need it most.

A good place for HUD to start would be to expand the requirement for localities to provide more than seven-day write-in comment periods for submitting or amending Partial Actions Plans. It’s unfair to expect communities to analyze and respond on a short time frame about how local officials should spend billions of dollars. Without a stronger signal or outright requirement for additional time, (which is also being urged by groups in New Jersey) we will continue to see instances like last month, when the Bloomberg Administration failed to broadly publicize its comment period for an amendment to the city’s first plan to allocate CDBG funds. And if past disasters nationwide are any indication, Action Plans are regularly amended, (the majority of 9/11 CDBG grants to New York were amended or revised) creating many missed opportunities for the public.

Many low and moderate-income communities had long standing inequality issues before the Hurricane and that were then exacerbated. In order for resiliency efforts to move forward efficiently, local officials must better communicate with their constituents. The old adage about there being a silver lining holds profoundly true after Sandy: Federal officials have a chance to diversify the type of stakeholders who will be at decision-making tables around the region as neighborhoods rebuild in the face of climate change. The long-existing processes of allocating CDBG funds that too often excludes hard hit communities should have been more clearly addressed by the Task Force.

Thanks to GJNY’s Research Analyst Elizabeth Bird

Federal Task Force on Sandy Rebuilding Urges Regional Economic Development & Community Development

August 23, 2013

HSRTF_cover_imageThis is our second of three blog posts reviewing the federal Hurricane Sandy Rebuilding Task Force report released earlier this week. Our first blog was on the report’s recommendations related to transparency. We also provided examples of where we believe the Task Force should have used its influence to require cities and states to agree to abide by the recommendations, especially those that would enhance democratic planning principles and benefit low and moderate-income communities.

For our second blog, we focus on economic development and community needs.

Regional Economic Development & Community Needs

We were thrilled to see the Task Force’s report reference regional coordination. Competition between cities and states has gotten out of control in recent years, with billions of unaccountable economic development dollars often used to shuffle jobs around regions rather than create new ones. Considering how New York allocated hundreds of millions of dollars in disaster aid after the attacks of September 11, 2001 to large financial and real estate interests in Lower Manhattan, fearing they would move, a bona fide conversation directed from the White House about thoughtful approaches to regional economic development planning is long overdue.

Additionally, the emphasis on how impacted communities can assist small businesses is another welcome change from policies implemented after 9/11. At that time, a disproportionate amount of the assistance from New York State went to boutique law firms and bond trading firms under the guise of aid to small business, a New York Times analysis found.

We are encouraged by the report’s recommendations that small businesses receive assistance with resiliency planning and that more types of small business that be made eligible for SBA loans, and in a wider range of loan amounts. Also helpful is the call for more flexibility for community-based intermediary lenders. However, the New York City Economic Development Corporation, which is expected to allocate a significant portion of CDBG-DR funds for business resiliency and rebuilding, is lacking transparency on its existing non-CDBG disaster relief aid for area businesses. This lack of transparency is a bad precedent for company-specific disaster aid.

There is a passing mention of tax-exempt bond financing in the report, while we suspect the potential for Sandy related private activity bonds can be an important tool to leverage affordable housing and other capital projects that have broad community benefits. If those bonds or other tax benefits become available, they should be used to promote truly affordable housing in the region and focus on the needs of working families and low-income communities. Lacking a requirement to do so, there is little to prevent what occurred after 9/11, when Liberty Bonds were used to build luxury housing, helping to establish Lower Manhattan as one of the region’s hottest and priciest neighborhoods.

The report accurately describes the region’s housing market as challenging. Many neighborhoods in the area, especially in New York City, are experiencing an affordability crisis and the New York City Housing Authority was ill-prepared for the storm. The loss of housing stock due to the hurricane was a double whammy as low vacancies meant there were limited places for displaced New Yorkers to go even temporarily. The report outlines several programs that could help repair homes and recommends that various agencies work with the private sector, including the philanthropic sector, to preserve and develop affordable housing.

Aside from affordability, the housing situation also faces environmental problems such as mold.   Not uncommon after disasters like Hurricane Sandy, mold is a problem for thousands of households in New York City but policies on how to fix the problem have not been effective, as the report implies. The recommendation that federal agencies streamline how to deal with “indoor air pollutants” is a welcome one.

An issue environmental justice advocates are particularly concerned about is that low-income neighborhoods and communities of color that have historically borne the brunt of hazardous waste dumping may have suffered additional damage as a result of  Sandy’s storm surge. The Environmental Protection Agency’s “Plan EJ 2014″ cited in the report is expected to provide various tools for community engagement and inclusive planning procedures. The Sandy Regional Assembly has been organizing and advocating for policies and capital projects to protect residents and workers from hazardous exposures in the event of severe weather, and create jobs for residents, as part of the rebuilding process.

We are pleased there’s no mention of using disaster aid to build market rate housing, yet there is also nothing in the report that will prevent this from happening. The Bloomberg Administration has done little to help the city’s middle class and working poor; its policies that displace small businesses combined with a proliferation of low-wage jobs have led to a dramatic increase in disparity. The administration continues stubbornly down the same economic development path after Sandy with recently proposed programs like the “Neighborhood Game Changer” causing anxiety in some communities.

The Task Force acknowledges the immense impact Hurricane Sandy had on our region. However, as mentioned in our first post, the report leaves too much responsibility on already struggling neighborhoods to push for its implementation and not enough of a mandate to local officials.

Thanks to GJNY’s Research Analyst, Elizabeth Bird

Federal Task Force on Sandy Rebuilding Pushes Transparency

August 22, 2013

cover_HSTF reportThis week the federal Hurricane Sandy Rebuilding Task Force released its long-awaited Rebuilding Strategy, Stronger Communities, A Resilient Region report. Chaired by HUD Secretary Shaun Donovan, the task force compiled disaster recovery and rebuilding recommendations from two dozen federal agencies and departments to help prepare for future weather-related disasters.

News coverage of the report has focused mostly on the report’s calls for improved coordination between federal agencies and localities, resiliency efforts, upgrading critical infrastructure and greater attention to the impacts of climate change.  It is not surprising that New York City officials reportedly are embracing the report’s recommendations, as addressing climate change has been a focal point of the Bloomberg Administration.

The Task Force report also deserves attention for its broad recommendations on transparency, regional cooperation, equitable allocation of funds and addressing the storm’s impacts on low-income communities.   However, the report does not address the need to ensure that governments receiving federal funds re-focus rebuilding efforts on those most in need. Having tracked job creation subsidies and 9/11 federal rebuilding funds, we at Good Jobs New York know that programs created with the best of intentions too often wind up benefitting very few. We would have welcomed more guidance from the Task Force on issues such as:

  • Better engagement on proposed use of funds -  Both New York and New Jersey have provided minimal opportunities for residents to respond to public comment periods on proposed uses of Community Development Block Grant disaster aid. Regulations require a seven-day write-in comment period. Though New York City provided two weeks for its Partial Action Plan A, it only provided seven days for a proposed amendment to the plan. Nobody wants to slow funds from getting to the people and small businesses that need them, but the Task Force’s recommendation to expand local capacity building rings a little hollow without requiring better opportunities for engagement.
  • Access to funds for undocumented immigrants – The region and New York City especially, have a significant number of undocumented immigrants, many that have lost jobs and housing. As FEMA doesn’t count undocumented immigrants in its needs assessment most assuredly, more resources are needed. Federal officials should require that localities connect with community based organizations for a clearer needs assessment to ensure the region receives the funds that are warranted.

Good Jobs New York also reviewed the report’s recommendations with an eye towards transparency, economic development, and equity. We begin here with a look at transparency.

Transparency

We could not agree more with the report’s recommendation for government agencies to be proactive in posting data, particularly related to funds allocated for the recovery and rebuilding. The report also calls for the creation of a central website of disaster relief data from multiple federal agencies, specifically HUD, FEMA, and SBA. Lessons from Hurricane Katrina clearly influenced the recommendations on transparency.

Multiple references to the waste and abuse of government funding after Katrina are cited as reasons for greater government oversight of recovery funding and accountability, both within government agencies and to the public. The successful oversight of funds allocated by the American Recovery and Reinvestment Act (ARRA), via the Recovery Accountability Transparency Board – which is also providing transparency of the Sandy disaster relief–reinforces the idea that greater transparency is possible and strongly supported by the public.

In line with these recommendations, the Task Force has created a Program Management Office (PMO) to both promote interagency information sharing as well as provide oversight and transparency of the Sandy disaster relief aid.   PMO’s data is expected to include performance reports, including data on numbers of people and businesses served and on infrastructure projects that received funding. A public website is expected by October 1. 

Some local transparency efforts are already in place. In New York City, lists of Sandy-related contracts and expenditures are available at the Comptrollers offices of New York City (found by searching “Hurricane Sandy” in the office’s “Checkbook 2.0” website) and New York State. In New Jersey efforts include The Sandy Recovery Scorecard and NJSandy Transparency. There is a proposal before the New York City Council, sponsored by Brad Lander (Brooklyn) and Donovan Richards, Jr. (Queens) for a transparency website that would provide data on jobs and the amount of aid allocated to specific projects.

Enhanced websites like these not only enhance accountability but also encourage public officials in different jurisdictions to engage in greater cooperation.

The recommendations in the report are an excellent starting point. But residents in long-ignored communities are beyond asking politely for a place at the decision making table and deserve more from federal officials to help support democratic planning and equitable use of Sandy funds.  

Thanks to GJNY’s Research Analyst, Elizabeth Bird

Terms of Engagement After Sandy

November 12, 2012

Photo credit – Eliud Echevarria: FEMA News Photo.

Sandy and the surges of water that accompanied her didn’t discriminate in terms of which lives, homes and businesses they devastated. People of all income levels and companies of all sizes were hard hit. Thousands in New York, New Jersey and Connecticut remain without power, hampering the relief effort. All of this is to say: there’s a long road ahead and communities must work with decision-makers now to create a plan for allocating reconstruction financial resources.

After past disasters such as the 9/11 attacks and Hurricane Katrina, Congress created federal assistance programs that became dominated by those that needed it least: large corporations and luxury housing developers. It’s safe to assume these interests, the typical beneficiaries of “disaster capitalism,” are trying to influence similar legislation after Sandy.

Post-September 11, 2001 federal resources helped firms that already had vast resources—such as Bank of America, Goldman Sachs and Morgan Stanley—or “small businesses” like boutique brokerage houses and law firms (see Good Jobs New York’s Database of Deals for more information). As recently reported by our Good Jobs First colleagues, in the wake of Hurricane Katrina, most of Louisiana’s allocation of the federal Gulf Opportunity Zone Bonds went to giant petrochemical companies not located in the hardest hit areas.

Here are some suggestions on how to do it right this time:

Do help small businesses get back on their feet quickly with a minimum of red tape. This includes helping them deal with private insurance carriers. Provide technical assistance that helps them firm up their operations by making them more sustainable.

Don’t prioritize luxury housing. Real estate interests made sure that 9/11 Liberty Bonds for Lower Manhattan had so few strings attached that they fueled housing for the fabulously wealthy and no new affordable housing construction.

Do focus on the needs of residents and small businesses most affected. Subsidies and/or other land-use policies shouldn’t displace existing or future generations from working and living in healthy, affordable neighborhoods. Private Activity Bonds after Hurricane Katrina were available to such a large geographic area that those who needed resources the most were left with little access to these funds.

Don’t ignore the needs of low-income workers. The 9/11 attacks had a huge direct impact on the financial sector of Lower Manhattan, but they also had a severe ripple effect on low-income workers; think of the baggage handlers at the airports, retail workers in Lower Manhattan or restaurant employees in Chinatown. Before Congress in 2007, Interfaith Worker Justice testified that after Katrina, loose regulations lowered wages and greatly undermined job standards.

Do subsidize projects that create high-road employment in both the construction industry and for permanent jobs. If recent reports are any indication, there are decades’ worth of employment opportunities. Many of the areas swept away or without heat and hot water are home to the poor and working class and between 70,000 and 80,000 residents of the New York City Housing Authority have been impacted by the storm. If these people don’t have decent -paying jobs to return to, it will have devastating long-term impacts on the economy

A message to Katrina victims from some community groups engaged in 9/11 rebuilding still rings true after Sandy: Officials at all levels of government, particularly in Congress, must consider four things before creating reconstruction subsidy programs:

1) Programs must be created using broadly democratic and transparent planning principles.

2) The allocation of funds must prioritize the creation of good jobs and building sustainable neighborhoods.

3) Programs must focus on fiscal stewardship by rebuilding infrastructure and public goods that will help existing businesses rebound and foster new ones.

4) Programs must incorporate clawback provisions to make sure that recipients (especially large firms) live up to those job-creation requirements. Some of the largest recipients of 9/11 funds had grants withheld or were forced to repay them after laying off workers.

Some might argue that these safeguards will slow the recovery from Sandy. We think the opposite is true: if loose rules allow big companies with the most lobbyists and consultants to hog the trough, the neighborhoods hit hardest will get short-changed and suffer longest.

UPDATED Hurricane Sandy Recovery Dollars–How to Make Them Count

November 2, 2012

Boat meets Metro-North Railroad in Westchester County, Photo credit: MTA Photos, Flicker

As New York, New Jersey and Connecticut begin the painstaking process of recovering from Hurricane Sandy, experts are estimating that the cost of cleaning up and rebuilding may top $50 billion. It’s likely— considering the dire state of roads, subways, bridges, commuter rail and other infrastructure–that the figure will escalate.

Using past disasters as an example, we can also expect that big business will seek to dominate the conversation and benefit most from the use of relief and rebuilding funds.

Billions of dollars in federal economic development aid was made available to New York after the attacks of September 11, 2001. Left out of much of the allocation and all of the decision-making were small businesses and low-income residents, especially in nearby areas of Chinatown and the Lower East Side. Much of the cash grants went to large business or wealthy “small” businesses like hedge funds and brokerages with few employees. Billions in Liberty Bonds went to building luxury housing in Lower Manhattan  and new headquarters for powerful financial firms like Goldman Sachs.  Good Jobs New York tracked these funds as part of our Reconstruction Watch project and in our Database of Deals.

How does this bode for an impending flood of rebuilding aid for the area? The answer is good and bad. Technology could be a great democratizer, and opportunities to educate taxpayers about proposals and get feedback are widely available. While acknowledging the existence of the digital divide, it has lessened dramatically since 9/11. Town halls, literal and virtual, are more accessible, (expect opinionated New Yorkers to chime in loudly once electricity is back online).  The bad part is that powerful business interests will be using their influence with policymakers to set the agenda while the rest of us are still preoccupied with recovering from the storm.

This week New York City announced two Hurricane Sandy recovery programs. A loan program capped at $10,000 for small firms and tax breaks for large firms spending more than half a million dollars on rebuilding. There are also “swing” spaces available in Brooklyn and The Bronx for displaced firms. Right out of the box, it looks like little has changed: small firms offered more debt and big firms with big checkbooks get tax breaks.

UPDATED Sunday, November 4: The New York City Economic Development Corporation (EDC) alerted us to the following:

We will update this post as new details emerge. For more information and how to apply for these programs or to help visit the EDC’s Back to Business webpage.

Keeping in mind that these programs will most likely evolve and new ones created, we urge officials to use this tragic storm to make accountability, equity and transparency central to rebuilding our communities:

  • Prioritize small businesses over giant ones.
  • Hold public hearings and allow citizens to help shape how funds will be allocated.
  • Post data on the web about which companies are receiving aid, whether there are any conditions on that assistance and whether those conditions are met.
  • Use resources to leverage high-road job standards (good wages and benefits).
  • Require funds for rebuilding to be sustainable for the environment and for future storms.  Wise public investment now will pay off in the future.
  • Include stringent work-safety rules.
  • Include clawback – money-back guarantee – provisions. This is especially important when it comes to large firms, which often make extravagant job-creation promises and then fall short.
  • Existing transparency practices should be maintained, or even improved, for storm-related subsidies.

The allocation of discretionary economic subsidies has become more transparent in New York City in recent years (a fuller explanation is here), yet policies that include democratic planning principles is badly lacking in New York City and many surrounding areas. There is a long road of rebuilding ahead and public funds must be used efficiently. To help ensure this, leaders must bring community members to the table while decisions are being made.

If history is any gauge, the interests of big business have already landed on the table of decision makers. But there’s still time to create a future that gives priority to the creation of good jobs for people that need them and the rebuilding of sound infrastructure for all.

Living Wage Bill passes in the Big Apple

May 2, 2012
photo by Good Jobs New York

James Parrott of the Fiscal Policy Institute at a press conference on the Fair Wages for New Yorkers Act.

What started out as an attempt to guarantee benefits to Bronx residents at a redeveloped armory over a decade ago found its way to City Hall Monday with the passage of Fair Wages for New Yorkers Act. The bill was sponsored by Bronx Council Members G. Oliver Koppell and Annabel Palma.

Efforts to redevelop the city-owned armory fell through in 2009 when the city prevented a developer from entering into a Community Benefits Agreement with the Kingsbridge Armory Redevelopment Alliance. In response to that campaign and concerns regarding wages in city-subsidized developments, a new city-wide campaign for better wages took hold led by the Retail Wholesale Department Store Union and Living Wage NYC a coalition of community, civic and religious organizations.

The final version of the Living Wage bill is narrower than campaign organizers would have liked (tenants of subsidized project won’t be covered, for example). Still, supporters of the bill report it is the strongest living wage law in the country and assert this is only a first step to expand Living Wage ordinances in the city.

Information on the Fair Wages for New Yorkers bill can be found here, but the fundamentals are:

  • Commercial and Industrial firms receiving $1 million or more in discretionary subsidies and have gross revenue of $5 million or more would have to pay their employees at least $10.00 an hour or $11.50 if no health benefits are provided;
  • Developments on property sold by the city for more than $1 million below market value would be covered;
  • Manufacturers and nonprofit organizations would be exempt;
  • Tenants of subsidized firms (e.g., retail stores, restaurants) would be excluded.

On a worthwhile transparency note, the bill would require firms that receive more than $1 million in subsidies (whether or not a firm would be subject to the living wage requirement) to provide wage data for all employees in lower-wage sectors such as retail and restaurants. This goes beyond what is currently required in an already laudable transparency bill approved in December of 2010.

However, it is unclear whether this bill will go into effect. Last week, Mayor Bloomberg gave an address attacking wage requirements at subsidized firms and during a radio show compared them to Communism. Bloomberg has vowed to veto the bill and if that is overridden (as is expected) he will continue to fight it in the courts.

Regardless of the bill’s future, a victory lap is being taken by City Council Speaker Christine Quinn, whose political dexterity has allowed her to use the issue advantageously as she positions herself to run for mayor next year, (Mayor Bloomberg is term-limited out of office). In the New York City Council, where bills generally only move forward with support of the Speaker, Quinn skillfully maneuvered the living wage bill through controversial waters. In the year ahead, irrespective of her audience, she can take credit with community and labor groups for her support of a campaign to help lift workers out of poverty and with the city’s business interests for curtailing the bill so much it would cover a relatively small portion of the city workforce.

Quinn has received both praise and criticism for walking out of a press conference celebrating the living wage bill when a heckler refused to apologize for calling Mayor Bloomberg a “Pharaoh”.

NYC Unleashes Decades of Subsidy Data

February 1, 2012

After years of nudging by Good Jobs New York and others, subsidy transparency in the Big Apple took a giant leap forward yesterday.

Thanks to the New York City Council and a bill sponsored by Brooklyn’s Diana Reyna, the New York City Industrial Development Agency released data on 623 discretionary subsidy deals. The new report – which includes data as far back at the 1980’s – is trend-setting for being in excel (not just in PDF format) and for including all currently subsidized firms. Previous reports were only required to include project for a seven-year window. Previously, GJNY transcribed this data from PDF’s to create its “Database of Deals” and we will merge the two databases giving New Yorkers of all stripes: advocates, community organizers, elected and public officials, journalists and academics a unique tool that shines a light on how discretionary subsides are allocated.

As we explained in October of 2011 when the bill was passed, New York City is on an up- swing with regards to subsidy transparency. The report, formally known as the Annual Investment Projects Report, includes 126 fields of data including:

  • Current employment, promised employment and employment at time of deal
  • The amounts and types of city subsidies used to date and remaining
  •   Amount of subsidies recaptured
  • Percentage of employees that are city resident
  • Percentage of employees offered health benefits

Combining new subsidy deals, extensive company-specific data in a downloadable, excel format makes what we believe, to be the country’s best local subsidy disclosure report. Though, as reported last month, New York State still has plenty of room for improvement.

Good Jobs New York will be reviewing the data in the weeks ahead and will report back our findings. In the meantime, we encourage you to do the same!

Occupying Subsidized Space

October 31, 2011

Photo by Good Jobs New York

The ability of Occupy Wall Street protesters to remain in Zuccotti Park in Lower Manhattan for weeks while Occupy groups in other cities are being evicted from their encampments is, ironically, based on the fact that the park is private rather than public property.

But it’s a special category of private property. The park was created more than 40 years ago as part of a deal in which U.S. Steel, which was building an adjacent office tower now called One Liberty Plaza, was allowed to put additional floors on the structure in exchange for providing an open space for the public. The space is not subject to the same rules, including curfews, that apply to city parks.

The zoning variance is not the only factor that complicates the status of Zuccotti Park.

Brookfield Properties, the current owner of One Liberty Plaza and the park, benefits directly and indirectly from a host of taxpayer-funded subsidies. The New York Daily News reported on some of the direct grants received by Brookfield after 9/11, and further details on the full extent of subsidies are in the chart below and in our Database of Deals.

Brookfield, one of America’s largest commercial real estate companies and its premier tenants, took advantage of city and state economic development programs. Millions of dollars in economic development grants earmarked for rebuilding after the attacks of September 11, 2001 went to Brookfield and some of its tenants at One Liberty Plaza (NASDAQ and the Royal Bank of Canada among them). Some tenants also received discretionary tax breaks from the New York City Industrial Development Agency.

A breakdown of the $176 million given to Brookfield Properties, its subsidiaries and tenants in Lower Manhattan is here.

The subsidy figures don’t tell the whole story. There are other economic development programs that Lower Manhattan firms benefit from, but how much is earmarked for a particular firm isn’t publicly known.

Among the many reasons why the Occupy Wall Street protesters should be allowed to remain in Zuccotti Park is that they are occupying taxpayer-subsidized space.

Thanks to Elizabeth Bird and Dan Steinberg for their assistance.

Some 9/11 Subsidy Recipients Fail to Meet Job Goals; New York State Recaptures Funds

September 1, 2011

Pie Chart 1: The Largest JCRP Recipients

As the 10th anniversary of September 11th attack on the World Trade Center approaches, it is a good time to review what happened with the subsidies that were allocated to large firms to help them deal with the effects of that tragedy. It turns out that some companies that received those subsidies, including Goldman Sachs, failed to meet their job retention or creation goals, and some have had to repay funds to New York State.

Good Jobs New York has just completed an analysis of the Job Creation and Retention Program (JCRP), which was created in the wake of 9/11 to encourage major employers in Lower Manhattan to remain there and to encourage others to relocate to the area. JCRP, which is administered by the Empire State Development Corporation (ESDC) and its subsidiary the Lower Manhattan Development (LMDC) Corporation, has awarded about $304 million in Community Development Block Grants to 91 companies. These funds come from a special $2.7 billion allocation for various rebuilding efforts in Lower Manhattan after 9/11.

Here are some of the highlights of our analysis:

  • Goldman Sachs which received $22.9 million of a $25 million JCRP grant, has not complied with its commitment to retain 8,100 jobs.  The state has not clawed back funds, but it will most likely not allocate the remaining $2.1 million the firm is due.
  • Approximately $13.4 million was recaptured from firms for not being in compliance with their agreements with the Empire State Development Corporation, (see Table 1).
  • Nine firms that were especially hard hit by the attack received a special allocation of $33 million in CDBG funds under the “New York Firms Suffering Disproportionate Loss of Workforce Program” (see table 2).

Table 1: Firms that had JCRP funds recaptured

As part of our analysis we obtained copies of 19 JCRP agreements between firms and ESDC. JCRP grants were allocated by the (ESDC) and/or its subsidiary, the (LMDC) but compliance falls under the ESDC. We have posted these documents here and have summarized their content in our Database of Deals along with summary information about the other recipients.

We also requested copies of the applications firms submitted for the JCRP funds, but some of them were unavailable because they had been destroyed, we were told, in a flood at ESDC offices. Missing applications included those of Goldman Sachs and American Express.

It is interesting that the applications submitted by HIP and Deloitte Consulting said the firms were under no immediate pressure to move but they received the grants anyway. Nearly all the applications we reviewed warned that the firms were considering moving their facilities to neighboring states; many said they might remain elsewhere in the city.

Goldman’s Subsidy Reach: Goldman Sachs, one of the largest beneficiaries of post 9/11 resources, has received $22.9 million of a promised $25 million grant. Goldman benefited tremendously from government incentives after 9/11, including Liberty Bonds and a special lease agreement with the Battery Park City Authority for its new office tower.  Details on Goldman’s subsidies are here. However, as of December 2010 Goldman was not in compliance with it job commitments. Employment was 8,100 in 2005 when its agreement was made but in 2010 the firm’s employment was 7,472. As of the end of 2010, ESDC had yet to recapture funds from Goldman Sachs but the firm will most likely not receive the remaining $2.1 million it was promised.

Whether Goldman Sachs needed subsidies to finance its move from one side of Lower Manhattan to the other no longer remains a mystery. Goldman’s agreement with the ESDC notes: “Goldman was not significantly impacted by the attacks of September 11th” and “The remainder of its facilities were not severely damaged or destroyed and no lives were lost.” However, the firm notes that it had to temporarily relocate employees and “experienced significant losses directly related to the overall economic impact of the attack…”

Banking on the Bank of New York: The largest JCRP grant of $40 million went to the Bank of New York. The Bank also benefited from a $90.8 million allocation of Liberty Bonds to FC Hanson for its building above Atlantic Terminal in Brooklyn. Details are available in our Database of Deals.

Deal with Deutsche: On 9/11 Deutsche Bank occupied two buildings impacted by the attack: 130 Liberty Street, directly across the street from the WTC and 4 World Trade Center. In return for keeping employees in Lower Manhattan, it received a $34.5 million JCRP grant. The redevelopment of the 130 Liberty Street site has hit several bumps, including the need for the negotiation skills of former US Senator George Mitchell to forge an agreement with the various interests (Deutsche Bank, New York State via the Lower Manhattan Development Corporation and insurers). In the end, the Lower Manhattan Development Corporation bought the building in 2004 and has spent approximately $277 million for acquisition, demolition and developing 130 Liberty Street with the expectation of turning the property over to the Port Authority of New York and New Jersey.

Demolition of 130 Liberty Street raised the ire of residents and local elected officials who were concerned that if it is not done properly, the contaminated building could be an environmentally hazardous project. In 2007 a fire killed two firefighters at the site.

Recaptures and Clawbacks

Chart 2: Percentages of JCRP allocations recaptured

Each JCRP agreement includes a clawback provision that requires firms to return part of the grant if it does not create the jobs promised or if it moves jobs and/or operations out of New York City. Penalties are generally strongest in the first and second years of the deal. GJNY has long pushed for strong clawback provisions in economic development deals and is pleased to see this first public evidence of recaptures by ESDC. However, as chart 2 indicates, the actual percentage of money clawed back is low in many cases.

 

Grants for Employees’ Loss of Life: Ten firms received $33 million from a special allocation of CDBG funds from the New York Firms Suffering Disproportionate Loss of Workforce program. The lion’s share has gone to Cantor Fitzgerald; after merging with another JCRP program recipient, the firm is eligible to receive approximately $6.8 million more in JCRP funds. To be eligible for the program, firms have to have had “suffered a loss of life equal to at least six permanent employees AND at least 20% of its permanent workforce OR at least 50 permanent employees located in New York City.” Learn more about the program on the Lower Manhattan Development Corporation’s website.

Table 2: Recipients of the Disproportionate Loss of Workforce program. *Note: Recipients of this program were required to provide jobs data only for 2004 and 2005. Information for those that provided jobs data beyond these years can be found in our Database of Deals.

Jobs Reporting

GJNY has long advocated for an accountable and equitable use of economic development funds and believes, like many fiscal watchdogs and CEOs alike, that subsidies do not persuade location decisions of large firms in the finance and real estate industries. For companies to move or expand operations and create jobs, access to workforce, transportation and infrastructure, and a cluster of like-minded businesses guide location decisions more than taxes.

With that caveat and due to weak transparency on the state level, GJNY finds that a concise figure of job impacts remains elusive. A December 2010 report to the U.S.  Department of Housing and Urban Development claims 30,000 jobs were created or retained by 40 JCRP recipients that benefited from the LMDC allocation. This job count corroborates data we received from ESDC that tallies job totals for both agencies, approximately doubling the jobs cited in the HUD report. (Prior to the creation of LMDC, the ESDC allocated JCRP grants.) We encourage New York State to emulate recent transparency efforts like those at the New York City Industrial Development Agency.

Grants continue: In early August of this year, ESDC announced a $3 million JCRP grant for Oppenheimer & Co. Because this grant was announced so recently it is not in our database. More information about the proposal is available here.

See more: Information on other CDBG-funded economic development programs created after 9/11 – including several thousand recipients of the Business Recovery Grant (BRG), Small Firm Attraction and Retention Grants (SFRAG) and the special $8 Billion allocation of Private Activity Bonds (aka “Liberty Bonds”) -  are available in the Database of Deals and our Reconstruction Watch section of our website. There you will also find descriptions of various incentives being offered in Lower Manhattan from the City and State commercial subsidy program known as “the Marshall Plan.” In addition, in August 2011 the New York City Independent Budget Office released a summary of Federal Aid to New York City after 9/11.

NYC Living Wage Debate Boils Over, Into the Streets and before City Council

May 17, 2011

It’s budget season in New York City, when community groups and labor unions usually take to the streets to protest proposed budgets and this year proposals including teacher layoffs and social service cuts was a serious call to action. But marchers also had an added demand: a living wage at subsidized companies.  May 12 was planned as a day of action; it also was the day the New York City Council Committee on Contracts held a public hearing on the proposed “Fair Wages for New Yorkers Act”. The bill would require firms that receive certain economic development subsidies to pay a “Living Wage” of $10.00 an hour or $11.50 an hour if no benefits are provided.

Mayor Michael Bloomberg opposes the bill and the Speaker of the City Council Christine Quinn is undecided but the momentum is building with 30 co-sponsors (out of 51 members). The bill excludes many small businesses and only covers some subsidy programs. (more…)


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