Archive for the ‘Hurricane Sandy’ Category

Supersizing New Jersey’s Subsidies

April 8, 2014

What a waste

Economic development incentives are making headlines again in New Jersey.   Following a massive legislative overhaul of the state’s business subsidy programs last year, Good Jobs First predicted that the state would quickly lose control of spending through the expanded programs.  It took less than a year for the state Economic Development Authority (EDA) to prove us right.

The (Bergen) Record revealed this weekend that under the new subsidy structure the EDA has awarded twice the amount of business incentives as it did during the first quarter of last year:

“The grants so far, awarded in the form of tax credits, totaled $355 million. That’s about $89 million a month, compared with about $36 million a month awarded under the state’s main incentive programs in the first nine months of 2013, authority data show. The state made about six awards a month under the revamped programs, nearly double the number in the first nine months of 2013.” (source)

Prior to the state’s business subsidies undergoing scrutiny as a result of the ongoing David Samson/Christie-Gate scandal, and even before the structural overhaul that has allowed the current subsidy surge, New Jersey was already facing criticism for its excessive spending on business incentives.  During its first two and a half years, the Christie Administration awarded nearly $2 billion in tax incentives and grants.

All this spending has done little to help the state’s economy.   New Jersey’s employment recovery rate lags behind the rest of the nation and reports that small business owners are still having trouble accessing Hurricane Sandy recovery funds are persistent.  Unfortunately for residents, the Christie Administration has already demonstrated that doubling the state’s already ineffective business incentive spending isn’t likely to have much of an impact.  Supersizing subsidy spending is no recipe for prosperity in the Garden State.

New Jersey Subsidy Overhaul Scraps Cost Controls and Accountability

September 19, 2013

Fallout from Hurricane Sandy and this month’s tragic boardwalk fire are not the only costs that New Jersey taxpayers will face in the coming years – Governor Chris Christie has signed off on a massive overhaul of the state’s business subsidy system that will cost the state plenty.

The Economic Opportunity Act of 2013 consolidates New Jersey’s biggest subsidy programs into two programs that will likely cost more than the largest five currently do.  Gone are the Business Employment Incentive Program (BEIP), the Urban Transit Hub Tax Credit, and the Business Retention and Relocation Assistance Grant (BRRAG) tax credit.  The state will now award job subsidies to companies through the Economic Redevelopment Growth Grant and the Grow New Jersey program.  Supporters of the Act argue that streamlining and simplifying New Jersey’s subsidy system will enhance the business climate of the state, but the legislation is seriously deficient in the matter of accountability.

This is not to say that the state’s previous subsidies were without problems.  In its nearly two decades of use, BEIP awards have cost the state over $1.5 billion.  At one point, the New Jersey Economic Development Authority was even issuing bonds in order to meet its BEIP debt obligations to subsidized companies.

Recently the Christie Administration has accelerated its subsidy spending, amounting to more than $2 billion awarded to companies in the last 3 years alone through a combination of programs.  Over half of that amount was spent through the once-credible Urban Transit Hub Tax Credit program, a subsidy designed to spur development near transit stations.  With the support of Gov. Christie, the pool of credits available for the program was expanded and quickly exhausted, with many of the awards going to companies making short in-state moves.

The two remaining subsidy programs are deeply flawed.  The Economic Redevelopment and Growth Grant (ERG) program, enacted in 2008, diverts more types of tax revenue away from public coffers than any other tax increment financing program in the nation.  One of the first awards made through this program was a bailout for the struggling Revel Casino in Atlantic City – a project so financially toxic that Morgan Stanley walked away from its nearly $1 billion investment in the development.  (Revel has since declared and emerged from bankruptcy.)

Ironically enough, the other surviving subsidy, Grow New Jersey, was enacted to appease suburban and rural areas that had lost jobs through headquarters relocations subsidized by the out-of-control Urban Transit Hub Tax Credit program.  Since the first application was approved in April 2012, the state has awarded an average of $22.2 million per month to New Jersey businesses.

Unsurprisingly, in their new iterations, Grow New Jersey and ERG lack aggregate cost controls.  There is no annual or program-wide cap for use of either subsidy, virtually ensuring that New Jersey’s economic development spending spree will continue unchecked.  The potential costs to the state are immeasurable; fiscal analysis of the bill conducted by the Office of Legislative Services concluded that “the bill will produce an indeterminate multi-year State revenue loss” but it “cannot project the direction or magnitude of the bill’s net fiscal impact on the State and local governments.” There is a   $350 million maximum subsidy per company but business eligibility criteria have been loosened.

Aside from the potentially astronomical costs to the tax-paying public, the Economic Opportunity Act of 2013 introduces a host of other accountability problems to the state’s subsidy system.  Chief criticisms include the inclusion of retailers as eligible recipients, the removal of the state’s long-standing prevailing wage requirement for subsidized facilities, the elimination of the requirement that subsidized businesses pay a portion of health care benefit premiums, the allowance for businesses to count part time employees toward job creation requirements, and the high probability that both subsidy programs will accelerate suburban sprawl in the state.

In spite of the Christie Administration’s unprecedented spending on business subsidies over the past three years, New Jersey’s economic recovery lags behind most of the nation.  At last count, the state unemployment rate was 8.7 percent, earning it a ranking of 43rd in the country.  More unchecked spending on business subsidies is surely no remedy for the state’s employment problem.  The definition of insanity is doing the same thing over and over again and expecting different results, an adage unfortunately lost on Gov. Christie and New Jersey’s lawmakers.

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.

Lessons from Katrina in Dealing with Sandy

November 12, 2012

The many billions of dollars needed to repair the devastation caused by Hurricane Sandy in the New York metropolitan area will come from many sources.

Among those will likely be new tax-exempt private-activity bonds authorized by the federal government. Such bonds provide low-cost financing because the interest they pay is exempt from federal, state and local income taxes.

Already, the Council of Development Finance Agencies has issued a call for the creation of Hurricane Sandy Recovery Bonds.

Such an initiative would, as CDFA acknowledges, be patterned on the Gulf Opportunity Zone Bonds enacted by Congress in 2005 to help the economies of Louisiana, Mississippi and Alabama recover from Hurricane Katrina. The three states were given a total of $14.9 billion in GO Zone bond allocations.

So how did GO Zone bonds work out for the Gulf states?

Not very well. Soon after the GO Zone process began, Good Jobs First published a report commissioned by Interfaith Worker Justice that warned of pitfalls in the way the program was structured. We pointed out that because Congress qualified large swaths of the three states for the financing, areas that were not hit hard by the storm would get a disproportionate share of the assistance. We also predicted that big portions of the funding would be gobbled up by large corporations.

Unfortunately, our concerns turned out to be valid. According to data we’ve just obtained from the Louisiana Bond Commission, Orleans Parish (i.e. New Orleans) used only 3.3 percent of the state’s GO Zone bond allocation, while most of the money went to parishes that are dominated economically by the petrochemical industry, both those in “Cancer Alley” between New Orleans and Baton Rouge and those in the southwestern part of the state.

The Bond Commission data also make it clear that some giant corporations did, in fact, get outsized allocations. For example:

  • Marathon Oil got $1 billion for a refinery project in St. John the Baptist Parish;
  • Nucor got $600 million for its steel operation in St. James Parish;
  • Exxon Mobil got a total of $522 million for three projects in East Baton Rouge Parish; and
  • Valero Energy got $300 million for a hydrocracker at its refinery in St. Charles Parish.

Some big companies went to the GO Zone trough multiple times. International-Matex Tank Terminals, which operates bulk liquid storage facilities, received a total of $490 million for eight different projects. Westlake Chemical Corporation, whose products include polyvinyl chloride and plastic food wrap, received a total of $439 million for six different projects.

We predict now that, absent targeting safeguards, Hurricane Sandy Recovery Bonds would follow the same pattern. They might very well go to some of the same giant petrochemical corporations that do business in Louisiana for their New Jersey facilities or to megabanks in Manhattan that may not have suffered serious storm damage—and in any case can afford to pay for their own recovery.

This can be avoided by intentionally targeting the assistance to the hardest-hit areas and to small businesses which need the most help accessing low-cost credit.

We will be monitoring these developments through our Good Jobs First affiliate Good Jobs New York, which has been the leading watchdog on the reconstruction funds that flowed into New York City in the wake of the 9/11 attacks. These funds had many of the same injustices as GO Zone bonds. Of the $8 billion in triple tax-exempt private activity bonds specially enacted by Congress for Lower Manhattan, more than 20 percent, or $1.65 billion, went to Goldman Sachs alone for its new headquarters building.

GJNY is urging that Sandy aid programs be structured intentionally so that small businesses get priority over giant ones and that accountability and sustainability principles be applied. Let’s take lessons from Katrina and 9/11 so that Sandy reconstruction money does not repeat those troubled histories.

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.


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