Archive for the ‘New York’ Category

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

Economic Development Among Consenting Adults

June 14, 2013

Lalo Alcaraz (c) 2013

California has unwittingly joined New York and Pennsylvania in the distinction of subsidizing strip clubs. Is there a bi-coastal consensus for, ahem, full disclosure?

Late last month, as a part of California Governor Jerry Brown’s campaign to end the wasteful and ineffective Enterprise Zone (EZ) program, the Sacramento area EZ businesses list was made public.  This disclosure of companies benefiting from EZ hiring tax credits was the first time that taxpayers in California have ever had access to information about which companies receive economic development subsidies through the program and how much those tax breaks are worth.

In addition to showing that the state provides subsidies to highly profitable corporations and a casino, the list revealed that two strip clubs in the town of Rancho Cordova have been claiming EZ tax credits since at least 2010.  Gold Club Centerfolds is receiving tax breaks worth up to $37,440 apiece for nine employees, and Déjà Vu Showgirls is receiving the same deal for 13 employees.

It is unknown how many other “adult” businesses in the state are getting such tax breaks because the identities of EZ businesses are usually hidden from public scrutiny based on (clearly misplaced) taxpayer confidentiality policies.

As we blogged last week, the California EZ program is also extremely expensive, with an annual loss of state revenue now more than $700 million headed towards $1 billion.

California is not the first state to embarrass itself by subsidizing sexually-oriented businesses.  New York City provides substantial tax breaks to thousands of businesses through its Industrial and Commercial Incentive Program (ICIP).  In 2010, the New York Daily News revealed that at least three strip clubs were receiving subsidies through ICIP.  The scandal led many organizations, including Good Jobs New York, to call for an overhaul of the misguided program (NYC’s costliest).

Similarly, Pennsylvania’s Keystone Opportunity Zone program (KOZ is the state’s name for Enterprise Zones) became embroiled in considerable controversy when an “adult entertainment business” in LycomingCounty landed in a KOZ in 2005.  The business was later forced to relocate after an utterly predictable land use conflict with the nearby Little League World Series Complex, and the KOZ rules were modified to prevent strip clubs from receiving tax breaks.  Unfortunately, this eligibility rule is literally one of the only restrictions on uses of KOZ subsidies and the identities of participating businesses remain hidden from the public.

The common element these three costly programs share is secrecy: none publicly discloses recipients of the tax breaks.  Hiding government expenditures is a guaranteed recipe for waste and abuse.   Public outrage is justified when the veil of taxpayer confidentiality is lifted to reveal a subsidized strip club or other controversial enterprise.  Whether or not such uses of economic development funds are appropriate should be decided in broad daylight; without subsidy transparency, continuing scandals are inevitable.

(Comic compliments of Lalo Alcaraz, (C) 2013)

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…)

K.C. Business Leaders Demand Cease-Fire on Wasteful Job Poaching

April 15, 2011

In an incredibly rapid private-sector response to our April Fool’s Day gag about that wonderful 50-state jobs truce, 17 prominent Kansas City-area business executives issued a letter this week urging the governors of Missouri and Kansas to stop offering subsidies to companies that are jumping the state line to create “new” jobs (no kidding!)

According to the Kansas City Star, the letter was not initiated by the Greater Kansas City Chamber of Commerce. A spokesperson for Kansas Gov. Sam Brownback basically said that state would press on. Missouri Gov. Jay Nixon is currently trying to convince AMC Entertainment not to jump the state line.

The paper also reported that the job-poaching wars have gotten worse since Kansas enacted a subsidy that allows employers to keep the personal income taxes of their employees (yes, you read that right), but then Kansas reportedly did that to defend itself against a similar Missouri giveaway…

Aside from the K.C. business leaders naïvely referring to their “unique bi-state community” (they’ve apparently not heard about New Jersey and Connecticut pirating New York City, or various Western states plundering Southern California, or northwest Indiana raiding Chicago, or [insert your favorite border job-war here], the letter is a lucid statement of the problem (if not a real solution). I especially like their point: “The losers are the taxpayers who must provide services to those who are not paying for them.”

And contrary to the tone of a similarly naïve piece about Kansas City-area job wars that recently ran in the New York Times, there is hardly anything new about this problem. Indeed, some people would date it to the 1937 birth in New York City of the Fantus Factory Locating Service, the grand-daddy of the secretive, powerful site location consulting industry.

Read this letter!

Apr. 11, 2011

Letter from KC area business leaders to Missouri, Kansas governors on ‘economic border war’

This letter to Kansas Gov. Sam Brownback and Missouri Gov. Jay Nixon was signed by 17 of the area’s top business executives: David Beaham of Faultless Starch/Bon Ami; Michael J. Chesser of Great Plains Energy; Ellen Z. Darling of Zimmer Real Estate Services; Peter J. deSilva of UMB Bank; David Gentile of Blue Cross and Blue Shield of Kansas City; Greg M. Graves of Burns & McDonnell; Donald J. Hall Jr. of Hallmark Cards; Michael R. Haverty of Kansas City Southern; Daniel R. Hesse of Sprint Nextel; L. Patrick James of Quest Diagnostics; A. Drue Jennings, formerly of Kansas City Power & Light; Mark R. Jorgenson of U.S. Bank; Jonathan Kemper of Commerce Bank; Thomas A. McDonnell of DST Systems; Michael Merriman of Americo Life; Robert D. Regnier of Bank of Blue Valley; and Kent W. Sunderland of Ash Grove Cement.

Dear Governor Brownback and Governor Nixon:

The Kansas City community is experiencing an economic border war. State incentives are being used to lure businesses back and forth across the state line with no net economic gain to the community as a whole and a resulting erosion of the area’s tax base. We are asking that you direct your Departments of Commerce to develop parallel legislation to reduce this unproductive use of tax incentives. While your departments work on this legislation, we ask that you both mutually agree to a bilateral halt to the issuance of incentives for business relocations between the two states within the Greater Kansas City area. We recognize that previously offered commitments should be honored and retention efforts and job training efforts should go forward. Let us give you more detail.

Both states offer competitive incentives for attracting new businesses. We support these incentives. We know they are necessary to compete with other states. We believe these incentives were intended to attract businesses and new jobs from outside the state or region. However, because of our unique bi-state community, too often these incentives are being used to shuffle existing business back and forth across the state line with no net economic benefit or new jobs to the community as a whole. At a time of severe fiscal constraint the effect to the states is that one state loses tax revenue, while the other forgives it. The states are being pitted against each other and the only real winner is the business who is “incentive shopping” to reduce costs. The losers are the taxpayers who must provide services to those who are not paying for them.

There are companies taking out short-term leases in hopes of taking advantage of the incentives more than once. This shuffle is a two-way street as one state lures businesses and the other responds in kind. Neither state will benefit as the stakes in this “economic arms race” continue to escalate, and we squander available tax incentives by fighting amongst ourselves.

Further, the effect of this economic border war is not only erosion of the tax base but a decrease in property values, and the chilling of community relationships on other important metropolitan issues.
We applaud an aggressive economic development effort by both states. However, we should measure success by new businesses and jobs from outside this area and the state, not from across the street. We need to compete with others … not each other.

We believe the directors of the Department of Commerce should examine the definition of “new jobs” for the granting of incentives. “New jobs” should be redefined to exclude jobs attracted to the states from counties bordering the state line in the Greater Kansas City SMSA and counties contiguous to those counties.

Greater Kansas City is unique in having a community equally divided between two states. Our community is interdependent. To compete we must cooperate. The use of these incentives is vital to attract new businesses to our region. We can’t grow this community if we’re using our incentives to steal from each other instead of attracting real new economic growth.

We ask that each state examine how incentives can be better used to grow our economy, and while that is being done, declare a moratorium on the use of incentives for relocations between states within the Greater Kansas City area. We do encourage continuing programs for job retention and job training that advance or maintain economic activity.

Thank you for your consideration.


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