Goldman’s Rules in Rebuilding Lower Manhattan

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While the rebuilding of Lower Manhattan after the September 11, 2001 attacks rarely makes national headlines these days, an article in yesterday’s Daily News reminds us how lopsided the negotiations are between New York’s economic development officials and major firms like Goldman Sachs. 

Goldman Sachs is moving its headquarters from one side of Lower Manhattan to the other, adjacent to the World Trade Center site on publicly owned property also known as Battery Park City. After plenty of politicking, construction is underway.  

The politicking goes back to shortly after 9/11 when the firm had concerns that its new entrance would be located at the entrance of a then proposed tunnel.  Not surprisingly, Goldman executives thought this could be a security risk.  When these concerns fell on the deaf ears of then-Governor Pataki in 2005, the firm did what any self-respecting, Fortune 100 Company that wants attention from economic development officials would do. It publicly threatened to relocate. 

In response the Governor took the tunnel off the table, created a timetable for the rebuilding, and along with Mayor Bloomberg tried to smooth things over with new subsidies which rose leaps and bounds from the initial proposal of $1 billion in post 9/11 “Liberty Bonds” to $1.65 billion in Liberty Bonds sweetened with cash grants and tax breaks. 

What the Daily News uncovered yesterday, updated today and was picked up by The New York Times is a provision found in SEC documents that taxpayers would be penalized possibly up to  $320 million if a timeline negotiated between officials and Goldman execs for rebuilding isn’t met. 

Over and over again, large firms like the ones “anchoring” Lower Manhattan’s rebuilding say tax breaks are not factors in location decisions. Subsidy watchers should not be surprised that Goldman took advantage of the lack of leadership in Lower Manhattan’s rebuilding by demanding more subsidies to get the attention of officials to address larger planning issues. 

 

 

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