Archive for February, 2009

NYC “Venture”ing Into Incentives For Wall Street’s Down and Out

February 27, 2009

Mayor Bloomberg announces 11 Initiatives to Support City’s Financial Services Sector

Mayor Bloomberg announces 11 Initiatives to Support City’s Financial Services Sector

If at first you don’t succeed, try, try again. That might be the motto of the New York City Economic Development Corporation which recently announced an incentive program to pump more public monies into the city’s financial sector. Exact dollar figures aren’t clear but news reports suggest the plan could pump $45 million from the city, state and federal governments along with private foundations into programs for unemployed Wall Street-types.

Among the 11 initiatives laid out last week are plans to create an “Angel Fund” to help harvest venture capital dollars in small start-up firms and a “crash course” training program starting next month for entrepreneurs to develop business strategies. These proposals seem to be moving forward to the chagrin and suspicion of some.

Public investment in small companies is nothing new, but this news struck a cord for two reasons. Our city and state budget is living history of what happens when one industry dominates the economy and hits a snag or collapses; the impact is paralyzing. Second, the return thus far on gambling with tax incentives on Wall Street hasn’t paid off on the jobs we’ve been promised.

No one expects the city to ignore the needs of those who lost their Wall Street jobs but this group is better equipped than most with its educational background and work experience to reinvent itself. Shouldn’t the city be helping unemployed New Yorkers without the Ivy League MBA? How about the laid off cook or manufacturer who wants to learn how to access capital funds or participate in a business development program?  Already the majority of funds from the city’s Economic Development Corporation go to commercial interests including its recent obsession with baseball stadiums. So we argue it’s time to stop putting all the tax-break eggs in one basket.

Last week’s proposal mimics plans put in place after the attacks of September 11, 2001; shore up the financial industry even if working families and small businesses were impacted more and expect the benefits to trickle down. Cash grants and tax-free bonds mostly went to large firms (think Goldman Sachs, American Express, Deloitte & Touche) and to build luxury housing.  These plans did wonders for developers, landlords and bond attorneys at the expense of everyone else, especially residents and firms in Chinatown.

Before another incentive program is created, EDC needs to engage with its colleagues in city government whose directive it is help small businesses, (Department of Small Businesses Services, Mayor’s Office of Industrial and Manufacturing Businesses, for example) and those outside of government like the New York Industrial Retention Network and come up with a plan that mitigates the silos of economic development subsidies to benefit the city’s numerous business sectors.

Posted in Economic Recovery, Financial Crisis, New York | Leave a Comment »

New York Advocates to “Drill Down” on Where Federal Stimulus Money Goes

February 26, 2009

cropped_workinggroup_presser_02_09-26A diverse coalition of two dozen advocates named the “NYS Stimulus Oversight Working Group” and led by Common Cause/New York have signed on to a set of common principles that would make the allocation of funds under the American Recovery and Reinvestment Act fully transparent.

At a press conference this morning on the steps of City Hall in New York City, members of the Working Group and local Council Members agreed that it would take citizens, advocates and elected officials to create a truly transparent process.

Among the recommendations the working group is proposing in the principles is creating a website that has bi-monthly reports, copies of written agreements with contractors, impact on energy efficiency and the environment and details on job creation and wages.

Addressing the desire to learn more about projects in New York State that received stimulus funds, Susan Lerner the Executive Director of Common Cause/New York, said, “New York City must collect all of the information related to the stimulus spending including drilling down” to the subcontractor level.” Advocates on the national level have also expressed this concern.

Several Working Group members also attended: Citizens Union, Environmental Advocates of New York, Good Jobs New York, NYPIRG and the Urban Justice Center.

Also in attendance at today’s press conference were several Council Members: Eric Gioia Chair of the Oversight and Investigations Committee, who recently proposed a form of “Google government” for all city tax exemptions; Gale Brewer, Chair of the Technology in Government Committee; Daniel Garodnick, Chair of the Planning, Dispositions & Concessions Committee and Robert Jackson Chair of the Education Committee.

The transparency issue seems to be taking hold locally as Council Member Bill deBlasio and Council Member Brewer move forward to create a website called SunlightNYC.gov.

Posted in 1, Clawbacks, Economic Recovery, Financial Crisis, New York, Tax Expenditure Budgets | Leave a Comment »

Millions of Eyeballs on the Recovery Act

February 24, 2009

groundbreakingWith the enactment of the $787 billion American Recovery and Reinvestment Act (ARRA), the federal government has taken an audacious step to stem what appears to be one of the worst recessions in U.S. history. To its credit, the Obama Administration does not see its role as simply turning on the spigot. As the President just warned winter meetings of mayors and governors, he will hold them accountable to not waste funds, and the money flows will be closely monitored. To promote what it says will be the best federal transparency ever, the Administration has launched a website, Recovery.gov, through which it plans to report on ARRA spending.

CARlogoplainborderWhile Obama’s aides will be monitoring the recovery from inside the government, a group of non-profit organizations (including Good Jobs First) is planning to do so from the outside. To make sure the new Administration walks the talk, our new Coalition for an Accountable Recovery is calling for state-of-the-art disclosure of how the stimulus funds are being used and what impact they are having. In its founding statement, the Coalition argues that full transparency is essential in order to determine whether the massive recovery plan is fair and effective.

As we have blogged before, President Obama is a bona fide transparency pioneer, having co-sponsored a 2006 federal law that created the federal spending disclosure site USASpending.gov. Since taking office, he has issued executive orders to reverse Bush-era secrecy practices. Given the Obama Administration’s apparent passion for openness, the Coalition’s aim is to work with federal officials on the details of its implementation. Next week, the Coalition will provide initial written suggestions to the Office of Management and Budget (OMB), which is coordinating Recovery.gov, with more detailed recommendations planned soon. OMB’s initial guidance to federal agencies about the website can be found here.

The Coalition is being co-chaired by OMB Watch, a long-time monitor of federal budget and regulatory policy which created a website that provided the framework for USASpending, and Good Jobs First, where we have long tracked and promoted best practices in state government transparency on economic development subsidies. Among the other members are: Common Cause, National Institute on Money in State Politics, Partnership for Working Families, Project On Government Oversight, Progressive States Network, Sunlight Foundation and U.S. PIRG.

One of our key aims is to see that the stimulus disclosure goes deep enough. This means, for example, reporting not only on which companies receive ARRA-funded contracts from state governments, but also on their subcontractors. “That’s where the rubber hits the road, and that’s where I see a gap right now,” OMB Watch Executive Director Gary Bass told the National Journal.

My Good Jobs First colleague Greg LeRoy told the Journal that the recovery disclosure system could help resolve the maddening “Tower of Babel” situation we have today in the way states report their spending. Uniformity would encourage greater use of the system, or as LeRoy put it: “We want millions of eyeballs on that money.”

Posted in Disclosure, Economic Recovery | 2 Comments »

Money for Nothing

February 24, 2009

Money for NothingThe West Virginia Center on Budget & Policy has just released a new report examining how state agencies can improve their bang for the buck on job-creation investments. The report, entitled “Money for Nothing: Do Business Subsides Create Jobs or Leave Workers in Dire Straits?,” focuses on the three of the most common subsidies with job-creation requirements: the Economic Opportunity Tax Credit, the Manufacturing Investment Tax Credit, and the West Virginia Economic Development Authority’s (WVEDA) low-interest direct loans.

Despite spending millions of dollars annually to encourage private businesses to create good-paying jobs, the report concludes West Virginia is getting little in return. The authors recommend better public disclosure on the details of each program, timely and company-specific information on the number and quality of jobs created, clear consequences for non-compliant subsidy recipients, and an annual unified development budget to keep state agencies better informed.

Posted in Clawbacks, Disclosure, Job Quality Standards, Tax Expenditure Budgets | Leave a Comment »

SunCal Shines No Light on New Mexico Lobbying Expenditures

February 23, 2009

tidd-abq-outlineAlthough SunCal has spent huge sums of cash attempting to influence New Mexico’s residents and state legislators over the past three years, the goliath developer doesn’t appear very diligent when it comes to complying with state lobbying law.

SunCal’s latest request of the state’s taxpayers is $690 million worth of tax increment development district (TIDD) bonds to develop a 55,000 acre tract of land to the west of Albuquerque. The measure was shot down last year, but bills have resurfaced this year in both the state house and senate.

A complaint filed by Albuquerque resident Lora Lucero last week accused SunCal of failing to comply with the state Lobbyist Regulation Act. SunCal has mounted a massive public relations campaign, using billboards, radio spots, and internet advertising (“TIDDs Keep Our Families Together!”) in an attempt to sway public opinion on the public bonding capacity it has requested from the state.

New Mexico’s Lobbyist Regulation Act requires that all lobbying and related expenses be disclosed to the state within 48 hours of the expenditure. This includes advertising, mailers to constituents concerning legislation and polls conducted concerning legislation. As of the beginning of last week, SunCal had only reported one expense of $196. The noncompliance complaint sparked an onslaught of critical media to which the company responded midweek by filing current expenditures reports with the state. (As of this posting, they have not yet been made available on the Secretary of State’s website.)

Opposition is mounting to the company’s explicitly political methods of procuring public bonds. Real estate developers in New Mexico outspend other lobbies by leaps and bounds. During the 2006 election cycle, the real estate/development industry donated nearly $1.5 million to state politicians’ political campaigns. (Forest City Covington, the development company that pushed to enact the legislation enabling the creation of TIDDs, spent $150,000 alone.)

A SunCal advertisement that was run in the Albuquerque Journal in late 2008 and early 2009

A SunCal advertisement that was run in the Albuquerque Journal in late 2008 and early 2009

SunCal is also encountering criticism in other locales for its insistence on using taxpayers’ money as a business strategy. In Alameda, California, the company is seeking a roughly $700 million subsidy for a proposed development. Public subsidies are rarely granted without generating a little controversy, and to counter this in Alameda, SunCal contacted residents with a telephone survey about a legislative measure that would exempt the company from the city’s growth management plan. Some residents who received the call contend that the survey was designed to disseminate information (a technique sometimes known as a push poll) about the measure in a way that was partial to SunCal’s political and financial objectives.

All of this is surfacing at a time when subsidiaries and affiliates of the company are experiencing a wave of bankruptcies. Fifteen of these bankrupt projects were partnerships with evaporated financial giant, Lehman Brothers. SunCal projects are defaulting on loans, failing to make payments to contractors, and getting slapped with liens, lawsuits, and repossessions in multiple states.

In the context of a tanking residential real estate markets and strapped state and local budgets, betting on a company whose subsidiaries and affiliates are missing payments to their creditors, relying on massive subsidies, and being accused of noncompliance with state lobbying regulations sounds like a poor investment decision, wouldn’t you agree?

Posted in Financial Crisis, Hidden Taxpayer Costs, Smart Growth, Sprawl, Subsidies, Tax Increment Financing, Taxes | 1 Comment »

Public Money for Banks is Déjà Vu in NYC

February 17, 2009

bailoutcover1At a time when the federal government is promising to make its bank bailout more transparent by requiring financial institutions receiving funds from the Troubled Asset Relief Program (TARP) to report what they are doing with the money, New York City should shed more light on the subsidies it has provided to many of these same firms over the past two decades. Before the Bailout of 2008: New York City’s Experience with Tax Giveaways to Financial Giants, a new report by Good Jobs New York, documents the lack of transparency and accountability in New York City’s corporate subsidy deals.

Before the Bailout focuses on six financial firms that have received some of the largest federal payouts under TARP and earlier received subsidy deals worth hundreds of millions of dollars from New York City: American International Group (AIG), Bank of America, Bear Stearns, Citigroup, JPMorgan Chase, and Merrill Lynch.

Good Jobs New York released the report last week at a press conference with New York City Council Members Eric Gioia, David Yassky and Letitia James, and advocacy groups Common Cause/New York and New York Jobs with Justice.

The report documents problems with New York City’s reporting system that make it difficult to discern whether these companies have lived up to the job promises they made in exchange for tax breaks. One of the biggest roadblocks is that the New York City Industrial Development Agency’s Annual Projects Report excludes companies that were initially granted subsidies eight or more years prior, even though many of the companies are still receiving city subsidies. While reporting requirements expire after seven years, most deals last more than twice as long – Bear Stearns’ deal is for fifty years.

From the documentation we have been able to obtain we found that the city’s return on these deals is disappointing: some firms failed to live up to their job-creation promises, others laid people off despite supposedly agreeing to retain or create jobs, and others only reached promised job levels thanks to mergers.

The report details a number of recommendations for making the city’s subsidy deals more transparent and accountable to taxpayers. Among them:

Improve web-based transparency – The current reporting system provides information only for the first eight years of a deal, leaving the public in the dark for the remaining duration of the projects.

Provide full advance disclosure of proposed subsidy contracts – The IDA should post the full text of proposed subsidy contracts online 30 days in advance of the public hearing. Details should include job creation and retention requirements and clawback (money back guarantee) provisions.

Implement job quality standards – Subsidized firms should guarantee all employees earn a living wage and have health benefits. This requirement – that companies receiving subsidies adhere to job quality standards – already exists in numerous states and municipalities across the country.

Strictly enforce job-creation requirements – Any new subsidy contracts must eliminate the possibility of a firm laying off workers while still claiming tax breaks.

Whether federal or local funds are involved, the public deserves to know how banks are using taxpayer dollars.


Posted in Disclosure, Financial Crisis, New York | Leave a Comment »

Green Jobs are Not Always Good Jobs

February 3, 2009

greencoversmallerAs the federal government prepares to spend billions of dollars promoting the creation of green jobs as part of the huge economy recovery bill, a new report warns that the jobs already being created in climate-friendly sectors of the economy do not always measure up in terms of wages and other terms of employment. The report, entitled High Road or Low Road: Job Quality in the New Green Economy, was produced by Good Jobs First (yours truly was the principal author). It was commissioned by the Change to Win labor federation, the Sierra Club, and the Teamsters and Laborers unions.

Many proponents of green development assume that the result will be good jobs. The report tested that assumption and found that it is not always valid. This is based on an examination of three sectors: manufacturing of components for wind and solar energy generation; green building; and recycling. In each sector, we found examples of employers that compensate their workers decently and treat them with respect. These include the Gamesa wind equipment manufacturing operations in Pennsylvania; developer Gerding Edlen’s commercial and residential construction projects centered in Portland, Oregon; and Norcal Waste Systems’ Recycle Central operation in San Francisco.

Yet we also found examples of purportedly green employers paying substandard wages and not treating their workers well. These include at least two wind energy manufacturing plants—one run by Clipper Windpower in Iowa and another run by DMI Industries in North Dakota—where workers initiated union organizing drives in response to issues such as poor safety conditions and then faced strong union-busting campaigns by management. Some U.S. wind and solar manufacturing firms are weakening the job security of their workers by opening parallel plants in foreign low-wage havens such as China, Mexico and Malaysia.

The report finds that many wind and solar manufacturing plants are receiving sizeable economic development subsidies from state and local governments. This use of taxpayer money provides an opportunity to raise wages and other working conditions. Many states and localities already apply job quality standards to companies receiving job subsidies or public contracts. In the report we urge wider and more aggressive use of such standards by federal as well as state and local agencies. The report offers other public policy options and urges the private U.S. Green Building Council to consider adding labor criteria to its widely used LEED standards for green construction.

The overall message is: green jobs are not automatically good jobs. We have to make them so.

Note: This item is crossposted on our sister blog Dirt Diggers Digest.

Posted in Green Jobs | 2 Comments »