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Testimony
of State Senator Liz Krueger before the Empire State
Development Corporation (ESDC) Regarding the Proposed One Bryant Park
Land Use Improvement Project November 20, 2003 Good
afternoon, I am State Senator Liz Krueger and I represent the 26th
Senatorial District, which includes Midtown and the East Side of
Manhattan. I want to thank the ESDC
for allowing me the opportunity to make a statement regarding a number of
concerns that I have with the proposed One Bryant Park Land Use Improvement
Project. This project puts several
issues into the limelight, such as eminent domain proceedings, corporate
subsidies and New York City’s record high commercial vacancy rates. One
primary concern I have regarding this proposal is the use of eminent domain
to acquire properties on the basis that the area is “blighted.” In today’s New York Times, the owners of
two of the lots slated for condemnation took out a full-page ad opposing this
condemnation, and I can certainly understand their objection to the
characterization of their properties as a blight on the neighborhood. I know, as everyone in this room knows,
that Sixth Avenue and 42nd Street is hardly a blighted
neighborhood. I believe the real
reason for this condemnation is a conflation on the part of ESDC of low-rise
development with blight, which is highly questionable. I believe that we must re-evaluate the
usage of eminent domain throughout our City and State, which has increasingly
been used in recent years to the benefit of private corporations. The practice of condemning privately owned
businesses for a corporation’s gain is not only detrimental to existing
businesses, but it raises serious concerns with regard to the original
purposes of eminent domain. Another
concern that I have deals with the system of corporate welfare that has
consumed our city. The misuse of
Liberty Bonds for this project is the most recent example. The Durst Organization and the Bank of
America (BoA) have already obtained preliminary approval for $650 million in
Liberty Bonds, which will cover 65% of the project costs. Considering that the purpose of Liberty
Bonds is to stimulate business throughout New York City, I believe that it is
inappropriate for such a large sum of money to go towards one project. New York City must reassess the
commonplace usage of discretionary funding and subsidies for corporate
retention deals. Time and time again,
New York City has given tax breaks and incentives to corporations, such as
Merrill Lynch, Paine Webber, Chase Manhattan Bank, Citicorp and Viacom, only
to be thanked by mergers and layoffs.
Incidentally, the BoA was in a similar situation in the early 1990’s
when they asked for $12 million in sales-tax abatements in exchange for a
promise to retain 1,700 employees at the World Trade Center. A few years later, the sales-tax deal was
terminated when BoA merged with a west coast bank and laid off 800
employees. With regard to the One
Bryant Park Project, Durst and BoA will be exempt from paying real property
taxes, mortgage recording tax and sales & use taxes from 2008 until
2028. While they will be required to
disburse payment in lieu of taxes (PILOT), New York City will lose out on
millions of dollars in potential tax money.
Many studies have highlighted that this model of corporate welfare and
job retention simply does not work.
An interesting footnote is that BoA recently merged with
FleetBoston. How will this affect the
employees that BoA has promised to retain?
Will this merger result in layoffs to the New York-based employees of
FleetBoston? Will this influx of
FleetBoston employees serve to inflate BoA’s employee numbers, while
ultimately decreasing the total number of employed New Yorkers? And what will happen with all of the
office space that FleetBoston presently utilizes? I
am also concerned because Manhattan presently has unprecedented levels of
vacant office space. While, the
terrorist attacks of September 11th had an obvious impact upon
vacancy rates throughout New York City, vacancy rates had been on the rise
for almost a year before. Between the
third quarters of 2001 and 2002, the vacancy rate shot up by 55%. According to the September 2003 Colliers
Manhattan Office Market Report, the Midtown Class A vacancy rate climbed
to 11%. To put that in real numbers,
figure that there are about 148.5 million square feet of rentable Class A
space in Midtown Manhattan. Over 16
million square feet of that space is presently vacant. With the proposed addition of 2.1 million
square feet of space at One Bryant Park, a million square feet will be added
to that vacancy rate due to BoA’s rental of only half of the available
space. Why are we building more
office space when we cannot fill the space that is already available? One
suggestion that I would like to propose to the ESDC is to put more energy
into creating affordable housing (which we need), rather than commercial
structures in Midtown Manhattan (which we don’t need). Good Jobs New York has put forth an
excellent proposal that would charge commercial developers a fee for the
usage of Liberty Bonds. At present,
housing developers must pay a fee to the City for the privilege of receiving
Liberty Bonds and this money goes into a fund that will be used to build more
affordable housing. This would show
an increased commitment on behalf of the ESDC to address the lack of
affordable housing in New York City. I
would also like to emphasize that while the proposed building will be
violating certain zoning regulations, it is crucial that the building be up
to code for building construction safety standards. One of the critical lessons of 9/11 was that it was not worth
working around the code when people’s lives are potentially in danger. While
this statement raises a number of concerns and criticism, I would like to
commend the Durst Organization for their fierce commitment to “green”
technology. In addition, the public
amenities, such as the urban garden, pedestrian passageways and the
restoration of the Henry Miller Theater will most certainly have a positive
impact upon the Midtown area. Once
again, thank you for the opportunity to testify today. |
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