Wednesday, April 25, 2007

When $100 Million Isn't Enough

The financial juggernaut JPMorgan Chase is threatening to ditch plans to build a 1.3-million square foot, 50 story building, next to the World Trade Center site. The city has only offered them $100 million is subsidies. They want more:

Chase struck a tentative deal with the Port Authority in late March to pay about $300 million for the development rights at the site of the soon-to-be-demolished Deutsche
building, at Greenwich and Cedar Streets. Chase planned to build a 1.3-million-square-foot tower there and move thousands of employees from Park Avenue to Lower Manhattan, in what was widely regarded as a boon for the beleaguered district.

Officials expected that the move would solidify Lower Manhattan’s place as a world financial center and validate the redevelopment of the World Trade Center site as a commercial complex.

In subsequent negotiations, state and city officials offered the bank the kind of benefit package available to any company moving to ground zero: a combination of tax breaks, cash payments and subsidized electricity benefits worth more than $100 million. But Chase has continually pushed city and state officials for a batch of subsidies akin to what Goldman Sachs got in 2005 to build a headquarters in Battery Park City. Critics described that deal as an egregious example of corporate welfare.

State and city officials have resisted the bank’s demands. They regard the Goldman deal as an aberration. And Mayor Michael R. Bloomberg has said that the city will not grant any special benefits beyond what any other company would get.

“We would hope that Chase recognizes that Lower Manhattan is the financial capital of the world and that they would want to be located here,” said John Gallagher, a spokesman for Mayor Bloomberg. “Because the market in Lower Manhattan is strong and
because Chase will realize more than $100 million with the incentives in place for Lower Manhattan, giving them an additional incentive package at this point would be difficult to justify.”

Joseph Evangelisti, a spokesman for Chase, declined to comment. Last week, Chase reported a 55 percent rise in first-quarter profits.

Sure, this struggling (wink, wink) business obviously needs a helping hand from taxpayers. They want the kind of handout that Goldman-Sachs got:

But after a series of missteps by aides to Gov. George E. Pataki, the state was forced to grant an unusually large subsidy package to ensure that Goldman would build the tower.

Goldman Sachs got incentives worth an estimated $650 million in cash grants, tax-exempt bonds, sales and utility tax breaks and discounts on required payments in lieu of taxes. Since then, Chase, Lehman Brothers and Merrill Lynch have sought similar packages. City and state officials have rebuffed them.

I don't mind making an area an attractive place to do business in, but do we need to pay hundreds of millions of dollars to companies experiencing record profits?