Wednesday, December 13, 2006

Cut 270,000 square feet of office space, lose $456 million?

I asked the Empire State Development Corporation today for an explanation of the drastically revised fiscal impact for the Atlantic Yards project.

(Why didn't I ask yesterday? Because I didn't discover the change until the evening, and I wanted to get the numbers out there for discussion.)

I asked if there were a memo that explained it, like the one issued in October, but got this response, in full:
The project has been scaled down by 8 percent for both residential and commercial space. The commercial reduction affects tax revenues more than residential reductions because commercial generates more direct jobs. We estimate that for every 300 sq ft. in commercial space there is 1 direct job.

The job multiplier for residential building management and support services is 1.26. This means that 1 direct job in these activities supports an additional 0.26 indirect and induced jobs in the rest of the economy.

By comparison, employment multipliers for the commercial side of the project go from about 2.93 (insurance activities) to 3.28 (securities and investment activities). Internet services and data processing has a multiplier of 1.98. This means that for every direct job in these businesses and additional 1.93, 2.28, and 0.98 indirect and induced jobs, respectively, is supported in the rest of the economy.


Does it make sense?

The agency, however, doesn't explain the calculations.

The project has been scaled down by 8 percent in total space, but the percentage of commercial space reduced has been reduced more significantly, by about 44 percent, from 2424 to about 1340 jobs. So that's about 1086 jobs, while the General Project plan now suggests a decline of 2035 jobs in the city. That could include the multipliers mentioned above.

Those calculations make some more sense than the decline in construction jobs/revenues, since the decline in the latter is more than twice as large as the cut in the size of the project.

Still, who would've thought that an 8 percent cut "recommended" by the City Planning Commission meant nearly half a billion dollars less in net revenues? And that no one in government would have pointed it out?

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