Thursday, October 30, 2008

Deputy Mayor (in Newark): "look for the least necessary insertion of subsidies"

New York Governor David Paterson is looking for federal help to close the state's enormous budget deficit (projected to reach $47 billion by 2011), but he's also warning that no part of the state budget will remain unscathed. The Times reported yesterday:
“Don’t get me wrong, there will be hard and painful cuts,” he said in the address. “There will be no segment of this budget that will not be cut.”


So, if Paterson turns to projects sponsored by the Empire State Development Corporation, how might he set priorities? There has to be a wiser method than that posited by Comptroller William Thompson, who said last week, defending Atlantic Yards, "If those projects made sense two-three years ago, when things were booming, they make sense during slower economies, also."

Setting priorities

Well, last night, Newark Deputy Mayor Stefan Pryor offered some common-sense advice, speaking at a panel in Newark titled The New Newark, Part 1: Maintaining Momentum for Renewal in a Slowing Economy.

He was asked how to set priorities among projects in the city.

His response: "Well, I mentioned the basic construct, which is to look for efficiency, that is to say the least dependency on subsidies. There typically is a pro forma gap in the project, a gap that has to be filled because the construction costs outstrip the potential revenue in the budget line. We want to look for the least necessary insertion of subsidies."

He added, "The other aspect of our construct is community benefits. Will a project deliver jobs for our residents? Will a developer commit to a First Source compact where jobs will go to Newark residents first? Small [and] minority business contracting and green building sustainability are among our criteria. The other thing we're looking for is whether a developer can in fact demonstrate that private sector lenders will commit to the project... And we'll be looking for other factors that will ensure that project will proceed, for example timeline commitments."

Navigating tensions

Well, there is a potential tension between community benefits and subsidies, since a developer obviously could make more promises with a greater subsidy cushion. But Pryor at least suggests that are some rational ways of looking at a project.

With Atlantic Yards, it may be that subsidies already committed can't be touched. But Pryor's formulation certainly suggests a skeptical eye at additional subsidies. And, remember, the timeline commitments for AY are very loose, with six years to build the arena after the exercise of eminent domain and delivery of properties, 12 years to build Phase 1, and no timetable for Phase 2.

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