Wednesday, November 02, 2011

Wanting to ensure "we get the most out of every economic development dollar," de Blasio calls for more transparency and "the subsidy cost per job" (what about AY?)

“We have an unemployment crisis in this city that demands we get the most out of every economic development dollar," says Public Advocate Bill de Blasio, so he wants to make sure there's more transparency regarding projects funded by the New York City Economic Development Corporation (NYC EDC).

De Blasio said in a press release:
The new legislation to be introduced by Public Advocate de Blasio in the City Council would require EDC to report for each project site:
  • The number of jobs prior to receiving subsidies;
  • The projected number of jobs when subsidies end;
  • The current number of jobs; and
  • The subsidy cost per job.
The legislation is the first in a series of reforms to be proposed by the Public Advocate this month to spur job creation and expand opportunity for the middle class.
That's surely a worthy goal, but de Blasio is not exactly consistent, having not said a word about the failure to monitor the Atlantic Yards Community Benefits Agreement.

How many jobs have been created by Atlantic Yards subsidies, and at what cost?

Leveraging the IBO

As the Wall Street Journal reported yesterday, in Bill Focuses on Cost of Keeping Firms in City, the Public Advocate provided--um, leaked--a report that was to be released Tuesday by the New York City Independent Budget Office.

The IBO Fiscal Brief, Tracking the City’s Discretionary Economic Development Deal, analyzed 17 years of NYC EDC reports, but said they "do not allow us to produce credible estimates of the costs to the city of different projects or their effectiveness in creating or retaining jobs."

The Journal reported:
Some would like to see even more transparency. The EDC should do further analysis on whether subsides are even needed in the first place to lure or retain specific companies, said James Parrott, chief economist of the left-leaning Fiscal Policy Institute, a think tank.
"We don't really have the info needed to know whether the subsidies are necessary," Mr. Parrott said.
Parrott said in de Blasio's press release:
“This is an important step in clearly understanding City investments to spur job creation and economic growth. The public needs much better information on how the City subsidizes economic development and reliable data on the number and quality of the jobs being subsidized,” said James Parrott, Deputy Director and Chief Economist at the Fiscal Policy Institute. “The IBO wasn't able to assess whether city subsidies make any difference because the public doesn't have the information needed to make that determination.”
A NYC EDC spokesman told the newspaper:
"We fully enforce all reporting requirements, which include the change in number of jobs at a project site, projected employment growth and the amount of benefits a company has received to date."
However, de Blasio's press release seems to contradict that:
The law does not require EDC to disclose project site-specific employment data, making it difficult to gauge the effectiveness of subsidies, particularly for larger companies that employ workers at more than one site in the five boroughs.
The changing pattern and the Ratner angle

The report does not mention Atlantic Yards, for which the city--via the associated NYC EDC, a private agency contracted by the city and controlled by the mayor--provided a reported (by Forest City Ratner!) $205 million but then dialed back the total somewhat.

But it does mention Forest City Ratner's MetroTech project:
Changes in the Borough of Projects. The industries accounting for most of the larger projects—finance and information—are concentrated in Manhattan. As a result, Manhattan projects accounted for the lion’s share of new projects’ value each year for over a decade—in almost all but the earliest and latest years covered by the LL69/48 data. Prior to 1993, Brooklyn and/or Queens, or both, accounted for most of the value of projects being initiated each year. For example, with the initiation of projects benefitting Chase Manhattan Bank in Metrotech Center, 79.8 percent of new project value in 1990 was in Brooklyn. The following year, the start of a large project for American Airlines led Queens to account for 77.4 percent of new project value. Turning to the last few years, with the start of the two stadium projects, the Bronx and Queens together accounted for 74.9 percent of the value of projects begun in 2007. In 2008 through 2010 there were no new large-scale projects for finance or information firms, and the value of nearly all new projects comes from projects outside of Manhattan.

...Rather, Brooklyn projects accounted for 56.1 percent of the total value of Koch Administration projects, mainly because of large-scale projects for Chase Manhattan and Forest City (a real estate development company that developed Metrotech) in downtown Brooklyn.
In the Times

The Times's City Room coverage had the lame headline In Doling Out Economic Incentives, Bloomberg Looks Outside Manhattan, which was undermined by the text, which pointed to the more important issue of legitimacy:
Fewer than half of the projects – measured by their total value – have been in Manhattan during Mr. Bloomberg’s time in office, compared with almost three-fourths of the total under Mr. Giuliani and Mr. Dinkins, the report found.

And fewer than one-fifth of the economic incentives went to the finance and information industries under the Bloomberg administration, compared with about two-thirds under each of the two previous mayors.

But Bettina Damiani, who scrutinizes the city’s corporate incentives at Good Jobs New York, said that much of that shift was attributable to the generous deals the city gave to the owners of the Yankees and the Mets to build stadiums in the Bronx and Queens.

“The stadium stuff was such a blatant misuse of resources and did so little to address the unemployment crisis of the people in the Bronx,” Ms. Damiani said, referring to the Yankee Stadium incentives. “Subsidizing projects without a guarantee that it’s going to help low-income people is, to me, a problem.”
A Reuters article was headlined NYC firms got $898 million of aid but job data slim.

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