Thursday, April 03, 2014

The wheel turns: new EDC chairman says tax incentives no longer needed to lure companies

The New York Times reports today:
The mayor on Thursday plans to name Michael Schlein, a close friend with deep ties to Wall Street, as chairman of the Economic Development Corporation, the powerful nonprofit arm of City Hall that frequently negotiates with corporate giants on issues like real estate and public subsidies.
...The Economic Development Corporation brought ferries to the East River and persuaded Cornell University to build a campus on Roosevelt Island. But it also earned critics in the Bloomberg years for offering public subsidies to companies like JetBlue and FreshDirect that had threatened to leave the city.
In an interview, Mr. Schlein said he would take a more measured approach on the question of corporate subsidies, saying the city was now “in a position of relative strength.”
“I think we no longer need to use tax incentives to get companies and people to come to New York City,” he said. “New York City is a magnet for talent and employees, and I completely agree with Mayor de Blasio’s view that we need to be more prudent in how we use that tool.”
2004: "winning the competition"?

Let's recall what then-EDC head Andrew Alper told a City Council committee in May 2004 regarding Atlantic Yards:
We are studying the project economics from the public/private sector's respective... to ensure that each party's contributions are in proportion to the returns they expect to receive. 
...We strongly believe that the project's benefits far outweigh the costs. Just think how far Brooklyn has come that a major professional sports franchise could in the not- too-distant future play its home games in an arena designed by one of the world's great architects, Frank Gehry. We should all be proud that Brooklyn has become a place that can win in the competition for residents, businesses and workers.
Of course, Brooklyn wasn't winning the competition so much as offering a very attractive alternative to the New Jersey Nets' current suburban arena, offering mass transit access, a home in the nation's media capital, and a new arena larded with suites and sponsorships. 

"In a position of relative strength"

So the city was already, as Schlein would put it, "in a position of relative strength."

The New York Times's editorial page, for a while, recognized it. Remember the newspaper's stance in a 3/27/05 editorial headlined A Triple Play for New York Teams:
But the city and state are each supposed to contribute $100 million to build streets and sidewalks and prepare the site for development. That's unnecessary: Mr. Ratner should pay his own way.
That position was forgotten in all subsequent editorials, even as that subsidy was more than doubled, to $205 million, according to Forest City Ratner. (The city says it was worth about $179 million.)

Referring as well to the Jets in Manhattan and the Yankees in the Bronx, the Times in 2005 concluded:
But major professional sports teams just don't need the assistance. Government officials should be negotiating from positions of power, instead of standing ready to give away the store when professional teams bat an eye in New York's direction.

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