Volume 18 • Issue 13 | August 19 - 25, 2005

Goldman deal almost sealed without new public benefits

By Ronda Kaysen

City and state officials are close to sealing a deal with Goldman Sachs offering the investment bank more than $1.75 billion in incentives to build their new headquarters across from the World Trade Center. The offer — paid for with public funds — includes no additional amenities for a residential community that will have little access to the 740-foot tower.

Goldman Sachs bowed out of plans to build its $2.4 billion headquarters in Battery Park City last April, citing security concerns related to a proposed West St. tunnel that would have emptied out at the building’s doorstep and to a Freedom Tower design vulnerable to attack.

In the original agreement, the investment bank had agreed to provide $3.5 million for a new library — the first library for the 9,000-resident neighborhood — to be built at Site 16/17, a nearby Battery Park City development. Goldman had also pledged $1 million for a new community center in Tribeca, a plaza, reservation-only access to a conference room and a civic facility fee.

The new agreement comes after months of negotiations and includes $1.65 billion in triple tax-free Liberty Bonds — $650 million more than the offer made last September — and about $150 million in new city and state tax credits. In all, Goldman Sachs will probably save $100 million in interest costs over 30 years from the Liberty Bonds, according to the Independent Budget Office, a nonpartisan group.

The original amenities remain intact in the new agreement and the details of the civic facilities fee — a Battery Park City Authority fee required of B.P.C. leaseholders — have been worked out. Goldman will pay about $900,000 a year at the outset to the authority. The total fee will come to $155 million over the course of its lease, which expires in 2069, and be used for parks and public facilities.

Community amenities were never discussed during the negotiations, despite a near doubling of public financing for the project and community representatives were absent from the discussions, according to several sources close to the negotiations.

“It’s clear that Goldman got an increased incentive package, but they’re not going to increase amenities and they made that very, very clear,” said Julie Menin, chairperson of Community Board 1, which represents the Battery Park City community. “I was certainly disappointed that they were not willing to reconsider that, but they were not.”

City and state officials agree that community benefits were never up for discussion with each side looking to the other for responsibility. At a Wednesday morning ribbon cutting for a new residential development in B.P.C., Governor George Pataki directed questions about amenities to B.P.C.A., which negotiated for the community in the original deal. Pataki appoints all three members to the Battery Park City Authority board.

B.P.C.A., in turn, directed questions back to the city and state. “There was no additional discussion of the public amenities,” James Cavanaugh, chief operating officer of B.P.C.A., told Downtown Express, adding that it was the city and state’s responsibility — not the B.P.C.A., a city and state agency — to negotiate details in the new incentive package. “We had already negotiated the public amenities that the community wanted.”

Goldman Sachs declined to comment on the negotiations.

A lease agreement had not been reached with the authority by press time, although Cavanaugh indicated on Wednesday that the price for the land lease — $161 million — had not changed. An emergency B.P.C.A. board meeting was cancelled on Tuesday and authority officials have declined to elaborate as to why the agreement was delayed and when it might be approved.

Political leaders hail Goldman’s return as a boon to the troubled W.T.C. redevelopment, which has been floundering since last spring. Goldman’s renewed interest is a signal to investors and other businesses that redevelopment is back on track and the Financial District, which recently slipped from its place as the nation’s third largest business district to its fourth, is still a place to invest.

However, the concerns the neighborhood has expressed since last September have never been resolved and remain unresolved in the new agreement. The 2.1-million sq. ft. office tower is completely cut off from public access because of high security, rendering the lobby inaccessible to residents crossing the neighborhood. Residents also worry that black cars crossing the bike and pedestrian pathway to drop off and pick up Goldman clients and employees will make the pathway, which runs along West St., unsafe for cyclists and pedestrians.

The bike path will not be narrowed, said Chris Martin, a spokesperson for the Hudson River Park Trust, which operates the pathway, despite reports by the New York Times, which broke the story.

The negotiation process has been marked by secrecy at every level, with community members wondering how the authority can declare it had met the community’s needs when the community had no voice in the revised negotiations.

“I have no idea what transpired. It was never made clear, ever,” said Tom Goodkind, a B.P.C. resident and C.B. 1 member. “The communication was very poor on this negotiation, very poor. I don’t know who was at the table. I don’t know what was offered, what was exchanged. These are our most valuable assets and I don’t know who did it and what transpired.”

No documents have been released regarding the details of the agreement and the Liberty Development Corporation board meeting where the board approved the $1.65 billion in Liberty Bonds on Monday went with little notice by the press and public, although a media advisory was released and an announcement was posted in the Empire State Development Corporation’s office, according to Deborah Wetzel, a spokesperson for the E.S.D.C.

“How dare they approve this project and not give anything to the public,” said Bettina Damiani, director of Good Jobs New York, a civic group, adding that she was unaware of the board meeting. “This amount of money and this amount of secrecy is really quite unprecedented.”

A public hearing regarding the Liberty Bonds will be held on Sept. 7 and relevant documents will be released the day before. “I don’t know anybody that can analyze a $1.6 billion finance package and prepare and give testimony about it the next day,” said Damiani. “They’re negotiating with our tax dollars and our foregone resources. How we don’t have the most preliminary information about these projects is shameful.”

Goldman’s return to the fold has been hailed a victory for Downtown’s redevelopment by Democratic and Republican leaders alike, both sides insisting the business, jobs and cache the new headquarters — at the corner of West and Murray Sts. —will bring is benefit enough for the community located across the street from the W.T.C.

“From the standpoint of making sure that Lower Manhattan stays the financial capital of the world, having Goldman Sachs commit to having its global headquarters right across the street from the scene of those attacks was absolutely essential,” Governor Pataki told reporters at the ribbon cutting. “It’s going to mean Lower Manhattan will be the financial center of the world. It’s going to mean thousands more jobs in Lower Manhattan.”

The new deal guarantees that Goldman will bring more than 8,000 jobs Downtown.

New York State Assembly Speaker Sheldon Silver, who represents part of the Battery Park City community, has taken strides to ensure that the remaining $3.3 billion in Liberty Bonds be reserved for Downtown. Goldman’s return “will have a long-term positive impact on the community,” said Jim Quent a spokesperson for the speaker.

City Comptroller William C. Thompson, Jr., who must also approve the deal, came out in favor of the agreement on Wednesday, clearing another obstacle in the hasty process. “This agreement strengthens the hope of renewal and job stability for Lower Manhattan and will benefit the entire city for years to come,” Thompson said in a statement.

With Goldman now claiming $1.65 billion of the remaining Liberty Bonds, the pot of bonds is quickly running dry, making it unclear how Larry Silverstein, who owns the W.T.C., will fund his remaining projects. Silverstein was expecting $3.5 billion in Liberty Bonds to supplement his $4.5 billion in insurance proceeds to finance the rest of the build out, is now looking to government officials to allocate additional bonds, sources close to the redevelopment told Downtown Express. The federal government released $8 billion in Liberty Bonds to help New York recover from 9/11.

Supporters, however, insist the benefits of Goldman’s return will outweigh any setbacks Silverstein might suffer from the loss of bonds. Seven W.T.C., the first building Silverstein completed in the redevelopment, has languished largely unrented since construction began, even with a recent incentive package from the state legislature. Goldman, however, might create a sudden surge of interest from businesses wary of a waffling Downtown.

“The value to Silverstein of having Goldman go forward immediately with this $2.4 billion investment is far greater than any Liberty Bond,” said Kathryn Wylde, president and C.E.O. of the Partnership for New York City, a business leadership organization. “The success of the Trade Center will be driven, more than anything else, by this kind of high quality private sector commitment to bring 9,000 people to the Trade Center.”

The local residents who stand to directly benefit from Goldman’s original $4.5 million financial commitment to the neighborhood are lining up behind Goldman’s supporters.

“I’m optimistic for Manhattan Youth but also for Downtown,” Bob Townley, executive director of Manhattan Youth, the community organization that will steer the Tribeca community center partially funded with $1 million from the Goldman Sachs deal. The return of a major financial player to the Downtown community, he said, is more than a harbinger of good things to come, “it’s old fashioned Downtown.”



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