Learning painful lessons with Liberty Bonds
File it under the law of unintended consequences. When the federal Liberty Bond program was approved early in 2002 it appeared to be one of the shots in the arm Lower Manhattan needed to help it recover economically.
In some ways it was, and we support the proposed extension of the tax-free program from the end of this year to 2009 to ensure that we dont end up with a mostly undeveloped World Trade Center site. Our Republican governor and mayor, George Pataki and Mike Bloomberg, our Congressional delegation, made up mostly of Democrats, and most leaders Downtown all support the extension and with the recent announcement that President Bush favors the extension, Congressional approval would appear to be likely.
As we report in this issue, state and city officials expect that the $1.6 billion of the $8 billion of bonds set aside for residential development is likely to be allocated before the current December deadline. Thats good news for two reasons. One, it is another indication that despite the horrific attack on Lower Manhattan, bankers, developers and residents all think that this is a pretty good place to live and it should only get better with time. Two, it means that bond money that was sucking away the possibility of building acceptable amounts of affordable housing Downtown is now almost all dried up.
An estimated $1.2 billion in lost taxes will be needed to support the Liberty Bonds.
In the necessary rush to pass legislation to help Downtown, Congress unwittingly passed incentives to build less housing for middle and low-income people. Real estate executives now say the Liberty Bond incentives were so good that developers who otherwise might have taken existing incentives to build housing with 20 percent affordable units under the 80-20 program, chose Liberty Bonds and built market-rate in Lower Manhattan, read luxury housing almost entirely.
Pataki, Bloomberg and the Lower Manhattan Development Corp. set aside $50 million to support 300 affordable housing units on Minskoffs lot known as Site 5B at Greenwich and Warren/Murray Streets in Tribeca, just south of P.S. 234. While that project creeps along slowly, if at all, and has neighborhood opposition because the building appears to be too big, luxury apartments are springing up all around Downtown.
Good riddance to residential Liberty Bond money indeed.
As for the office bond money, about $1.8 billion of the $6.4 billion available has either received preliminary or final approval. All of the remaining money should be spent Downtown. Developers like Bruce Ratner, and his client, The New York Times, should not be allowed to use money intended to help the city recover from 9/11 in Midtown, for the New York Times new office tower is miles away from the W.T.C. Ratners Liberty Bond application should be denied along with any others too far afield. The Times cant pretend that they are not involved. The paper has hired Ratner and it cant absolve itself of responsibility for the actions of its developer/contractor.
Spend the rest of the money wisely in Lower Manhattan where it belongs. If the commercial lots at the W.T.C. site remain undeveloped for more than a decade, would anyone suggest that it didnt symbolize a success for Al Qaeda?