View Full Version : Will the City Get All of Promised 9/11 Aid?

October 6th, 2003, 01:24 AM
October 6, 2003

Report Fuels Fear That City Won't Get All of Promised 9/11 Aid


New York officials have long worried that the city will get billions of dollars less in federal aid to rebuild Lower Manhattan than the $21.4 billion President Bush promised after the 2001 terrorist attack on the World Trade Center.

Although the White House, Gov. George E. Pataki and Mayor Michael R. Bloomberg have dismissed those concerns, a new report by the General Accounting Office is helping to increase them.

The report, which will be released this week, says no information is being collected to determine whether many of the tax benefits that account for a quarter of the entire federal aid package are being used. In essence, the report says, the city may never know how much of the $5 billion in so-called Liberty Zone tax benefits are ever used.

For the most part, the report says, the Internal Revenue Service does not collect or report information about the use of six of the seven tax benefits.

There is a growing consensus among state and city officials that the tax benefits are worth far less than the $5 billion federal officials originally estimated.

"It's disturbing," said Representative Carolyn B. Maloney of Manhattan. "They're not going to have any records of how much was spent, or the value of what we've gotten. New York deserves to get the full $21.4 billion it was promised."

The report comes as state and city officials are scrambling to gather the financing necessary for a variety of rebuilding projects downtown.

Ms. Maloney and Representative Charles B. Rangel had asked the General Accounting Office to assess how much of the Liberty Zone tax benefits would be used.

Last month, Ms. Maloney and Gifford Miller, the City Council speaker, warned that New York would receive at least $2 billion less than what President Bush had promised in March 2002. Separately, City Comptroller William C. Thompson issued a report saying that the city was in danger of losing even more money, $3.7 billion in federal aid.

The actual value of the Liberty Zone tax benefits had already been called into question by a 2002 report for the Bloomberg administration by the accounting firm of PriceWaterhouseCoopers. It estimated that the tax benefits were worth less than $3.8 billion, not the $5.029 billion projected by federal officials.

There are seven different Liberty Zone tax benefits, including tax-free financing for commercial and residential projects, a special depreciation allowance for property downtown and an increase in the maximum allowable deduction for certain kinds of property improvements.

The accounting office report finds that the Internal Revenue Service is collecting information concerning one benefit — business employee tax credits — but does not plan to report the value of the total claims. The I.R.S. does not collect or report information concerning the other six benefits.

The I.R.S. indicated, according to the report, that it would have to change its forms and computer programming to gather the information.

Many state and city officials, however, have concluded that most of the tax credits "don't really help us rebuild Lower Manhattan," said Deputy Mayor Daniel L. Doctoroff. Still, there are sharp disagreements over what to do next.

City and state officials are talking about making changes to the largest single tax benefit, Liberty Bonds, which provide tax-free financing intended to encourage as much as $8 billion in residential and commercial construction projects. The federal government estimates that it would forgo about $1.2 billion in taxes if all the bonds are used.

The bonds expire at the end of 2004, and the demand for commercial projects in Lower Manhattan has been weak, because of the high vacancy rate. State and city officials are circulating a proposed letter that would call on Congress to extend the life of the bonds, at least through 2009.

The Bloomberg administration also wants to increase the amount of bonds that could be used for residential projects downtown. A total of 19 residential developments, with nearly 7,000 apartments, have requested or received approval for a combined $2.3 billion in Liberty Bonds. In contrast, only seven commercial buildings have received at least preliminary approval, the largest of which is in Midtown: $650 million in bonds for the Bank of America office tower on 42nd Street.

"Right now, there is no demand for commercial in Lower Manhattan," Mr. Doctoroff said. "It's almost all coming from residential."

Some downtown landlords and officials involved in the rebuilding effort prefer to use the bonds for commercial buildings that would strengthen Lower Manhattan's position as the third-largest business district in the country. John Whitehead, chairman of the Lower Manhattan Development Corporation, has also opposed the city's effort to use Liberty Bonds for projects outside the downtown area.

Similar tensions have emerged over Mr. Doctoroff's suggestion that the city and state consider exchanging many of the other tax benefits in the federal aid package for cash, which could be used for transportation projects that would link downtown with the city's airports and Long Island.

At the same time, the Bloomberg administration has talked about using $1.2 billion in federal funds now controlled by the Lower Manhattan Development Corporation for downtown projects outside the trade center site, like the redevelopment of the East River waterfront.

"It's the only flexible pool of capital for Lower Manhattan," Mr. Doctoroff said. "There are a lot of things that could be invested in today to create a true sense of momentum."

Rebuilding officials say that neither Congress nor the White House will convert the tax credits to cash. "It's a dead issue," one official said.

Some officials involved in the rebuilding effort, large downtown landlords like Brookfield Financial Properties, and the Alliance for Downtown New York say that it is far more important to use the $1.2 billion at Lower Manhattan Development Corporation for a rail link to Kennedy Airport and Long Island, which they say is critical to the future of the downtown business district.

Copyright 2003 The New York Times Company

April 9th, 2004, 01:56 AM
April 9, 2004

City May Bear $350 Million in 9/11 Claims


New York City may be liable for up to $350 million in medical claims as a result of a tangle with the federal government over who is responsible for the claims of workers who cleaned up the World Trade Center site.

The dispute focuses on a federal program that would provide $1 billion in liability coverage to New York City and the four construction companies whose workers toiled at the site. They could not get coverage because commercial insurance companies had refused to issue such policies, contending that the financial risk there was too great.

The Bloomberg administration and the four contracting companies that led work at the site, as well as the lawmakers who drafted the legislation to create the unusual program, believe that the $1 billion covers all claims from injuries incurred on the site, without any exceptions or deductibles. That $1 billion was part of a $21.5 billion aid package that President Bush outlined to help the city rebuild after the Sept. 11 terrorist attack.

But officials with the Federal Emergency Management Agency, looking at another federal law, have suggested that the city and contractors may first have to pay hundreds of millions of dollars in claims before the federal program kicks in, infuriating Mayor Michael R. Bloomberg and some members of the New York Congressional delegation.

"This is FEMA going back and tying the law into a pretzel as to not fulfill their obligation," said Charles E. Schumer, New York's senior senator.

The potential $350 million liability would represent a huge, unexpected cost to the city, even though the payout would probably occur over several years. By comparison, the bill for the mayor's proposed property tax rebate this year would be $250 million.

Late last month, Mr. Bloomberg sent a letter to Secretary Tom Ridge of the Department of Homeland Security expressing his concern over the issue, saying, "Why, I ask, should those who responded to the nation's call on Sept. 11 be forced to pay vast sums of money as their 'reward' for doing the right thing?"

Representatives from the Bloomberg administration, the four contracting companies involved - Tully, AMEC, Bovis and Turner - and the state government plan to meet on Monday with officials from the emergency management agency to discuss the matter. "We take the same position as the city," said Mary Costello, a spokeswoman for Bovis.

This is not the first time that the city has been in a dispute over federal money promised in response to the attack. Mayor Bloomberg has consistently criticized the federal formula used to distribute antiterrorism money to states, contending that New York is not receiving a share that reflects its high risk as a terrorist target. A year ago, Bloomberg officials got into a scrape with the Pataki administration over what percentage of the state's antiterrorism money ought to go into state, rather than local, coffers.

The city and contracting companies anticipate millions of dollars in lawsuits from workers who removed debris from the site after the attack, with claims that include broken legs, long-term respiratory illnesses and psychological distress. So far, 2,357 claims have been filed against the city. The anticipated limit on insurance would result in the city paying as much as $350 million in claims, Bloomberg administration officials said.

A FEMA spokeswoman, Lea Anne McBride, said the federal government would go to great lengths to recognize the dangers faced by workers who removed the debris, and their commitment to work anyway without insurance coverage. "We have been looking at Congressional intent," she said.

Officials at the agency have looked to the city's own defense in a recent court case tied to earlier Congressional legislation meant to protect airlines and the city from lawsuits related to the attacks.

In that case, 1,200 rescue workers who claimed to have suffered severe respiratory injuries from breathing toxic substances at the site charged that the city had failed to provide them with proper respiratory masks. But citing the law that limits the liability of airlines and New York City against claims related to the rescue effort, a federal court found that to the extent those injuries occurred after Sept. 29, they would not be covered by that act.

What FEMA officials have suggested, Bloomberg officials said, is that if Sept. 29 marks the end of the rescue effort, it also marks the official beginning of the cleanup effort. According to that reasoning, the city should contribute payments for claims made for injuries suffered as a result of cleaning debris from the site before Sept. 29.

But the Bloomberg administration, contending that debris cleanup began the day after the terrorist attack, disagrees. It argues further that the legislation was written without any limitations or caps.

"What they are saying is despite what Congress unequivocally said and the president's promise, the city will still have to pay up to $350 million for debris removal,'' said Michael A. Cardozo, the city's corporation counsel. "The author of the statute has said there is no basis for this interpretation. I am very confident as a lawyer that if we had to go to court to defend our rights, we would win hands down. We hope on Monday when we meet with FEMA they will be convinced."

Copyright 2004 The New York Times Company

April 13th, 2004, 06:28 AM
April 13, 2004

New York and FEMA End Dispute Over 9/11 Medical Claims


New York will not be held liable for up to $350 million in medical claims arising from the cleanup of the World Trade Center site, since city and federal officials said yesterday that they had resolved a dispute over the matter.

The Federal Emergency Management Agency said it would abandon a narrow legal interpretation that would have limited insurance coverage to injuries that occurred after Sept. 29, 2001, when rescue work at the site officially ended.

Previously, the agency had indicated that claims related to work between Sept. 11 and Sept. 29 were not technically cleanup-related, and therefore could be considered ineligible under a $1 billion liability insurance fund created by Congress to protect companies involved in the work, city officials said. But after meeting yesterday with city and state officials, as well as representatives of the contracting companies, FEMA backed off from that position.

"The city and contractors will have full insurance coverage for debris removal claims arising from Sept. 11, forward," Mike Brown, an undersecretary of the Department of Homeland Security, said after the meeting.

The decision was hailed by Mayor Michael R. Bloomberg, who complained last month to the homeland security secretary, Tom Ridge, that the federal government's stance exposed the city to huge potential losses. More than 2,300 claims have been filed so far against the city for injuries related to work at the trade center site.

In a statement, the mayor credited the Bush administration for "working toward a constructive resolution to a difficult issue."

"President Bush has been there for us since Sept. 11," Mr. Bloomberg said, "and this is another example of his continuing support for New York City."

Senator Charles E. Schumer also had kind words for the president. But Mr. Schumer expressed irritation that the controversy had arisen in the first place, saying that Congress never intended to place limits on insurance coverage for cleanup work at the site.

"There was never even a whisper that the city would have to pay $350 million," he said. "I'm pleased that the administration has kept their word. It never should have happened to begin with, but all's well that ends well."

The $1 billion insurance program, which Mr. Schumer and other members of Congress said was to cover all claims of injuries at the site without deductibles or exceptions, was part of a $21.5 billion federal aid package to help New York recover from the Sept. 11 attacks.

While satisfied with the outcome of the dispute with FEMA, the Bloomberg administration has continued to complain that New York City in general is coming up short in the allocation of federal funds for antiterrorism efforts, particularly given the high concentration of potential targets in the city.

Copyright 2004 The New York Times Company

June 8th, 2004, 09:15 AM
Bush to New York: Here's Your $20 Million—Now Drop Dead (http://www.newyorkmetro.com/nymetro/news/politics/national/features/9268)
What the soon-to-be-home of the Republican National Convention is not getting from the Republicans.

TLOZ Link5
June 10th, 2004, 02:07 PM
That article enraged me. But the shortchanging of the City been happening for years and I'm also vexed by the fact that Bloomberg has been backing down as of late. He had better go back on the offensive the day after the convention.

June 28th, 2004, 12:16 AM
Gotham Gazette - http://www.gothamgazette.com/article//20040628/202/1017

Where's Our $21 Billion?

by Carolyn Maloney

June 06, 2004

Several months after September 11, 2001, President George W. Bush detailed $21.4 billion in pledged federal aid to New York City to help rebuild after the attacks on the World Trade Center.

Three years later, New York is still grappling with the serious and lasting impact of the attacks. But because of the Bush administration’s vague accounting, we do not know how much money we have actually received to date. The total amount of money we will eventually receive is also far from clear.

Unfortunately, it is clear that New York State’s own poor decisions have made it even harder for New York City to get what it needs from Washington.


The Bush administration is required by law to produce a full accounting of this 9/11 aid. Why it has failed to do so adequately is extremely difficult for me to understand. Along with members of the New York Congressional delegation, I have urged the administration on seven separate occasions to detail when and where recovery funds have been used and to clarify what has not been sent to New York from the President's initial pledge.

In late May, the White House Office of Management and Budget finally produced an attempted accounting document (http://www.gothamgazette.com/rebuilding_nyc/OMB.pdf), but it can be called an "accounting" of 9/11 aid only by Enron standards. There is inadequate detail on where specific funds went for what purposes. In several instances, we don’t know when, if ever, these funds were used.

The document does not address the $268 million lost to wrongful taxation of 9/11 aid to downtown businesses. It also fails to explain how the administration intends to respond to billions in losses to our region that, at present, remain totally unaddressed. For example, city and state tax revenues lost as a result of 9/11 are estimated at $8.8 billion, for which the federal government has provided no assistance.

Nor does it account for a shortfall of about $2.6 billion in “Liberty Zone” Tax benefits.

“Liberty Zone” tax benefits made up fully one-fourth of the overall aid package, or about $5 billion, earmarked for New York's recovery by President Bush. These were intended to stimulate economic activity in Lower Manhattan. Now, most officials agree that $2.6 billion Liberty Zone benefits will go unused if Congress and the President fail to extend the deadline for when these benefits can be used, or alter how New York City can take advantage of the funds.

Significant gaps in the federal response have made achieving a full economic recovery for New York a serious challenge. From the widest perspective, costs and losses from 9/11 total between $80 billion and $100 billion while federal aid designated for the region remains under $20 billion and insurance payments are estimated to be between $30 billion and $40 billion. This leaves New York alone to shoulder the burden of between $20 billion and $50 billion in losses, in addition to ongoing costs for anti-terrorism security measures, unanticipated long-term health costs from the disaster and increasing costs for rebuilding projects in Lower Manhattan.


The city’s financial problems go beyond those surrounding the president’s $21.4 billion, however. Seeking additional help from Washington is made more difficult by poor decisions on the use of existing funds by New York State.

For instance, rather than using current Liberty Bonds for their intended purpose, to help downtown redevelopment, Governor Pataki's administration is diverting $400 million for a power plant in Queens that is opposed by the community. This, even though Congress has said specifically that "public utility property and residential property located outside [Lower Manhattan] cannot be financed with the bonds."

Because the Governor has left us no choice, I have joined several elected officials in a lawsuit challenging this misuse of the Liberty Bonds. Federal legislators from around the country will be much less likely to support future requests to help New York's recovery if we don't spend existing resources the way they were meant for use by Congress.


Billions of dollars have come in for the redevelopment of the World Trade Center Site and transportation projects throughout New York City. But a significant portion of the pledged funding that we received has only come after a tough fight by the New York congressional delegation. The good news is that after our sustained efforts, there are a number of successes to report:
$90 million for the health screening of sick and injured Ground Zero responders

$80.5 million for New York's school system to make up for lost instructional time resulting from the terrorist attacks

$33 million for the mental health needs of students affected by the disaster

$10 million in federal aid for universities damaged by the attacks

The extensive reform and expansion of Federal Emergency Management Agency's emergency response programs, leading to thousands more New Yorkers made eligible for individual grants and housing assistance after 9/11.
Hopefully, our continued advocacy in Washington for New York's remaining recovery needs will lead to additional successes, but we will need a united front, including the governor and the mayor, to achieve much needed and more positive results.

Congresswoman Carolyn Maloney represents the 14th District in New York, which includes parts of Manhattan and Queens.