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Thread: Small Businesses, Big Growth

  1. #1

    Default Small Businesses, Big Growth

    September 4, 2003


    Small Businesses, Big Growth


    CAMBRIDGE, Mass. Believe it or not, the little guys in the so-called outer boroughs could help revive New York City's economy. Small businesses have emerged as a strong growth sector in the city and Mayor Michael R. Bloomberg should find new ways to support them.

    While financial services and other sectors still languish, according to the National Association of Purchasing Management-New York, small businesses, often owned and patronized by immigrants and minorities, have been growing. Leading this expansion are specialty and ethnic-food manufacturers, like the bakeries that produce rolls for high-end restaurants and sausage makers that serve immigrant neighborhoods. Over the last year the number of people these businesses employ grew by almost 8 percent probably more, since many firms go unreported.

    Food producers are only the most visible among many small-scale industries that are thriving and poised to expand. Evidence, albeit fragmentary, suggests there is growth in construction, specialty apparel, medical instruments and luxury consumer goods like jewelry.

    Unfortunately, New York offers few programs aimed at such businesses. To its credit, the city government recently announced it would develop 10 sites in Brooklyn and the Bronx for much-needed industrial space. There are also some tax incentives, like credits for utility bills and waivers for manufacturers trying to develop facilities. Reflecting New York's labyrinthine regulatory environment, the city also offers help dealing with its own agencies, including the departments of sanitation, health and police.

    Most small manufacturers, however, will not use these services. They are too busy running their business, and some may fear that if they contact the government, officials will interfere with their business or workers.

    So what can New York do to reach these business owners? A useful lesson can be found in Los Angeles, where in the early 1990's small manufacturers helped bring some prosperity to urban neighborhoods there.

    After the devastation left by the riots of 1992, Los Angeles and California officials looked to large corporations to revive the city. As head of an ad hoc reconstruction agency, Peter Ueberroth (the former baseball commissioner and current candidate for governor of California) tried to persuade many chief executives to move some operations to the inner city. The oil, aerospace and movie industries were all staggering in the 1990's, however, and Mr. Ueberroth had little success.

    But his successor, Linda Griego, sensed life in the inner city. Ms. Griego, a former chili stand operator and deputy mayor for economic development, commissioned a door-to-door survey of businesses operating in South Central Los Angeles and other forsaken areas.

    To nearly everyone's surprise, inner-city Los Angeles turned out to be an industrial beehive. Its 15,000 companies employed more than 360,000 people mainly immigrants and minorities and generated more than $54 billion in sales annually of everything from tortillas to bicycling outfits. But as in New York most of the proprietors knew little about government programs and sometimes operated outside government rules.

    Ms. Griego, along with the nonprofit Community Development Technologies Center and eventually the city government, adopted an unusual strategy to deal with the mom-and-pop entrepreneurs. They worked directly with the small manufacturers to help them organize trade associations, navigate government regulations and upgrade the skills of their workers. In the end, small manufactures succeeded where large industry failed: they helped rescue the economy of inner-city Los Angeles.

    Of course, Los Angeles is not New York. New York is far larger both in terms of population and the size of its government and it has not relied on industry to drive its economy the way Los Angeles has. But the Bloomberg administration can certainly do more to encourage small-scale manufacturing.

    To begin with, economic development officials must learn about the city's disparate manufacturers and identify the issues they face. Government officials, perhaps in cooperation with a business association or nonprofit group, should undertake a systematic study of small industry in the city mindful of the need for street-by-street canvassing because corporate records and permits may not reveal every business.

    Having identified the most important industries, the city government could help organize trade associations. Since many small-business owners are so intently focused on their company, they are notoriously isolated from one another. Together, manufacturers can overcome their shared problems. Owners of small ethnic-food businesses in Los Angeles, for example, lobbied the state to block a steep hike in inspection fees something they could never have done without banding together.

    New York's government should also go beyond the tax waivers and credits it now provides and actually reduce the taxes on small businesses. This would ensure that costs of operating in New York do not prevent companies from expanding and it would also increase the rate of tax collection because fewer businesses would dodge taxes. Finally, the Bloomberg administration should reduce the bureaucracy and red tape that often make running a legitimate enterprise in New York City a logistical nightmare.

    By taking such steps, Mayor Bloomberg can unleash the energies of small-fry entrepreneurs busily operating in the boroughs and help them revive the economy of New York City.

    Alexander von Hoffman, senior fellow at the Joint Center for Housing Studies at Harvard, is author of "House by House, Block by Block: The Rebirth of America's Urban Neighborhoods."

    Copyright 2003 The New York Times Company

  2. #2


    September 8, 2003

    City Is Told to Abandon Its 'Doomed' Tactics of Encouraging Growth


    Arguing that the industries upon which New York City has depended for its economic well-being have been losing ground and are unlikely to generate many new jobs in future, a new study suggests that New York's longtime approach to economic development is obsolete and must be reconceived.

    The study, financed by the Rockefeller Foundation and written by a nonprofit group called the Center for an Urban Future, says the city should abandon the "doomed strategy" of favoring a few industries like finance an approach the study says has left the city increasingly vulnerable to economic shifts.

    City resources should go instead to improving the climate for small businesses and entrepreneurs, tapping the immigrant population as well as academic and research institutions, and improving basic services so the middle class will not leave the city, according to the study, to be released today.

    "Start small," the report urges. Large firms are decentralizing operations and adding new jobs elsewhere, and New York's future growth will depend on "whether it can restore its entrepreneurial vitality and create a better environment for smaller firms to grow and prosper."

    The recommendations run counter to the city's practice of using tax abatements and real estate development subsidies to keep big companies in New York. That tactic became common in the 1990's as competition among the city, its suburbs and other places intensified.

    Several economists and others who have seen the report said the recommendations were sound. Some said they also seemed consistent with some recent moves by the administration of Mayor Michael R. Bloomberg toward delineating a clear strategy and diversifying the economy.

    "The city has never had a clear economic development strategy," said Kathryn S. Wylde, president of the Partnership for New York City, a business group. "The city's strategy has been real-estate-driven and has been reactive to the threat of corporate move-outs and job losses rather than job creation."

    David Hochman, a consultant with the Technology Partnership Practice at the Battelle Memorial Institute, who worked on a similar report for the city in 2000, said: "It's really only in times of downturn that people get creative, get thoughtful about what needs to be done next. This would be a great road map to start with."

    The deputy mayor for economic development and rebuilding, Daniel L. Doctoroff, said the administration was already doing many things recommended in the new study. For example, it has taken steps to improve the business climate and cultivate business districts far beyond Midtown Manhattan through projects in such places as downtown Flushing, Long Island City, Harlem and the Hub area of the Bronx.

    In addition, he said, the administration has overhauled what is now called the Department of Small Business Services and has taken steps to give immigrant- and minority-owned businesses better access to contracts. The city is opening small-business satellite centers in each borough, offering advice on such things as financing, negotiating the bureaucracy and other aspects of starting and running businesses.

    "We've essentially stopped" the longtime practice of favoring a relatively small number of large companies with tax abatements and subsidies, Mr. Doctoroff said. "We have basically ended the era of corporate welfare, basically paying people to stay."

    The study, based on an analysis of census and economic data and interviews with business leaders, developers, ethnographers, government officials and others, was conducted over the past year by the center, a nonprofit policy institute that examines economic and work force development issues in New York.

    Jonathan Bowles, the group's research director and a writer of the report, said the center was told to take "a real hard look at the city's economy in the post-9/11 world." The aim was to explore in a comprehensive way the long-term economic, demographic and political challenges facing New York.

    Of the city's attitude in the past, Mr. Bowles said: "There was sort of an arrogant policy that we don't need to look at the future because we've already got Wall Street and we're the media capital. What more do we need? As long as we hang on to what we've got, the rest will fall into place."

    The group found that the finance, insurance and real estate industries, which accounted for one in six of all city jobs in 2000, were rapidly losing jobs and market share to other places. New York City accounted for 36 percent of all securities industry jobs in the country in 1987; its share has since dropped to 23 percent, the report says.

    Other important industries, including professional and business services and technology, have trailed the country and the region in job creation. The city accounted for 60 percent of the region's jobs in professional and business services in 1970; by 2000, that was down to 45 percent.

    As large firms everywhere have decentralized, cities like Los Angeles have benefited by the rise of small, home-grown businesses, the study says. But New York "has become one of the worst environments for entrepreneurs and growing firms," the report says, citing rankings by groups like the National Commission on Entrepreneurship and declines in venture capital investments.

    One big problem for growing businesses is high real estate costs, which the study traces in part to the city's practice of subsidizing the real estate costs of large employers. The report says the practice has distorted the "real estate market in ways that actually inhibit the development of new businesses and the retention of lower-margin industries."

    In addition, the study says: "Businesses in New York also face a daunting regulatory environment in which firms are required to get licenses and permits from as many as a half-dozen agencies, most of which are understaffed and few of which coordinate with each other. It's no wonder that a cottage industry of fixers and go-betweens has developed in the city."

    The study recommends that the city work harder to help growing businesses thrive, in part by addressing "the fundamental issues hampering business growth in the city, such as permitting, business taxes and policies that spur exorbitant real estate speculation."

    The city should also do more to encourage the growth of immigrant and minority-owned businesses, the study says, perhaps by following the example of cities like Los Angeles and Houston. According to the report, those two cities rebuilt their economies in recent decades in part by diversifying, reducing regulatory hurdles and helping immigrant-run businesses to develop.

    In addition, the city should extend its economic development efforts beyond large-scale commercial projects in Manhattan to include neighborhoods in all five boroughs, the study recommends. It notes that the Bloomberg administration is already working to develop viable and more affordable business districts in Downtown Brooklyn, as well as Long Island City and Flushing, Queens.

    Finally, the report suggests that the city support policies that will help retain middle-class residents. It should follow through with plans to increase the housing stock. And it should use scarce city resources to maintain and improve basic services like law enforcement, sanitation, public transit, education, parks and the infrastructure.

    The report states, "This vision should begin with the premise that blindly following the post-1950's strategy of ever-intensifying real estate speculation, over-concentration on selected sectors and `Capital of the World' rhetoric will erode the city's overall competitiveness even further, strain the city's financial resources and widen the gap between rich and poor."

    Copyright 2003 The New York Times Company

  3. #3


    September 8, 2003

    Downtown Grants Found to Favor Investment Field


    The Recovery Grants: Who Got What

    More than a third of the emergency grant money intended to help small businesses in Lower Manhattan survive after the Sept. 11 terrorist attack went to investment firms, financial traders and lawyers, a result that some New York legislators who helped secure money for the program say they never envisioned.

    Twenty-seven percent, or $144 million, of the $539 million World Trade Center Business Recovery Grant program went to traders who work on the floors of the financial district's stock and commodities exchanges, to brokerage firms and to investment banks, according to an analysis by The New York Times. An additional $53 million, or 10 percent of the total, went to law firms, some of which employ hundreds of attorneys and generate yearly revenues of tens of millions of dollars, and few of which faced dire threats to their survival.

    Far smaller amounts went to restaurants, retailers and other small businesses, many of them dependent on the foot traffic that largely disappeared from Lower Manhattan after the attack.

    The inconsistencies in the grant program complained about by many but never before completely documented did not result from fraud. Rather, they were the outcome of regulations drafted quickly by New York State officials, based on laws that were hastily written in Washington all in an effort to quickly distribute badly needed money to suffering businesses. Those rules, for instance, defined small business very broadly, and they required little hard evidence of lost revenues from any business seeking compensation.

    In writing the legislation, "we were thinking of restaurants and pizza places and all kinds of service establishments in the neighborhood," said United States Representative Jerrold Nadler, who was instrumental in the grant program legislation and whose congressional district includes the World Trade Center site.

    "A lot of discretion over the details of the program was left to the governor and the agencies he set up," Mr. Nadler said. "And a lot of their decisions are hard to defend."

    Undoubtedly, the grants helped many small businesses to stay open. Arthur Gregory, owner of the A&M Roadhouse, a restaurant and live-music establishment three blocks north of the trade center site, said the $33,726 he received "helped keep me open because the insurance companies were real bad, real slow."

    The analysis by The Times examined 21,069 grant payments made to 14,350 companies. Information on the payments was produced by the Empire State Development Corporation, the state agency in charge of the grant payments, in response to a request made under New York State's Freedom of Information law and is the first public assessment of the grant program since its completion.

    Two previous studies, by the United States General Accounting Office and the inspector general of the federal Department of Housing and Urban Development, looked at the program before all of the applications had been processed. The Times analysis shows that the program produced what for many legislators amounted to several unintended consequences, and that nothing was done to refine the program once those consequences became obvious.

    For example, commodities traders and brokers at the New York Mercantile Exchange, a few blocks from the World Trade Center site, received grants totaling $54 million, while the 669 small businesses that were in the trade center itself received $38 million. Unlike the businesses whose offices were obliterated, however, the Mercantile Exchange was operating again three days after the attack.

    Officials at Empire State Development rejected any assertion that they should have stepped in when it became clear what kind of companies were being compensated by the program.

    "With the economic conditions and physical conditions we were faced with downtown, and the need to get the money out, we had to make decisions quickly," said Kevin S. Corbett, chief operating officer at Empire State Development, which is controlled by Gov. George E. Pataki. "We had no template at all for this kind of challenge."

    The analysis also documented additional and, for some, undesired disparities in the distribution of the hundreds of millions of dollars. Small downtown stores that are steps from one another and that suffered the same damage on Sept. 11 and similar declines in business afterward received grants of vastly different size.

    It is extremely difficult, government officials and business owners themselves acknowledge, to determine precisely the ultimate impact of the differing grants.

    Carl Weisbrod, president of the Alliance for Downtown New York, a business association, said it was hard to know how many companies stayed in business because they had received grants or went out of business despite having received aid. "But the vast majority of our members say the grants were helpful and made them able to get through the rough spots," he said.

    Figures from city and state officials show that the number of businesses downtown has fallen by about 5 percent since Sept. 11, 2001, while the number of people employed there not counting those who worked at the World Trade Center itself has declined by about 14 percent.

    Mr. Corbett of the development corporation praised the program. "We feel that the Business Recovery Grant program was highly successful, especially given the time frame and climate under which it was created," he said. "Like all programs, it is subject to retrospective scrutiny."

    Differing Views

    The Business Recovery Grant program was among the largest of a flurry of relief programs intended to help New York businesses and individuals most severely affected by the attack on the World Trade Center. It resulted from the efforts of Republicans and Democrats in New York's congressional delegation who were desperate to secure the $21 billion in promised federal aid.

    But in the fall of 2001, differences emerged in how those representatives thought the aid should be structured. Senator Hillary Rodham Clinton, among others, wanted to set up an Office of World Trade Center Attack Claims to reimburse businesses and individuals in Lower Manhattan.

    But the White House budget director at the time, Mitchell E. Daniels Jr., prevailed in dictating that much of the money be distributed by the Department of Housing and Urban Development and its Community Development Block Grant program, which would give local authorities great flexibility in how to use federal dollars.

    "Rather than create a new federal agency, we felt that the city and state would know best how to spend that money," said Representative James T. Walsh, the New York congressman who is a member of the Appropriations Committee and chairman of the subcommittee that oversees HUD.

    Mr. Pataki and Mayor Rudolph W. Giuliani, both Republicans, supported that approach. But in the end, as the legislation was enacted, the grant program specified that the money be controlled by New York State.

    Congress also required that within 45 days, state officials issue regulations for a program to reimburse businesses for economic losses related to 9/11.

    "We had to get the money out as quickly as possible," Mr. Corbett said.

    Empire State officials, dismissing alternative suggestions from Congress, decided on their own guidelines for compensating businesses. A company's grant would depend on three primary factors: how close the business was to ground zero; its size, based on its annual revenues; and its "economic losses" related to 9/11.

    The agency did not require a company to document its losses. Instead, it had only to provide tax returns to certify its revenues in its fiscal year immediately before Sept. 11.

    Empire State officials laid the responsibility for those decisions at the feet of HUD officials. "They signed off on the form that did not require documentation of economic losses," Mr. Corbett said. "We were trying to keep the administrative burden within reason."

    Officials at HUD say such decisions were strictly up to Empire State Development. "As long as it is designed within the confines of the law, they can structure the program any way they want," said Jan C. Opper, a senior program officer at HUD who worked with Empire State.

    Congress had required that at least $500 million should go to "individuals, nonprofits or small businesses" south of 14th Street in Manhattan. Separate grant programs were set up for large businesses. Senator Charles E. Schumer said the New York representatives were concerned that small businesses not go unnoticed.

    "Big businesses know how to apply for these programs and how to get their money," he said. "If we didn't set aside something for small business, they were going to have a harder time."

    But the legislation did not define small business. Empire State Development ruled that any company with fewer than 500 employees would be eligible for grants, with no restrictions as to annual revenues.

    Representative Walsh said he thought the program was intended to help all businesses downtown. "We thought whoever was there, large businesses or small, or residents, should be able to access those funds," he said.

    Others differed. "The small-business piece of the aid we introduced really was meant to go to the small-size, small-revenue business rather than the larger businesses," Mrs. Clinton said. "I'm disappointed we didn't specify more clearly what should become of the money."

    An Exchange Gets a Windfall

    Nowhere were the incongruities of the Business Recovery Grant program more evident than at the New York Mercantile Exchange. The exchange restarted its commodities trading system just three days after the attack. The next Monday, traders were back in the pits at the exchange's headquarters in Battery Park City, a few hundred yards from the smoking trade center site.

    Despite operating with reduced trading hours, the exchange quickly began to thrive again. The most important measure of the exchange's health the price of a seat, or the right to trade commodities contracts on the exchange floor hit a record three times before the end of 2001. Trading volume fell a mere 1 percent in 2001 and soared 30 percent in 2002.

    Despite that fast recovery, traders at the Mercantile Exchange were among the biggest recipients of Business Recovery Grants. Of the $54 million in grants paid to companies based at the exchange, $44 million went to companies with a sole employee that is, to individual traders and brokers who worked on the floor of the exchange.

    The windfall was not limited to the Mercantile Exchange. Traders at the American Stock Exchange and the New York Stock Exchange, which were also up and running on Sept. 17, got $27 million. In all, investment dealers including traders, brokers and asset managers took in $144 million, 27 percent of the grant program's total. Their average grant of $71,325 was more than twice as large as the $32,800 average received by all other companies.

    The chairman of Empire State Development, Charles A. Gargano, said that it was only natural for the investment companies to have received more because they were closest to ground zero.

    The president of the Mercantile Exchange, J. Robert Collins Jr., agrees, saying the exchange traders only followed the program's rules. They simply computed their lost revenues and asked to be reimbursed.

    He acknowledged that documentation of their losses or questions about the real long-term threat to their businesses were not part of the equation.

    "If people want to moralize that making $100,000 a year is too much money to receive any government assistance, that is their right," he said. "I don't know how you divine what the appropriate amount is. But I don't think we as an entity have a responsibility for how the program was set up."

    Zones of Compensation

    In drawing up the program's details, Empire State made another decision that left many small-business owners complaining its definition of the area hardest hit economically.

    Overall, businesses from 14th Street to the Battery could receive compensation for economic losses attributed to the attack, but the highest payment scale applied to businesses that had been in the trade center or close by.

    The agency defined proximity as the area bordered by Chambers Street, five blocks north of ground zero; Rector Street, three blocks south; the Hudson River, on the other side of Battery Park City to the west; and Broadway, one block east of the trade center site. Grants in that zone initially covered 10 days' losses, and were later increased to 25 days' losses.

    "Considering the resources we had available to us," said Mr. Corbett, the agency official, "we believe that this was an appropriate structure to try to do proportional compensation."

    Many business owners in the blocks just east of Broadway said they had been close enough to the cataclysm to have suffered physical damage and economic losses as great as those on Broadway, yet they were being treated differently.

    Empire State officials said their major consideration in defining the prime compensation zone was how long business owners had been denied access to their premises. They said that in choosing Broadway, just one block from ground zero, as the eastern cutoff, they had followed the City Office of Emergency Management's guidelines, which said that businesses on Broadway and to the west had generally gone the longest without access.

    How this played out is seen at places like Evelyn's Chocolates, at 4 John Street, where Evelyn Robb has been selling candy and nuts for 40 years, and at the Shah Lobby Stand, in an office building at 160 Broadway, where Sam Shah has been providing newspapers, candy and soda for two decades.

    The $7,987 that Ms. Robb was eligible for covered only 8 percent of her $105,000 in uninsured losses. Had her shop been on Broadway, just 50 feet away, she would have received $28,526, or 27 percent.

    Mr. Shah received $6,245, not much less than Ms. Robb, though his $16,200 loss was about one-sixth of her loss.

    At her shop recently, Ms. Robb said: "I was so annoyed because if I had an address on Broadway, I would have gotten more."

    Her shop was closed for two months after the attack, and Ms. Robb said she had struggled ever since to stay afloat in the face of sharply reduced patronage, which she put at about half its pre-9/11 level.

    Under the program's formula, her award was based not on her losses, but was 2.8 percent of her previous year's gross revenue of $285,256, with 2.8 percent reflecting seven days' losses the most covered east of Broadway in a 250-business-day year.

    Ms. Robb also received a $25,000 grant from Seedco, a nonprofit group, but still had to take out nearly $50,000 in loans.

    In his small lobby nook at 160 Broadway, Mr. Shah said he knew he was "a little better off," under the program, for having a Broadway address.

    His newsstand was shut down for six weeks and did "little business" over the next six months, he said, explaining the $16,200 loss on his grant application. The $6,245 he received was 10 percent of his previous year's gross of $62,453, reflecting 25 days' losses in the 250-business-day year.

    Mr. Shah said the money had enabled him to buy a new refrigerator. He did not apply to other programs to cover more of his loss because "it's a lot of paperwork."

    Around the corner at 6 Maiden Lane, Peter Muscat, owner of Maiden Lane Wine & Liquor, said his experience showed that the Broadway boundary, less than 100 feet from his shop, had been ill conceived. Yes, he was able to reopen just two weeks after the attack, he said, but that proved to be no advantage.

    "We couldn't do business because for a month there were barricades at Nassau Street," which parallels Broadway a block to the east, and entrance to his block was restricted, he said.

    Mr. Muscat's seven days' compensation, based on his store's previous year's revenue, was nearly $24,000. Compensation for 25 days would have given him $60,000 more.

    Not everybody who was narrowly excluded from the prime zone complained. Marvin Rafeld, the owner of 14 Wall Street Jewelers, whose location a half-block east of Broadway cost him nearly $200,000 in grant money, praised the program, having received $107,000 in response to his claim of $443,000 in losses.

    "Without it, I can tell you without question, I would be out of business," he said. "Not only was it an economic lifeline, but it gave me the incentive to keep going."

    Copyright 2003 The New York Times Company

  4. #4
    Forum Veteran
    Join Date
    Nov 2002
    New York City


    I agree. Time to rediversify our economy. The financial industry did a lot to save New York back in the '80s, but inadvertantly we became too dependent on the fortunes of Wall Street for our own survival. We can reverse that trend but remain the financial center of the world.

  5. #5
    Forum Veteran
    Join Date
    Jan 2003
    Garden City, LI


    A balance needs to be struck. More attention to the outer boroughs and the little guy, while still trying to get the big guys to stay and grow. Both need to happen for NYC to get better.

  6. #6


    Mayor: City Puts Brakes on Corporate Welfare

    By Dan Janison
    Staff Writer

    October 21, 2003, 12:40 PM EDT

    The city has "essentially ended corporate welfare as we know it" -- in which companies that "wouldn't have left anyway" were paid to stay in the five boroughs, Mayor Michael Bloomberg declared today.

    Addressing a civic group on the state of the city's economy, Bloomberg also proclaimed the city's tax base is "just too dependent on Manhattan and increasingly dependent on financial services."

    "That's got to change," he told a breakfast audience of the Association for a Better New York gathered at the Hilton in midtown Manhattan.

    On city aid to private business, Bloomberg said some of the funding for city infrastucture investments will come from $630 million that had been apportioned to a new building for the New York Stock Exchange.

    Without mentioning the recent fiasco that forced out the exchange's chief officer, Dick Grasso, the mayor called such a building "something currently not at the top of anyone's priority list."

    The stock-exchange plan was pushed by ex-Mayor Rudolph Giuliani whom Bloomberg credited in another portion of the speech -- along with Ed Koch and David Dinkins.

    For a mayor elected after touting his business expertise, it was a boosterish message delivered two months shy of the two-year midpoint of his term -- and crafted to convey accomplishment and direction.

    "We've made New York safer," Bloomberg said. "We're running New York smarter, and we're also making New York economically stronger. Why the improvement in the face of adversity? Disclosure, prudence, focus, and accountability.

    "From day one, despite the two worst back-to-back fiscal years in the city's history, our administration has been honest with everyone about our true economic situation," he said.

    Bloomberg delivered the speech before visiting the Bronx where he announced an agreement with Related Companies CEO Steve Ross for a new, 140,000-square-foot retail and commercial center. The location is a vacant city-owned site near 155th St. and Third Avenue in the borough's "hub."

    Copyright Newsday, Inc.

  7. #7


    Cities in the Digital Age (interview with Joel Kotkin, co-author of the report)

  8. #8


    August 12, 2004

    9/11 Aid Dispersal Downtown Said to Favor Corporate Interests


    A budget watchdog group said yesterday that the Lower Manhattan Development Corporation had favored corporate interests and had approved millions of dollars in contracts with organizations connected to the corporation board.

    "The 9/11 attacks had a disproportionately harmful economic impact on low- and middle-income residents," said the group, Good Jobs New York, in an assessment of how the corporation has been spending federal redevelopment money. "Yet the L.M.D.C. has primarily focused on the priorities of powerful businesses and major property owners."

    Bettina Damiani and Stephanie Greenwood, the authors of the assessment, said board members had done nothing unethical or illegal, and had been "careful to recuse themselves" from votes involving their organizations. They said organizations with ties to board members had received $112.4 million in grants.

    Kevin M. Rampe, the president of the corporation, said it was "not surprising" that board members were involved with organizations and projects financed by the corporation, since they were chosen in part for their involvement downtown.

    "We rely on them to provide us with their experience and expertise," he said. Not only do they stay out of votes involving their organizations, he said, they also have "no day-to-day involvement" with the corporation's side of such projects.

    As to the larger assessment that the corporation had favored big business, officials said that Good Jobs New York had skewed its own analysis by ignoring $281 million in residential grants and $350 million in business retention and recovery grants. They also took issue with a number of facts in the report.

    Good Jobs New York, affiliated with the Fiscal Policy Institute and the Good Jobs First organization, analyzes and criticizes economic development deals, incentives and subsidies. It said that financing for its new assessment of Lower Manhattan reconstruction programs was provided by the Rockefeller Foundation.

    Of the total $2.78 billion in federal grants administered by the Lower Manhattan Development Corporation, $1.85 billion has been allocated.

    In its newest allocation proposal, now out for public comment, the corporation calls for spending $65.3 million, of which $35 million would go to planning and preparation for the World Trade Center site memorial.

    Copyright 2004 The New York Times Company

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