THE EXACT OPPOSITE OF A HANDOUT
The recently-passed $175 billion New York State budget contains a series of smart, long-term investments – in particular, new funding and planning for the city’s transit infrastructure. But the question remains, are progressive leaders willing to create an environment for New York to actually take advantage of these investments?
Let’s begin with the largest policy overhaul: the authorization of congestion pricing driven by Governor Cuomo. This smart step promises not only to reduce the number of cars on city streets – making our city greener and cleaner at the same time – but it could also leverage as much as $25 billion in bond funding dedicated to improving subway and bus service for all New Yorkers.
And yet, the state’s investment in the city’s infrastructure runs the risk of falling prey to the same attacks and mischaracterizations that sunk Amazon’s move to Long Island City – whereby a small, but vocal, opposition to Amazon’s state subsidies ultimately forced the tech giant to decide to withdraw its plans to create a New York headquarters.
The $3 billion in “subsidies” that caused concerns about the project were actually largely comprised of benefits that would have only resulted from specific numbers of jobs created and would have been realized over 30 years, rather than an immediate handout. At the same time, estimates showed what Amazon would have paid in taxes back to the city over the same time period to be as much as $30 billion.
Globally, the attacks – and ultimate withdrawal of the project – sent a clear signal that the business and political climate here in New York is terrible. Locally, city residents lost thousands of jobs and billions in economic activity.
It should concern New Yorkers in every corner of the state when elected officials mischaracterize subsidies – provided to offset some of the highest tax and development costs in the world – as a handout to a private company. These projects invest billions in our local economy and generate tens of billions in taxes to our city and state.
That’s the exact opposite of a handout.
The Amazon situation is not in isolation; we’ve seen increasingly more egregious examples of mischaracterizing subsidies recently. In March, the gleaming new Hudson Yards complex was the subject of a front-page New York Times article that characterized public subsidies for the project as being even more than those that Amazon would have gotten. Outrageously, the article and the report it was based on included the city-funded expansion of the 7-train line that allowed the development to occur as a subsidy.
Expanding the transit system, building greater capacity and creating new opportunities for transit-oriented development, which expands the city’s tax base, is a government investment in the city and its future, not a subsidy to a private developer. These are the types of investments New York needs to capitalize on, rather than using them as a weapon to attack development projects that are good for the city’s economy. These attacks are not only factually incorrect, but they hurt the city in the process.
Sadly, while transit advocates, environmental justice groups and others applaud congestion pricing this week, they remained surprisingly silent on characterization of the 7-train expansion as a give-away to Hudson Yards developers.
Long-term investments and smart policy changes will continue to put New York in a position to grow and attract jobs, businesses, and talent. But progressives need to remember that they will only be able to keep increasing investments in our people and home by expanding – not attacking – New York’s tax base.
Y. David Scharf is lead real estate and restructuring partner at Morrison Cohen.