$230 Million in Tax Breaks, Incentives for JPMorgan
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The state and city are subsidizing banking giant JPMorgan Chase & Co.’s planned tower on the World Trade Center site with about $230 million of tax breaks and incentives, an amount critics are deeming excessive given the rising appeal of downtown real estate.
JPMorgan announced yesterday its plans to construct a 42-story headquarters for its investment banking division on the site of the Deutsche Bank building, which is being demolished. The company is expecting the $2 billion building to have 1.3 million square feet of office space, including six trading floors that will cantilever out over a park.
At a press conference announcing the deal, Governor Spitzer, Mayor Bloomberg, and a host of other public officials lauded JPMorgan for its decision to return to Lower Manhattan.
Downtown’s resurgence makes the case for substantial subsidy dollars a tough sell, critics say, especially given that JPMorgan took in more than $14 billion in profit in 2006.
“Chase isn’t locating in Lower Manhattan because of the subsidies — subsidies are never on the top of the list when it comes to site location,” the director of the subsidy watchdog group Good Jobs New York, Bettina Damiani, said.
Mr. Spitzer said the vast majority of the subsidies — all but $20 million linked to job creation — were available to any developer who would have built at the site, existing as a result of previous legislation.
“The structure that was created is working, and the reason there is a 6% vacancy rate, which is a very low rate in terms of the commercial market, is because people are taking advantage of these incentives,” Mr. Spitzer said.
The bulk of the subsidies come as a result of a series of tax breaks and credits rushed through Albany in 2005 in an effort to create state and city incentives as a pool of federal subsidies dwindled. Dubbed the “Marshall Plan” by the Assembly speaker, Sheldon Silver, who represents Lower Manhattan, the plan was marked with a “message of necessity” by Governor Pataki, speeding it through the Legislature at the end of the session.
“Nobody had any time to review it before we passed it into law,” state Senator Elizabeth Krueger said yesterday, criticizing the lack of transparency surrounding the bill.
