Downtown Lease for Goldman Sachs Set To Be Approved by Authority
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A state board is expected to authorize a lease agreement with Goldman Sachs today for a parcel of land in downtown Manhattan that will house the investment bank’s new world headquarters, according to the president of the Battery Park City Authority, Timothy Carey.
The terms of the lease, which will run through 2069, include an up-front ground rent payment to the state, which owns the site, for $161 million.
“This is a very good deal,” Mr. Carey said. “We had not seen future use on this property for 10 years going forward because of our location across the street from ground zero.”
Mr. Carey said that the authority hired the commercial real estate company CB Richard Ellis to negotiate the lease with the investment bank. He said the firm compared similar leases before arriving at the terms, but the state board would not discuss the details of that study before the lease was finalized, a spokeswoman for the authority, Leticia Remauro, said.
Plans to authorize the lease stalled last week when the authority failed to conclude its deliberations and canceled a public hearing. The board vote was delayed because of non-economic issues that needed to be finalized.
In addition to the ground rent, Goldman will pledge $155 million over the length of the agreement to the Battery Park City Conservancy to purchase and maintain open space in the area. Those payments initially will be $900,000 and increase by 3% a year, Mr. Carey said. The investment bank also will give $500,000 to design a New York City Public Library branch to be built nearby and another $3 million for construction costs.
Goldman will also donate $1 million to a youth community center in TriBeCa, and build a covered glass atrium containing retail space that will connect its headquarters to the adjacent Embassy Suites Hotel. Mr. Carey said the cost of the atrium had not been finalized.
Last week, the state approved $1.65 billion in Liberty Bonds and a portion of at least $150 million in tax incentives Goldman will receive to build an office tower costing $2 billion.
Negotiations between government officials and the banking giant about the office tower unraveled last April after security concerns were raised about a nearby underground tunnel. At the time, the terms included $1 billion in Liberty Bonds, less than the current proposed amount, and less money in tax incentives.
Mr. Carey said that although the city and state tax incentives have increased, “the economics” of the lease did not change.
The chairwoman of Community Board 1, Julie Menin, said the reworked incentive package left her wondering why the community’s benefits were not also sweetened. Ms. Menin represents the community board district in which the Goldman site sits.
Ms. Menin said that when she learned last week that Goldman was getting a better deal from the state and city, she contacted the investment bank and urged it to contribute more to the surrounding community. Ms. Menin said, “They were very clear that they would not do so.”
A spokesman for Goldman Sachs, Andrea Raphael, declined to comment yesterday.
Ms. Menin said that in general, the board was delighted to have Goldman Sachs commit to Lower Manhattan. But she said that the community wanted more money to pay the operating costs of a Battery Park City community center, closer to the Goldman site than the TriBeCa facility that will receive support from the investment bank.
Mr. Carey added that Goldman Sachs would face a 7% to 10% rise in construction costs for building in Battery Park City because of its more stringent environmental guidelines.
The Goldman lease will also contain a provision nicknamed “most favored nation status,” under which the investment bank will have the opportunity to bid on the property should the state decide to sell or auction off part of it. Mr. Carey said the provision was “not an abnormal” stipulation in leases.
Mr. Carey said that after the board gives its approval authorizing him to sign the lease, all that remained were “basically formalities.”