City Spends Millions on Empty Offices
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The city’s Department of Transportation is paying millions of dollars in rent for six floors of premium office space that are sitting empty.
The department’s move into the space will be delayed by at least one year, by the agency’s estimation, and will cost the city a minimum of $11.8 million — the annual rent for the 368,147 square feet of office space at 55 Water St. in Lower Manhattan that the department will someday call its headquarters.
The stalled move and the city’s payments for empty office space are raising objections from City Council members, who say it is disappointing that taxpayers are footing the bill for one year’s worth of rent and getting nothing in return, especially at a moment when the city is facing a budget gap.
“No one would ever put up with this in their own life, paying for an office they don’t use or a house they don’t live in, but for some reason government gets away with this without any accountability or blame,” a City Council member of Queens, Eric Gioia, said. “At a time when the city and state are in dire financial straits, it’s very hard to ask people to tighten their belts or to pay more in taxes when government is paying for empty offices.”
About 1,300 employees are scheduled to move into the 55 Water St. office in April 2009, one year after the agency began paying rent on the space. The employees now work in one of four transportation offices, three of which are located in Manhattan and one of which is in Queens.
A spokesman for the department, Seth Solomonow, said that the delay is because of various unrelated design, technical, and logistical issues that can occur during moves of this scale. He said that the agency is paying annual rent of $32 a square foot for the office space, which he said is far below rates available in similar office space in Lower Manhattan.
“While we’re disappointed not to be moving into the new space sooner, the 20-year lease rate we negotiated will save us money in the long-term,” he wrote in an e-mail message.
Right now, the department pays about $11.8 million for the four offices they will be vacating, but Mr. Solomonow said that rents on those spaces are expected to increase significantly in the future. The department’s total budget this year is $704 million.
The city signed a lease for the new office space under a former transportation commissioner, Iris Weinshall, who left the agency last year to become a vice chancellor at the City University of New York. Bringing employees together in a single office space was considered a way to create a more efficient and effective work environment. It does, however, go against one of Mayor Bloomberg’s earliest campaign promises to move more government offices outside of Lower Manhattan.
The 54-story building that will eventually house the Department of Transportation takes up four adjoining city blocks and was the largest privately owned office building in the world when it opened in 1972. It is owned by the Retirement Systems of Alabama and managed by the New Water Street Corp.
It features views of the Brooklyn Bridge and two outdoor plazas, one of which is above ground and known as the “elevated acre.” Every Tuesday night in August this summer, movies will be projected on a giant outdoor screen at one end of the space, according to the building’s Web site.
The companies Standard & Poor’s and Health Insurance Plan of New York share the building, which is heavily secured with guards, metal detectors, and scanners for bags. Security guards at one entrance said that the offices that the city agency is renting are empty right now.
“Come back next year,” one guard said.
The chairman of the council’s Transportation Committee, John Liu, said that the Department of Transportation is not alone in its disappointment over the delays.
“New York City taxpayers are pretty disappointed about flushing $12 million down the drain,” he said. “We’re in austere budget times and this stuff cannot be accepted lightly.”