Politicians Victorious as Goldman Sachs Breaks Ground

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The New York Sun

An all-star political cast claimed a downtown development victory yesterday as Goldman Sachs broke ground on a $2.4 billion world headquarters next door to ground zero.


Governor Pataki, Mayor Bloomberg, Senators Clinton and Schumer, and Assembly Speaker Sheldon Speaker all expressed the idea that anchoring Goldman Sachs to Lower Manhattan will spur growth and cement the area’s reputation as the world capital of the financial services sector.


Scheduled to open in 2009, the 43-story, 2.1-million-square-foot office tower, located on West Street, will house the firm’s investment banking, investment management, and trading operations. Goldman Sachs has committed to retaining 9,000 employees in the city and has expressed its intention to create an additional 4,000 jobs.


The bank was awarded $1.65 billion in federally authorized, tax-exempt Liberty Bonds for the project. That represents 25% of the city and state’s total commercial allotment of bonds, and is more than twice the second-highest allocation.


Goldman also received a city and state incentive package worth $115 million, not including payments in lieu of taxes, over the length of the lease, according to the mayor’s office.


Yesterday, both the mayor and the governor said that landing Goldman was well worth the cost of the incentives.


“Such incentives actually make sound economic sense because they cost just a tiny fraction of the tax revenues New Yorkers will realize from this investment,” Mr. Bloomberg said. “Goldman Sachs will generate $8 billion in direct and indirect tax revenues to the state and city during the life of this deal.”


Mr. Pataki said after the ceremony that it was “extremely good government policy” to commit Goldman Sachs to a site across the street from ground zero.


“There were days that we doubted that Goldman Sachs was going to be on this site. We knew they would never be across the river in that empty building there because they had to be in New York City, but they didn’t have to be in Lower Manhattan,” he said.


The current incentive package represents a significantly better deal for the investment bank than the $1 billion in tax-exempt Liberty Bonds and a smaller incentive package the city offered Goldman in 2004. The bank pulled out of that deal this April, citing, among other elements, traffic problems and security concerns related to a planned nearby tunnel for vehicles.


After downtown development officials addressed those problems and the new deal was announced in August, critics charged that the city and state gave away too much to keep the banking giant downtown. They said Goldman was likely to stay in New York anyway.


A spokeswoman for Goldman Sachs, Andrea Raphael, told The New York Sun yesterday that the bank will vacate its current headquarters at 85 Broad St. in Lower Manhattan when the new building is complete. The new headquarters will be a “modest” increase in the amount of total office space Goldman Sachs occupies in Manhattan.


“It’s hard to say at this point because the space we are moving into is much more efficient … so it’s difficult to do a square foot to square foot comparison,” she said.


Next Thursday, a city agency will discuss granting developer Larry Silverstein about $3.5 billion in Liberty Bonds to help finance about 10 million square feet of commercial space at ground zero, including the Freedom Tower.


Mr. Schumer, who before September 11, 2001, led a panel that recommended building 60 million square feet of new office space over the course of 20 years, appeared to back Mr. Silverstein yesterday.


“The demand for housing, retail, and other services, without commercial buildings, will inevitably decline,” he said yesterday. “Downtown will still have 20 million square feet fewer of commercial space than it did before 9/11. Retail construction, residential, are booming on their own all over the city. But commercial development for downtown still needs to grow, and it needs it with government help.”


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