Posted on 08/03/2002 9:34:30 AM PDT by GeneD
The city has spent $80 million that will never be repaid for a new New York Stock Exchange facility that will never be built.
The Exchange, which pulled out of the deal this week, spent barely $10 million.
And the city isn't even through spending. City money will continue to flow for at least a year. The cost could soar to nearly $100 million.
In the end, the money killed it. As incoming mayor, Mike Bloomberg sought to change the arrangements for the $1.4 billion project, upping the NYSE's contribution, but angering chairman Dick Grasso.
"The city just cannot afford to give the aid to the New York Stock Exchange that it could a year ago," Bloomberg said yesterday during his weekly radio show on WABC.
The saga began nearly four years ago.
In response to NYSE threats to move to New Jersey, the Giuliani administration reached a deal in late 1998 to keep it in lower Manhattan. The arrangement called for a new trading facility across the street from the current Exchange headquarters at Wall and Broad Streets.
The deal included about $900 million in tax breaks and other subsidies for the NYSE, with the state contributing a portion. To make the money back, the city planned to sell development rights to a 50-story office tower that would go above the trading floor. The city and the NYSE hired architects Skidmore, Owings & Merrill to draw up plans.
But the city had to acquire the land - a block bounded by Broad, Wall and William Sts. and Exchange Place. The city agreed to buy two of the buildings on the site, 15 Broad St. and 45 Wall St. It planned to take the others using the state's condemnation powers.
J.P. Morgan Chase owned 15 Broad St. The city signed a contract to buy it for $220 million, paying a $22 million deposit which the city will now forfeit. The bank still owns the building and has not said what it plans to do with it now.
The city also reached a deal to buy 45 Wall St., a 28-story apartment building owned by Rockrose Development, for $160 million. The building's 435 apartments had to be vacated, and the city paid tenants relocation grants ranging from $8,000 to $15,000. Rockrose hired a law firm to evict tenants who refused to go. One source said the city paid all legal fees.
A group called Good Jobs New York estimated the city spent $6 million on tenant relocation. "They disrupted the lives of 400 families," said former resident Ray Fleischhacker. "It was all for nothing."
The Sept. 11 attacks cast doubt over the NYSE project, as Grasso rejected the plan for an office tower above the trading site.
With the project on hold and negotiations continuing, city officials agreed to pay J.P. Morgan and Rockrose to delay closing the building purchases. The city paid J.P. Morgan $2 million a month, plus a penalty of about $1.5 million each month that went by without a sale. Rockrose got $1 million a month.
As time went on, costs like fees for architects, appraisers, and lawyers mounted. The city paid $309,000 to bond lawyers at Hawkins, Delafield & Wood, though the bond issue to finance the project never happened.
The NYSE also paid architects and lawyers, but sources pegged their expenditures at under $10 million. An Exchange spokesman declined to comment.
After Bloomberg tried to get the Exchange to double its contribution, Grasso backed out. But it must still pay Rockrose up to $1 million a month until it can re-rent 90% of its apartments.
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