Dear Friend,
The Times Square giveaway recently uncovered by Comptroller John Liu is yet another example of the City's generous handouts of corporate welfare to a handful of lucky and well-connected few.
For years, Comptroller Liu has aggressively dug into the black hole that has been the Mayoral-controlled New York City Economic Development Corporation (EDC), a little-known yet powerful entity that awards hundreds of millions annually in tax breaks and corporate subsidies.
The EDC's failing record to create thousands of much-needed jobs – duly owed from the huge publicly-funded subsidies doled out to private companies – is an abdication of responsibility on the part of the City. With the agency charged with spurring economic development, Comptroller Liu has cracked open their books and offered concrete solutions, including specific tax cuts for small businesses which are the real job generators throughout New York.
See below for recent news reports.
REUTERS: "NYC CFO says Marriott deal could cost city $345 million" - 2/12/2013
EXCERPT - New York City's chief financial officer said on Tuesday the city stands to lose as much as $345 million because of a past sweetheart deal, uncovered during an audit, with the Marriott Marquis hotel in the heart of Times Square. Marriott in 1998 renegotiated its lease with the city, shortening it by 40 years, reducing the rent, and giving the hotel the option to buy the property for $20 million when the lease expires in 2017.
Liu has audited the EDC before and has long said the agency wields too much power. The agency awards city funds and tax breaks to promote economic development under a nearly $1 billion contract with the city, for which it hasn't been held accountable, he said.
Liu's audit found that the Marriott had not kept all of its financial records for the past six years - an alleged violation of its lease agreement with the city.
Liu called on Mayor Michael Bloomberg's administration to use that supposed contract breach as an opening to renegotiate the lease and make the terms more favorable to the city. If not, the city could find a different tenant, Liu said.
CBS NEWS: "Liu Blasts 'Sweetheart' Deal Marriott Got With NYC" – 2/12/2013
EXCERPT - John Liu said Tuesday that he found a lease signed by the Giuliani administration in 1998 that allows Marriott to buy the Times Square property its Marquis hotel sits on from the city for $20 million – one tenth of its current value.
"This EDC [Economic Development Corporation] Marriott deal was the most lopsided transaction since Manhattan was sold for $24," Liu told reporters. He said the land is currently valued at about $193 million and urged the city to renegotiate.
WALL STREET JOURNAL: "Old Marriott Deal Gets New Scrutiny" - 2/12/2013
EXCERPT - The Marriott Marquis also may be sitting on one of the best land deals around, city Comptroller John Liu said Tuesday. "The clock is ticking. The lease is set to expire in four years and it would allow the Marriott Marquis to purchase one of the hottest pieces of New York real estate for a fire sale price," Mr. Liu said.
THE REAL DEAL: "Liu takes aim at boondoggle' Marriott Marquis deal" - 2/12/2013
EXCERPT – "City Hall needs to reexamine this agreement and do whatever it can to recoup the millions taxpayers have lost in this boondoggle," he added. Liu claims that the city has lost $173 million in rent since 1998. A rent forgiveness clause allowed Marriott to pay off its back rent instead of paying current rent, which Liu said has cost an additional roughly $172 million. And according to Liu, the hotel still owes $3.6 million in unpaid rent and interest.
NY1: "Comptroller Liu Claims Major Times Square Hotel Pays Far Too Little In Rent" - 2/12/2013
EXCERPT - "The city has an obligation to the taxpayers, with billions of dollars of deficits on the horizon, to do everything it can to recover money for the city. I don't begrudge Marriott. They got themselves a great deal. Unfortunately, the EDC gave the store away and taxpayers are hurting for it," the comptroller said.
NEW YORK DAILY NEWS: "Controller Liu: Luxury Times Square Marriott Marquis Hotel could cost city taxpayers $344 million due to 'worst' deal" - 2/12/2013
EXCERPT - The city's 1998 lease agreement with the Marriott Marquis Hotel in Times Square was a disastrous move that could cost taxpayers a staggering $344 million, according to a new audit. The deal for the city-owned property gave the 50-story hotel the right to purchase the prime Broadway real estate for a song in 2017, Liu charged Tuesday. The cost of the property at W. 46th St. and Broadway under the amended 1998 deal: $19.9 million.
NEW YORK TIMES: "Marriott Marquis Lease Could Cost Taxpayers $344.9 Million, Audit Says" - 2/12/2013
EXCERPT - The Marriott Marquis, the 50-story convention hotel in Times Square, sits atop some of the most valuable land in all of New York City, if not the world.
The most striking finding in the audit is that the city appears to have drastically undervalued the land under the hotel.
CRAIN'S: "Liu targets city's Marriott Marquis lease" – 2/12/2013
EXCERPT - Comptroller John Liu is calling for the city to renegotiate a land-lease agreement with the Marriott Marquis Hotel in Times Square, claiming that the 31-year-old property is getting a sweetheart deal from the city.
REUTERS: "New York City should hike taxes on big business-comptroller" - 12/20/2012
EXCERPT - New York City's top financial officer and possible contender for mayor in 2013, John Liu, proposed on Thursday tax hikes for big businesses and an end to Madison Square Garden's $15 million annual property tax exemption.
The proposals by New York City Comptroller John Liu include tax hikes on private equity firms, which would help offset his plan for $500 million in tax breaks and lowered fines for 90 percent of the city's small businesses.
Liu also proposed examining tax breaks for special interests. Insurance companies, for instance, have not paid the general corporation tax since 1974, at a cost of $300 million annually to the city, he said.
Liu's package would use the revenue generated by those measures to offset his plan to ease the tax burden for small businesses.
He proposed ending the city's general corporation tax for all businesses with liabilities under $5,000 -- about 240,000 business in the city, or 85 percent of those that currently pay the tax.
His plan would also reduce some fines, as well as exempt businesses that make less than $250,000 in annual income from the city's unincorporated business tax.
NEW YORK TIMES: "City's Economic Development Corporation Agrees to More Openness" – 12/10/2012
EXCERPT - The Bloomberg administration's main agency for economic development has pledged to make its operations more transparent, thanks to a new agreement with the city comptroller, John C. Liu.
Among other pledges, the corporation, which offers financing, tax exemptions and other development programs, is expected to publish its capital and budget expenses on the comptroller's Web site, Checkbook NYC. The corporation must also detail how companies that have received contracts from the corporation have lived up to job-creation promises — and how they may be penalized, if they have failed.
"After years of operating in the shadows, the E.D.C.'s books have finally been cracked open," Mr. Liu said. "These new measures will ensure that E.D.C. focuses on its mission of boosting employment. If they still can't get their act together, then they should close up shop and stop wasting taxpayer dollars."