New York Stock Exchange threatens move to N.J. in bid for new Wall Street digs Tactic to gain subsidies is common, decried as 'corporate welfare'

November 08, 1998|By NEW YORK TIMES NEWS SERVICE

NEW YORK -- Even as city and state officials were clinching a deal last week to keep one financial market in Manhattan, the New York Stock Exchange increased the pressure for its own generous deal by talking to developers about building a new trading floor in Jersey City, N.J.

The routine threat to cross the Hudson River drew the routine reaction: Officials in New York put a $600 million incentive package on the bargaining table, a sum that would cover more than half the cost of building and outfitting a new headquarters for the New York Stock Exchange directly across from its historic home on Wall Street, according to negotiators on both sides of the talks.

The subsidies would also be triple those granted to the Nasdaq and American Stock Exchanges in a tentative deal struck last week for a new joint headquarters, possibly near Times Square.

Flirting with New Jersey has become an enduring ritual for many of the city's largest and most profitable corporations, from Avon Products and Conde Nast Publications to General Motors Corp. and NBC. No industry has used the tactic more than the commercial banks, investment banks and insurers that make up New York's financial sector.

And whether the companies truly intend to leave, it has worked. City and state officials have granted more than $2 billion in tax breaks, cash and low-cost electricity over the past 15 years to companies that threatened to move to New Jersey, Connecticut and elsewhere.

"The city of New York has become the softest mark in the country for companies looking to extract corporate welfare from government," said state Sen. Franz Leichter, a frequent critic of the deals. "We're spending hundreds of millions of dollars on the financial industry, which is -- while important to New York -- downsizing. Couldn't this money be better spent on transportation, schools and other economic development initiatives?"

vTC Perhaps surprisingly, Leich-ter's view is shared by developers like Leonard Stern, chief executive of Hartz Group, which owns the Colgate Center office complex in Jersey City.

Some companies will move to less expensive space outside New York, he said, but most have no intention of doing so, even though they "routinely inquire about how to shake down the city."

Despite the millions of dollars in subsidies provided by New Jersey or New York, he said, there is no net gain for the region's economy. "The city is paying an unnecessary price in allowing itself to be shaken down by one tenant or another," Stern said. "Too many politicians know the price of everything, but not the value of New York City."

Officials in New York contend that they have to take the relocation threats seriously, since New Jersey lures firms with subsidies of its own.

Pub Date: 11/08/98

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