A while back we promised our readers that from time to time we would revisit failed redevelopment/condemnation projects, so here is the next chapter – the saga of the New York Stock Exchange.
Back in the 1990s the NYSE decided that it had outgrown its present quarters and should build a new facility. But this is modern America, so the way you go about a deal like that is not just to build the new building, but to go schnorring to the government looking for a freebie. In the case of the NYSE, they accomplished that feat by threatening to move to New Jersey. No, we are not making this up. The New York Stock Exchange de facto threatened to become the Hoboken Stock Exchange – or something like that. Of course, few people believed that the NYSE would carry out its threat, but it worked for them. In 1998 it struck a deal with the Giuliani administration, with Mayor Giuliani pronouncing this deal to be a Christmas present for New York. Which only tends to prove the adage that one should beware of politicians bearing gifts, and that Mayor Giuliani was confusing receiving with giving — not the same, even if both are involved in Christmas gifts.
In order to obtain the site for the new NYSE building, the city would acquire a 28-story apartment building at 45 Wall Street, for $160 million, plus a relocation package for the tenants, that was estimated to be worth as much as $15,000 each (there were 435 apartments in that building, so we will let you do your own arithmetic). The city also acquired an office building from J.P. Morgan Chase, and put down a $22 million deposit. The total projected land costs were estimated by the New York Times to come to over $400 million (and you know what we think of the usual government pre-acquisition estimates). But you ain’t seen nothin’ yet. On top of that the city would pony up $480 million in cash toward construction costs, plus $160 million in tax breaks. Altogether it came to a circa $1 billion package of goodies. It doesn’t get much better than that, does it?
Then came 9/11.
As those involved contemplated the smoking ruins of the World Trade Center, it came to the movers and shakers behind this deal, that maybe it wasn’t the world’s smartest move to put up another, high rise, high-profile building that would make another tempting target for Middle Eastern terrorists. So the deal came unraveled.
The NYSE walked away, having spent only $10 million. But it was the City of New York that wound up wearing the barrel at the end of this party. The New York Times reported that, first of all, the city forfeited the $22 million deposit that had gone to J.P. Morgan Chase. Then there was the matter of unraveling the acquisition of that apartment building at 54 Wall Street, where the city had already spent some $6 million. Moreover, under the terms of the deal with the owners of that building, the city became obliged to pay them $1 million per month for lost rents, until the building became fully occupied again. Last time we looked (in 2003) the city was still paying.
The New York Times reported at that time that the city’s estimate of the cost of unraveling this deal would come to $109 million, a figure that like other government estimates, was likely to grow. You can find a concise summary of these events in Charles V. Bagli, 45 Wall St. Is Renting Again With Tower Deal Failed, N.Y. Times, February 8, 2003, p. B3.
Your tax money at work.