“Using state assets to put money in the pockets of your friends is wrong,” said Donohue. “Former Newark Mayor Sharpe James just got indicted by federal authorities for using Newark assets to enrich his friends. It’s time for the Governor to step up and tell us – is he or anyone in his Administration seeking or receiving counsel from Goldman Sachs on this hare-brained scheme? Haven’t we had enough surprises from our Governors in recent years?”
~Michael Donohue, 1st District Assembly Candidate
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July 19, 2007
Goldman Sachs Gets Deal for 2nd Jersey City Tower
By CHARLES V. BAGLI
NY Times
The Goldman Sachs Group received approval yesterday to build its second tower on the Jersey City waterfront, a 30-story, $560 million office building that would house employees moving across the river from New York and accommodate the future growth of the firm.
The approval came in a vote by the Municipal Council to grant a property tax break worth roughly $4 million a year for the project, which had already been approved by the planning department. Goldman said it would probably begin construction late in 2009, about the time it completes a $2.4 billion headquarters one mile to the east, at Battery Park City in Lower Manhattan.
The deal in Jersey City comes less than two years after Goldman promised to retain 9,000 employees and add 4,000 in the coming years in Manhattan, in return for one of the most generous subsidy packages in New York City ever granted by state and city officials.
The new Goldman tower in Jersey City would hold about 3,500 workers and add to that city’s rapidly growing skyline.
But it raises questions about the wisdom of granting corporations tax breaks in return for jobs. Critics of the practice contend that Goldman Sachs, one of the most profitable investment banks on Wall Street, may be unable to fulfill all its promises to New York and New Jersey.
Goldman’s first tower in Jersey City, at 30 Hudson Street, is only 60 percent full today and could accommodate 3,000 more workers.
“Goldman has perfected the art of grabbing subsidies on both sides of the river,” said Bettina Damiani, director of Good Jobs New York, a group that conducts research on economic development. “We can only hope that elected officials can get equally good at ensuring that Goldman lives up to its job promises. Too often, taxpayers get stuck with the tab and don’t get the jobs that were promised.”
Peter Rose, a spokesman for Goldman Sachs, said the company was planning for the future and had made a substantial investment in both Lower Manhattan and Jersey City. The property tax abatement that Goldman Sachs just received in Jersey City, he said, is available to any company moving there.
“We have to look at the economics of where we put a building,” Mr. Rose said. “We may be a profitable firm. But that doesn’t mean we don’t watch our expenses. This is a win-win for Jersey City and Goldman Sachs.”
The firm says it has 9,000 to 10,000 employees in New York and 3,662 in Jersey City.
New York City officials expressed mixed opinions. “The great news is that Goldman Sachs is continuing to grow,” said Robert C. Lieber, president of New York City’s Economic Development Corporation. But, he said, the commitments Goldman made in New York “have consequences if they’re not upheld.”
The tax break for Goldman provoked a lively debate yesterday at the Municipal Council’s meeting.
It was generally acknowledged that Goldman was a model corporate citizen. But the Rev. Kevin Agee, pastor of the Calvary C.M.E. Church, said it was “morally reprehensible to allocate tax abatements to folks who are billionaires and millionaires while the poor, and even the middle class, gets shafted.”
Elnora Watson, president of the Urban League of Hudson County, said she was grateful that Goldman Sachs donated $7,500 to her group last year, but she opposed the abatement. She said the Council should work harder to ensure that jobs go to local residents, a sentiment also expressed by other speakers.
Raj Patel, who owns a travel agency in Jersey City, said that he pays full property taxes and an additional $960 a year for a special improvement district. “These people are getting freebies,” Mr. Patel said. “It doesn’t make sense.”
But the president of the Municipal Council, Mariano Vega Jr., said that Goldman Sachs had done a lot for Jersey City since it opened its first tower about four years ago. Aside from the jobs and tax revenues, he said, the company has contributed to programs for affordable housing, recreation and education. And he said that Jersey City needed to provide incentives for companies if it wanted to compete with Lower Manhattan, Brooklyn and other locations.
The Council ultimately voted 6 to 1 in favor of the deal.
Viola Richardson, the sole council member to oppose it, said that she was not against Goldman Sachs, but that it was no longer necessary to provide incentives to get companies to move to the waterfront.
Goldman Sachs has long been a downtown stalwart. In 1999, the company bought three development sites at the former Colgate toothpaste factory in Jersey City. Five years later, it built 30 Hudson, at 42 stories the tallest building in the state, after bargaining for tax breaks worth more than $160 million.
Goldman Sachs initially planned to move equity sales and trading operations to the tower from Manhattan. But executives rebelled against the plan, and the company has been slow to fill the tower, which cost $1.3 billion to build.
A short time later, Goldman announced plans to build a 42-story headquarters on a site in Battery Park City, which would have a view of its Jersey City operations.
Grateful for the commitment downtown after the attack on the World Trade Center, state and city officials offered the company $1 billion in tax-free bonds and about $30 million in tax breaks.
But after snags in the negotiations, state and city officials enhanced their offer by providing $1.65 billion in bonds and $140 million in tax breaks and cash, as well as a sharp reduction, worth an estimated $9 million a year, in Goldman’s payments in lieu of taxes.
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