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Speech to LICBDC Business Breakfast
March 25, 2009
· Where We've Come From
· Before starting this morning, I want to share some good news and bad news with you.
· The bad news is that I recently read that New York's Mayor was quoted as saying: "This is the most gloomy period which New York has ever known. The number of failures is so great daily that I do not keep a record of them even in my mind."
· The good news? The New York Mayor who uttered those words was not Michael Bloomberg, but Philip Hone. And the quote is from 1837.
· This quote serves an important purpose: to remind us, as we navigate extremely difficult fiscal and economic waters ahead, that New York has been here before, and each time the City faced seemingly insurmountable obstacles, it not only overcame them, but emerged on the other side a better and more prosperous City.
· We don't even have to look back to the 19th Century for evidence of this. Just look to 2002, when Mayor Bloomberg first came into office...
o WTC smoldering and doubts about NYC's future; didn't succumb, emerged stronger:
§ Highest bond rating in 80 years
§ Record 47M tourists in 2008, making NYC the #1US tourist destination for the 2nd consecutive year
§ Rezoned fully 1/6th of City's land area (6,000 city blocks)
§ And we've literally changed the physical City:
· HY: Laid groundwork for NYC's next great CBD; rezoned for 40 MSF of commercial, residential, hotel; $2BN raised to extend 7; work underway
· Mets and Yankees Stadia: Leveraged City $$ to induce $2+BN private investment and thousands of construction/ permanent jobs; new infrastructure; no maintenance; $130+M in net fiscal benefit; April open
· Lower Manhattan: No City control; Mayor - leverage to force parties to table
o Result: More realistic deal with real deadlines and real consequences; 1WTC rising (done 2013); Steel going in for Memorial (done 9/11/11)
· But let's face it, times once again are tough; facing new challenges
o # of employed City residents fell by 36K in January alone, the most since 1976
o Wages expected to decline $39 billion from $293BN in ‘08 to $254BN in ‘10
o Disproportionate Wall Street impact: 9% of private sector employment; 34% of payroll
o 2008: Worst drop in stock market since 1931; ~$1TN in write-offs
o City revenues: drop $5BN from $42.8BN in FY08 to $37.1BN in FY10
· Bad News indeed, so what do we do?
o Natural instinct is to despair, but not the Bloomberg Administration
o Plan to move forward with a three-part strategy focused on work: evaluating how to make government work better, creating opportunities to ensure New Yorkers have work for the future, and undertaking substantial new investments in public works.
o Let's look at each part of the strategy in more detail:
(1) Making Government Work more efficiently and effectively
· Doing More with Less (started even before the downturn)
o "Rainy day fund" used to help balance FY09, but will run out in FY10
o Holding City-funded expenses essentially flat between FY09 and FY10, from $43.2BN to $43.4BN
o BUT, we're not going to make the mistake of the 1970s: Keep city clean and safe, even if it means generating more revenues
o Quality of life is not just a campaign slogan, it's good economic policy
· Working to get government out of the way of business
o End to UBT for small businesses (could help 17K, but need Albany) and reform environment regulations associated with ULURP
(2) Involves creating Work opportunities for New Yorkers
· Incumbent for NYC to remain financial capital
· FS initiatives: $15 million (City and EDC) + $30 million (Federal) to create 25K new jobs over next 10 years
· Redirect talent shed by banks, grow next generation, strengthen FS infrastructure, like exchanges and other utilities
· Still need to diversify and develop counter-cyclicals
o NYC does well on 2 ends of spectrum: Basic science (#2 recipient of NIH $; spin out 20 to 30 businesses/yr., but leave) and HQs (BMS; Pfizer;etc.)
o Problem: NYC lacks commercial lab space to create next generation
o Solution: ERSP ($700M private investment by Alexandria; $19M City funds; 300KSF first phase open in 2010) and BioBAT (With SUNY and NYS; 500KSF; IAVI 40KSF)
o Filmmakers did not return to City after 2001 strike
o MOFTB offered tax credits and invested in studios, i.e. $22M Kaufman Astoria Studios expansion (NYCEDC: $5M) for 40KSF studios, sound stage, support space; broke ground in October
o 92% increase in shooting days since 2002
· Also working to expand: Media; green technology; higher education, arts (will announce specific initiatives in each of these over course of year)
(3) Involves Public Works: Infrastructure
· Continue to invest...Why? Positions NYC to take advantage of recovery; Keeps people employed through downturn
· Capital budget: In FY09, spending a record of more than $10 billion, a 5% increase from FY08; BUT not immune to hard times: cut 30% in FY10-FY19
· Still, FY09 to FY13 (5 years) is ~40% higher than FY95 to FY01 (7 years)
· Back-fill some spending through federal stimulus ($5BN in shovel-ready projects)
· Examples of three major initiatives in Queens: Willets Point
o 62-acre toxic waste site, sought to redevelop since Moses
o Passed ULURP in Nov.; rezoned for 5K+ housing units (35% affordable), retail, convention center, office space, new school, open space, etc.
o $400+MM in budget
o Next steps: Begin selection of developer and significant infrastructure design in 2009
o 30-acre site
o Passed ULURP in Nov.; rezoned for 5K units of housing (60% afford. to middle income - most since Starrett City)
o $222M in budget + $92M for housing
o Next steps: Complete acquisition from ESDC/PA in 2009; break ground on infrastructure YE2009
· Long Island City Commercial Core
o 2001: Rezoned 37-block area to create City's 4th CBD; now development underway
o Gotham Center
§ 3.5MSF commercial development; financing deal reached in the weeks following Lehman collapse
§ $316M for first phase (662KSF office tower to house City Health Dept.), demolished Queens Plaza Garage in October
§ Next steps: Phase 1 construction complete YE11
o Queens Plaza Improvements
§ 1.5-acre open space, improved bikeway, medians, streetscape improvements, new lighting and tree-planting
§ $42M in budget
§ Next steps: currently reviewing construction bids; start construction this summer
o Jackson Avenue Improvements
§ New median, roadway alignment, streetlights, landscaping, and other related improvements; expand and improve open spaces in and around Jackson Avenue
§ $17M in budget; construction underway
§ Next steps: Open spaces complete this summer; entire project done Fall 2010
· Conclusion: I started with a little history, so I'll end with it as well.
· Look back to the Great Depression, which was even worse than now: national unemployment at 25%, 40% of national banks failed, stock market lost nearly 90% of its value
· But there were also those who had the courage to keep pushing forward, to keep building and investing, and the evidence of their forward-thinking remains: Rockefeller Center, the Triborough Bridge, and the Empire State Building...these icons that define our City today were all built during the Great Depression.
This should be an inspiration to us, for as tough as times are - and they are tough - New York has been through worse. As long as we keep focused on the future, make the essential decisions and investments that need to be made, we will not only get through this difficult period, but once again emerge a stronger and more vibrant City.