New plan for downtown announced.
The real estate community for the most part praised the programs, but some executives were hopeful even stronger proposals would be undertaken. The administration of the various and differently phased abatements is a concern, particularly when it comes to tracking individual tenant abatements.
Speaking in the ballroom of the refurbished Vista Hotel, before the Association for a Better New York's first breakfast ever held in Downtown Manhattan, mayor Rudy Giuliani outlined his proposals, developed by a task force over the last year. Many must still be approved by the City Council and in some cases the Albany legislature and could face delays.
The programs include tax abatements for the construction of "Smart Buildings," the rehabilitation of older buildings, direct tenant cost savings, energy savings, and the study of transportation alternatives, including new ferry service.
Emphasizing the proposals were open for comment and discussion, Giuliani laid out the overall foundation of abatements that will bring tenant costs down by $5 per square-foot and make the city more competitive with New Jersey and Connecticut.
Abatements of commercial rent and real estate taxes are planned for tenants that sign new and renewal leases, while real estate tax abatements are proposed for owners constructing new buildings or renovating old ones for commercial, mixed-use or residential occupancy.
Giuliani said the program will provide incentives to the real estate community to direct its time, efforts and money to Lower Manhattan. He thanked the business leaders for supporting him in the budget fight with the City Council and understanding that growth in the economy is needed to reduce and eliminate the deficit, attend to the city's social services, rebuild the infrastructure and generally provide for the well being of the citizens.
The proposals are designed to target the area from Chambers Street southward. As the third largest business district after Midtown and Chicago respectively, Downtown is on a steep decline. Between 1991 and 1994, billable assessed value declined 28.6 percent - costing the city $115 million per year in actual taxes. During the same period, the rest of Manhattan declined 8.2 percent, but Midtown has now stabilized.
"Lets act, let's act now, let's do some things that are bold and new and let's stabilize and revitalize Lower Manhattan," the Mayor said.
The Downtown owners have already banded together as the Alliance for Downtown New York in the city's largest Business Improvement District and are contributing $8.6 million towards signage, sidewalks and marketing programs.
While some proposals are short-term to jump start the economy, others are designed to be effective for the long term so as to restore Lower Manhattan "to its traditional role of the major engine of economic growth for the entire city."
Giuliani received a round of applause when he said, "The overall goal is to consolidate and simplify Lower Manhattan governing regulations. The object is to make development opportunities more as-of-right and predictable, and less subject to political interference and long, costly and debilitating delay."
To accomplish these goals, he is proposing the temporary reduction of the commercial rent tax and said he is looking forward to eventually eliminating that tax.
The real estate community fielded a large turnout for the breakfast. In a scene reminiscent of REBNY galas, table hopping was rampant until Lewis Rudin, chairman of ABNY and the Rudin Organization, insisted everyone sit down for the program.
Commending the mayor, Robert Douglas, president of the Downtown Lower Manhattan Association (DLMA), said it is essential for Downtown's survival that the public and private sectors work together. "This is a mayor who listened to our problems, listened to our ideas for improvement and actually did something about it," Douglas noted.
Bernard Mendik, chairman of the Mendik Company as well as the Real Estate Board of New York (REBNY), said the plan is long overdue.
"The mayor and his staff have been spectacular and very, very cognizant of the things that have to be done," Mendik said. "It has big incentives for tenants who sign renewal leases within the next three years and it's exactly what the city needs, and what Downtown needs, to jump start this revitalization."
With the DLMA and REBNY working behind the mayor, Bertram F. French, vice chairman of Cushman & Wakefield, said many of these projects can be accomplished.
Steven Spinola, president of REBNY, emphasized this is a positive step in the revitalization of Downtown. "The plan is comprehensive, it's detailed, and I think it's going to make the difference in terms of tenants making decisions that they want to renew their leases in lower Manhattan," Spinola said. "It will bring costs down between $3 and $5 a square foot. And more importantly, it is a strong vision for Lower Manhattan over the next decade."
Spinola noted the program contains no payback provision but includes significant energy cost reductions.
The Planning Dept. came out with a comprehensive plan for Lower Manhattan in 1993 that identified issues and goals for the area. Since then, the department has worked with the Mayor's Task Force to refine the current proposals.
Joseph Rose, chairman of City Planning, explained the Task Force was trying to create a mixed-use environment for Lower Manhattan and facilitate the opportunity for the construction of new commercial buildings where possible.
"We will undertake some zoning text changes to make it easier to convert buildings to residential use and create a special zoning district that will permit new development to proceed easily, and without the kind of regulatory obstruction that can make you miss business cycles," Rose added.
The tax package is expected to be retroactive to January 1, 1995 and Rose said they are working towards implementing the zoning actions by end of 1995. "We see this as something that has to move quickly," Rose added.
Richard Kennedy, associate director of Cushman & Wakefield, is active with the DLMA and was pleased that the administration was responsive to the needs of the owners. "The concern was to make it very competitive with places like Connecticut and New Jersey," he noted.
Jerome Belson, president of Associated Builders and Owners and Belson Enterprises, said the plan is exciting, "because it makes available the opportunity to rebuild and reoccupy and revisit the Downtown area."
"They have been very careful when drawing it up so that they don't make the benefits available to those moving from the outer boroughs, so you're not depleting the outer boroughs," Belson explained. "It's a very carefully thought out plan and it may be just the kind of impetus to allow organizations that are Downtown to stay Downtown and then to encourage others to expand."
William C. Rudin, executive vice president of the Rudin Organization, said "We're very enthusiastic about the mayor's speech. He said all the right things and now we have to get it implemented." Rudin believes the response from the marketplace will be positive because there are deals that have been waiting for this announcement. "You'll see an immediate impact and capital coming," he added.
While the effort is there and the intentions are good, Gil Robinov, executive vice president of Koll Management Services, said he wasn't too sure of the substance. "The occupancy tax is not going to add up to a helluva lot," he said.
But he is glad the MTA will be completing a study by the summer of 1995 that will determine the feasibility of bringing the LIRR and the Metro North rail lines into Lower Manhattan. Robinov was hopeful another study will find a way to provide a fast lane for taxis and livery vehicles to travel south of 34th Street to Lower Manhattan. "Executives can jump in a cab or some kind of taxi pool and be Downtown in 20 minutes, safely," he said.
Although Richard Anderson, president of the Building Congress, was happy to see the mayor put his "imprimatur" wholeheartedly behind this plan, he believes the scheme is lacking a critical component, such as a public/private development.
"I'd like to see an aggressive effort to build a new stock exchange," he said, "or to assure the location of the commodities exchange."
Although this plan has zoning changes, a tax reduction and financial incentives, Anderson observed, "a real plan has to be comprehensive and more of a long term document. I don't think that's there yet."
At least they are looking to do something, Robinov said, "because if they don't do something, Downtown will go away."
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|Title Annotation:||abatement strategy for downtown Manhattan, New York, New York|
|Publication:||Real Estate Weekly|
|Date:||Dec 21, 1994|
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