Week of August 30, 2004
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by JACK LYNE, Site Selection Executive Editor of Interactive Publishing
Goldman on Aug. 19 announced its plans for the new, 1.9-million-sq.-ft. (171,000-sq.-m.) facility, which will be located in Battery Park City. In addition to the headquarters, the building will house the company's front-office personnel, including investment banking and commodities trading.
The financial heavyweight is getting $1 billion in Liberty Bond financing to assist in the construction of the facility. In addition, the company will qualify for almost $50 million more in incentives if it attains its hiring projections.
Almost all of those subsidies are contingent on Goldman's maintaining total New York City employment at least at the company's current level of 9,178 workers. The agreement calls for the company to have that many employees by the time of its 2009 or 2010 move-in at the new building and to maintain that level through 2028.
Goldman says that about 7,400 of its New York City employees will relocate to the new headquarters. The company will construct its 40-story facility on site 26, Battery Park City's only remaining commercial tract.
"The decision by Goldman Sachs to invest almost $2 billion in a new headquarters building in Battery Park City is proof positive of the growing confidence of the financial services sector in the revitalization of the city and Lower Manhattan," Mayor Michael R. Bloomberg (R) said in a statement. (Bloomberg was attending the Athens Olympics at the time of the announcement.) "The firm's creation of a state-of-the-art trading facility and its expectation of adding thousands of jobs over the next 15 years speak volumes to the progress we're seeing every day."
Goldman hasn't said yet what kinds of new positions it will be creating or where the jobs will be located in New York.
"We are delighted to reaffirm our 135-year-old commitment to downtown Manhattan," said Goldman Chief Executive Henry M. Paulson Jr. "We also want to commend the governor and mayor for their efforts in revitalizing our neighborhood."
Project 'Is Exactly What theThose efforts include providing Goldman with the $1 billion in Liberty Bonds. Both the city and the state must approve all awards from the bond program.
Liberty Bond Program Was Created for'
Gov. George E. Pataki (R) called Goldman's announcement "another major step forward in our efforts to revitalize and bring jobs back to Lower Manhattan . . . further enhancing the city's reputation as the world's financial capital."
Goldman's Liberty Bonds are coming from the $8-billion program that the federal government created in 2002 to help in the post-Sept.-11 recovery of Lower Manhattan and New York. The bonds provide less expensive financing for development. Since Liberty Bonds generate tax-free income, developers pay a lower interest rate but can still offer bonds that appeal to investors.
"This fantastic project is exactly what the Liberty Bond program was created for," said Deputy Mayor Daniel L. Doctoroff. "With the city, state and federal governments working with leaders of New York City's financial community, we are making great strides toward full economic recovery."
Sachs has considerable vacant space in Jersey City, N.J., where the company earlier this year completed the construction of a 40-story, 1.5-million-sq.-ft. (135,000-sq.-m.) office tower. But the tower wasn't considered for this project. Sachs originally planned to relocate some of its traders to the Jersey tower. But that idea was soon dropped after many traders rebelled over relocating. Some departments (including real estate) have made the move to the Jersey side, but much of the building remains vacant.
Commercial developers, however, haven't been rushing en masse to access the bond funding. Of the $6.4 billion in Liberty Bonds that are earmarked for commercial construction, only some $3.5 billion have thus far been allocated or received tentative approval. By comparison, of the $1.6 billion in Liberty Bonds available for housing construction, $1.3 billion have been allocated.
One of the most high-profile commercial developments that's receiving bond assistance is Bank of America www.bankofamerica.com), which is partnering with The Durst Organization (www.durst.org) to build a new $1-billion tower in Midtown Manhattan. The Bank of America Tower project is receiving $650 million in Liberty Bonds. (For more details, see "Bank of America Begins Work on $1-Billion NYC Tower," the SiteNet/IAMC Dispatch's Snapshot from the Field for Aug. 16.)
$50 Million in Additional AidGoldman will be the first company to build a headquarters in Lower Manhattan since JP Morgan, which constructed its Wall Street facility in 1988.
Goldman is now working out details of its ground lease with the Battery Park City Authority (BPCA at www.batteryparkcity.org), a "public benefit corporation" that operates independently from the city's government. Local real estate players anticipate that the lease will run through 2069.
As part of the lease agreement, the company is expected to receive as much as $13.4 million in sales tax exemptions. Those exemptions will be for new positions that increase Goldman's total New York City employment above 9,413 jobs. The BPCA's ground lease is also expected to offer a program with in-lieu-of-real-estate- tax payments. That arrangement will allow Goldman to receive tax savings similar to those for companies occupying facilities that they own.
In addition, the company will be eligible to receive as much as $25 million in grants through the federally funded Job Creation and Retention Program (JCRP). The JCRP initiative is primarily aimed at the some 140 Lower Manhattan firms south of Canal Street that have more than 200 employees. The JCRP funding will be based on Goldman's retaining at least 8,100 jobs in New York City and creating at least 800 new jobs in Lower Manhattan over the next five years.
The company will get another benefit of about $10.3 million in business incentive rate discounts from Con Edison, which has signed a 15-year deal to provide power for Goldman's Lower Manhattan facilities.
The New York Building Congress (NYBC), an association composed of the city's construction, design and real estate community, strongly endorsed Goldman's project.
"There are few development projects that could yield greater benefit to Lower Manhattan and the city of New York at this time," NYBC President Richard T. Anderson told the New York City Planning Commission in June. "This proposal should be evaluated thoroughly and then expedited for the benefit of all New Yorkers. From every possible standpoint, this project is a win-win for the city and state of New York."
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