JANUARY 2004
Cover
Connections to Albany
Rochester Rolls
Home Grown and Growing (Syracuse)
Lake Effect
Request Information
NEW YORK SPOTLIGHT
Closing Ranks,
Opening Alliances
Opening Alliances
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ven executives residing in New York know it's usually not at the top of the list when it comes to business climate – the state came in 19th in a corporate leader survey on that topic conducted by Site Selection in August 2003. And the Small Business Survival Committee ranked it 45th on a list of entrepreneur-friendly states.
Taxation has something to do with it. After all, the state has recently raised property taxes, income taxes and sales taxes. In addition, big rises in property taxes have occurred in the Big Apple, Nassau County and Rensselaer County. A study by the Tax Foundation found that Maine and New York tie for having the highest combined state and local tax burden. And the state has more debt than any other, estimated in the spring of 2003 at $33 billion.
But the state's market, port access and namesake city's business heritage help to make up the difference.
In fact, among those corporate respondents to the Site Selection survey, one pharmaceutical executive ranked the Empire State first, citing ease of access to government decision-makers. Others ranking the state highly spoke of available incentives and available talent.
New York does indeed top some ranking, including the ranking of rankings. In mid-2003, a D.C.-based government consultancy called the National Policy Research Council (NPRC) took a look at 3,000 different measures across 11 categories like dynamism, public safety and entrepreneurism. New York's natural market advantages overcome its shortcomings to give it first place, while New York City comes in third among U.S. metros, behind Dallas and Houston.
Spencer Tracy, NPRC executive director, says that result is framed within the context of a shift from traditional manufacturing to a more thorough and diverse knowledge base at the root of future competitive advantage.
"The old paradigm was [access to] a large blue collar labor pool, proximity to market and cheap raw materials," he says. "New factors are knowledge workers, creativity and innovation, capacity to develop and harness innovation, quality of life, natural environment and a rich education system."
Certainly the shift is on: Between the dotcom meltdown in 2000 and the spring of 2003, New York lost 300,000 jobs. But even as big New Yorkbranded companies like Kodak and Carrier shed even more positions, new corporate projects in the Empire State reflect this fundamental economic transition.
In March 2003, JetBlue Airways received $50 million in triple tax-exempt financing for the expansion of its operations, including the renovation of an existing 25,000-sq.-ft. (2,323-sq.-m.) warehouse and support facility and the demolition of a second facility to make way for a 107,000-sq.-ft. (9,940-sq.-m.) hangar and technical support facility. The company broke ground for the latter in October 2003, planning to invest some $45 million in that facility alone. The property is leased from the Port Authority of New York and New Jersey, which in turn recently signed a watershed agreement with the City of New York extending its own lease on the property (as well as LaGuardia Airport) through the year 2050.
Combined with a pending renovation of the Eero Saarinen-designed TWA terminal at JFK, this could be only the beginning for JetBlue – in the air and on the ground. First, the company has just signed contracts to purchase 100 Embraer 190 aircraft, with options for an additional 100. And in announcing the company's sterling financial results in late October 2003, David Neeleman, CEO of JetBlue, said, "We are dedicated to ensuring we have the right people, processes and facilities in place to support our continued plans for steady, controlled expansion."
Perhaps just as crucial to the city is that lease extension agreement at the two airports, which came after a decade of negotiations. It provides for an upfront payment of almost $700 million, which includes a $500-million lump sum payment plus a new $93.5 million minimum annual rent payment for 2002 and 2003 (with interest).
Adding to the project's stature will be its design by none other than Frank Gehry. The "landscape-defining edifice" will be built in partnership with Manhattan-based The Georgetown Co.
"As our need for space grew, we began to think it might be advantageous to create our own working environment," said Barry Diller, IAC/InterActive Corp. chairman and CEO. "With more than 25,000 employees and 116 locations in 31 states and 20 countries, and operations spread out across Manhattan, we wanted one place where al our activities could find common ground, tailored to the particular needs of a company engaged in the cutting edges of Internet e-commerce life."
The federally backed, tax-exempt $8-billion Liberty Bond program allots up to $800 million for retail projects in Lower Manhattan, up to $1.6 billion for residential rental projects in Lower Manhattan and up to $2 billion for commercial projects in New York City outside Lower Manhattan. InterActive will also be eligible for up to $500,000 in discounted energy through Con Edison's Business Incentive Rate Program. The company plans to be the sole tenant of the new building and will locate more than 250 employees there.
Just outside the New York metro, in Suffern, a community of 11,000 right on the state line with New Jersey, Avon Products broke ground in August for a $100-million R&D complex on the same ground where it began manufacturing products in 1897 under the name California Perfume Co.
The move comes on the heels of a North American facility realignment that will see Avon's Montreal plant close in early 2004, with most of that work being consolidated at plants in Springdale, Ohio, and Morton Grove, Ill. In addition to building a $40-million plant in Russia (expected to open in mid-2004), Avon is calling on China just like every other company is, with an aggressive plan to open 500 stores a year. But that overseas growth is backed by this large R&D investment in its home territory. The 11-acre (4.5-hectare) campus will feature 225,000 sq. ft. (20,903 sq. m.) of office and lab space, with around 280 employees set to occupy it in March 2005.
As part of the agreement that cemented the deal, the Rockland Industrial Development Agency granted the company state sales and mortgage tax exemptions, effectively saving Avon some $2.6 million in sales tax alone. R&D tax credits from the state will mean another $7.2 million saved. Avon will also benefit from Payment in Lieu of Taxes (PILOT) agreements with three communities and the local school district. Finally, a $650,000 grant for the project will be forthcoming from Empire State Development Corp. The company had reportedly considered sites in New Jersey and California for the R&D operation.
Taxation has something to do with it. After all, the state has recently raised property taxes, income taxes and sales taxes. In addition, big rises in property taxes have occurred in the Big Apple, Nassau County and Rensselaer County. A study by the Tax Foundation found that Maine and New York tie for having the highest combined state and local tax burden. And the state has more debt than any other, estimated in the spring of 2003 at $33 billion.
But the state's market, port access and namesake city's business heritage help to make up the difference.
In fact, among those corporate respondents to the Site Selection survey, one pharmaceutical executive ranked the Empire State first, citing ease of access to government decision-makers. Others ranking the state highly spoke of available incentives and available talent.
New York does indeed top some ranking, including the ranking of rankings. In mid-2003, a D.C.-based government consultancy called the National Policy Research Council (NPRC) took a look at 3,000 different measures across 11 categories like dynamism, public safety and entrepreneurism. New York's natural market advantages overcome its shortcomings to give it first place, while New York City comes in third among U.S. metros, behind Dallas and Houston.
Spencer Tracy, NPRC executive director, says that result is framed within the context of a shift from traditional manufacturing to a more thorough and diverse knowledge base at the root of future competitive advantage.
"The old paradigm was [access to] a large blue collar labor pool, proximity to market and cheap raw materials," he says. "New factors are knowledge workers, creativity and innovation, capacity to develop and harness innovation, quality of life, natural environment and a rich education system."
Certainly the shift is on: Between the dotcom meltdown in 2000 and the spring of 2003, New York lost 300,000 jobs. But even as big New Yorkbranded companies like Kodak and Carrier shed even more positions, new corporate projects in the Empire State reflect this fundamental economic transition.
Real Ease of Access
New York City is reeling in projects of both the corporate and public varieties that stand to benefit the city for a long time to come.In March 2003, JetBlue Airways received $50 million in triple tax-exempt financing for the expansion of its operations, including the renovation of an existing 25,000-sq.-ft. (2,323-sq.-m.) warehouse and support facility and the demolition of a second facility to make way for a 107,000-sq.-ft. (9,940-sq.-m.) hangar and technical support facility. The company broke ground for the latter in October 2003, planning to invest some $45 million in that facility alone. The property is leased from the Port Authority of New York and New Jersey, which in turn recently signed a watershed agreement with the City of New York extending its own lease on the property (as well as LaGuardia Airport) through the year 2050.
Combined with a pending renovation of the Eero Saarinen-designed TWA terminal at JFK, this could be only the beginning for JetBlue – in the air and on the ground. First, the company has just signed contracts to purchase 100 Embraer 190 aircraft, with options for an additional 100. And in announcing the company's sterling financial results in late October 2003, David Neeleman, CEO of JetBlue, said, "We are dedicated to ensuring we have the right people, processes and facilities in place to support our continued plans for steady, controlled expansion."
Perhaps just as crucial to the city is that lease extension agreement at the two airports, which came after a decade of negotiations. It provides for an upfront payment of almost $700 million, which includes a $500-million lump sum payment plus a new $93.5 million minimum annual rent payment for 2002 and 2003 (with interest).
Gehry Wants to Go to Chelsea
The City of New York's Liberty Bond program will contribute $80 million in financing toward the construction of a new 190,000-sq.-ft. (17,651-sq.-m.), $138-million headquarters in the Chelsea neighborhood for InterActive Corp., parent company of such online brands as Expedia, Hotwire.com, Ticketmaster and the Home Shopping Network, the company's progenitor.
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Adding to the project's stature will be its design by none other than Frank Gehry. The "landscape-defining edifice" will be built in partnership with Manhattan-based The Georgetown Co.
"As our need for space grew, we began to think it might be advantageous to create our own working environment," said Barry Diller, IAC/InterActive Corp. chairman and CEO. "With more than 25,000 employees and 116 locations in 31 states and 20 countries, and operations spread out across Manhattan, we wanted one place where al our activities could find common ground, tailored to the particular needs of a company engaged in the cutting edges of Internet e-commerce life."
The federally backed, tax-exempt $8-billion Liberty Bond program allots up to $800 million for retail projects in Lower Manhattan, up to $1.6 billion for residential rental projects in Lower Manhattan and up to $2 billion for commercial projects in New York City outside Lower Manhattan. InterActive will also be eligible for up to $500,000 in discounted energy through Con Edison's Business Incentive Rate Program. The company plans to be the sole tenant of the new building and will locate more than 250 employees there.
Just outside the New York metro, in Suffern, a community of 11,000 right on the state line with New Jersey, Avon Products broke ground in August for a $100-million R&D complex on the same ground where it began manufacturing products in 1897 under the name California Perfume Co.
The move comes on the heels of a North American facility realignment that will see Avon's Montreal plant close in early 2004, with most of that work being consolidated at plants in Springdale, Ohio, and Morton Grove, Ill. In addition to building a $40-million plant in Russia (expected to open in mid-2004), Avon is calling on China just like every other company is, with an aggressive plan to open 500 stores a year. But that overseas growth is backed by this large R&D investment in its home territory. The 11-acre (4.5-hectare) campus will feature 225,000 sq. ft. (20,903 sq. m.) of office and lab space, with around 280 employees set to occupy it in March 2005.
As part of the agreement that cemented the deal, the Rockland Industrial Development Agency granted the company state sales and mortgage tax exemptions, effectively saving Avon some $2.6 million in sales tax alone. R&D tax credits from the state will mean another $7.2 million saved. Avon will also benefit from Payment in Lieu of Taxes (PILOT) agreements with three communities and the local school district. Finally, a $650,000 grant for the project will be forthcoming from Empire State Development Corp. The company had reportedly considered sites in New Jersey and California for the R&D operation.