Memo on WTC redevelopment legislation, Nov 2003

NYC 9/11 Public Portal Document

opportunities, and develop public spaces such as parks and cultural caters. The compelling interest in lower Manhattan’s redevelopment requires that these federal funds, and any funds committed to lower Manhattan by the State and local governments, be invested wisely. This will require the public and private organizations involved in the redevelopment to coordinate their efforts to construct the projects quickly, safely, fairly, and cost effectively. The coordinated effort will encourage private sector firms now located in lower Manhattan to remain, and stimulate much-needed private sector investment in the area.

Some of the existing restrictions on the procurement activities of city and state public agencies will prevent a coordinated investment of public funds. If left unmodified, these restrictions will delay the economic revival of lower Manhattan and inhibit its contribution to the economies of the city, region, and state at a time when speed and the economic contribution are most needed. The bill exempts public agencies in the city and state fi’om some procurement restrictions for publicly-funded projects while also assuring competitive processes that will secure the best work at the lowest possible cost in a timely and safe manner.

Before the September 11, 2001 attack on the World Trade Center, lower Manhattan was the third largest business district in the nation, accounting for more than $114 billion in - economic output and about 15 percent of New York City’s tax revenues. An extensive public transportation network, including subway and train lines, bus routes, and ferry terminals, coimected lower Manhattan to the rest of city and region. This lower Manhattan economy had a multiplier effect, particularly on the travel, hotel, restaurant, and real estate industries.

The attack on the World Trade Center took 2,792 lives. Lower Manhattan sustained economic losses of more than $80 billion, including the loss of infrastructure, utilities, 100,000 jobs, 14 million square feet of office space, and half a million square feet of retail space. Despite federal aid, insurance proceeds, and other forms of reimbursement, lower Manhattan will sustain a net loss of at least $16 billion and approximately 60,000 jobs. These losses, traced directly to the World Trade Center attack, significantly compounded the effect of the national economic downturn on lower Manhattan. Since reaching a peak in the summer of 2000, the securities industry—the dominant force in lower Manhattan’s economy—has seen a 70 percent decline in earnings. Vacancy rates for the office space that remains in lower Manhattan have grown at the fastest rate in the city, reaching 13.3 percent—and nearly 17 percent for Class A space—in the first quarter of 2003.

Recent evidence indicates that in the absence of quick and decisive public action to retain the existing companies and attract new ones to the area, these losses will continue and generate a devastating downward spiral. Neither the city nor the state can afford lower Mar±attan turning into a ghost town. Public agencies have acted quickly and effectively in many areas, such as restoring the damaged Path and IRT subway lines.

Nevertheless, despite the high vacancy rates and relatively low rents in lower Manhattan, the great majority of the companies that were in the World Trade Center on September 11 have relocated outside the area and 20 percent have relocated outside the city and state. A survey of commercial tenants in lower Manhattan at the end of 2002 found that half were not sure they would renew their leases when they became due, primarily because of

3

NYC-WTC_000153979