By Mike Bloomberg
The September 11th terrorist attack on the World Trade Center has affected every community of our City in all five boroughs. Families have suffered the loss of spouses, children, parents, siblings, aunts and uncles. We lost our friends, co-workers, neighbors, and more than 400 heroes who gave their lives to save others.
Now, even as we continue to mourn, we must move beyond the pain and deal realistically with the job that lies ahead. The economic impact of the destruction has damaged our transportation system, weakened our downtown financial center, and cost people their jobs.
Cutbacks in air travel threaten the aviation and related industries. The decline in tourism has forced the closure of Broadway shows and adversely impacted the hotel, retail and restaurant industries. Small businesses and their employees in all boroughs are threatened by forces, which they aren't equipped to manage and are beyond their control.
In the coming months, we face the enormous task of rebuilding and renewing our City. This is a challenge that will involve all New Yorkers, the public and private sectors, and will require the partnership of Federal and State governments.
But this is not our only challenge, as we seek to build on the success of the past eight years. We must take a comprehensive view of improving our city.
My plan is divided into a number of different sections focusing on different issues, but it really boils down to three inter-related, primary objectives: Building for the Future, which involves capital projects like rebuilding Lower Manhattan, major new developments and infrastructure improvements; Creating Jobs, which includes balancing the municipal budget, government policy, nurturing new businesses and attracting and retaining existing business; and Improving Quality of Life, which encompasses issues like public safety, education, housing, healthcare and seniors.
By focusing on Building for the Future, Jobs and Quality of Life, I will lead our City through the challenges that lie ahead. It is the only way to get us moving forward and let the world know New York is open for business.
Building for the Future
1. Lower Manhattan
I'll begin by looking at the challenges of rebuilding lower Manhattan.
We cannot precisely assess the economic damage from September 11th. But we can and should specify the priorities and process we need going forward.
The Federal Government is prepared to fund the total cost of recovery and clean up, and there is some hope for additional Federal monies for reconstruction.
But the Federal Government, no matter how sympathetic to our plight, is not going to dispense money indiscriminately for "non-recovery" purposes.
We must develop and promote a credible and comprehensive needs assessment that clearly demonstrates to the nation why we require and deserve Federal and State assistance. We must convince them this is a special case - and not just a "grab" for any monies available. To build credibility for our requests, we have to justify every cost
If we don't provide oversight, the State or the Federal Government will. Existing monitoring authorities maybe adequate, but this is a unique occurrence in terms of speed and magnitude. It requires the Mayor's personal attention, in partnership with the City Comptroller, the Department of Finance and the Department of Investigation.
In terms of what we build -- we know that the clean up and recovery process will take more than a year; and the PATH and Subway repairs even longer.
We will include a memorial to those we lost; and we will eventually build new structures, though probably at a substantially different scale. We'll hold a design competition and get the best from around the World to participate.
But we must not get locked into only looking at the site through a lens of the past. We must look to the future. What made sense on that site twenty years ago may not be what's best today.
We live in a different world, a different economy and different city than we did then. And we must rebuild from today's vantage point, looking ahead.
That is why we must consider industries other than Financial Services for the World Trade Center site. The fact is that financial industry has been spreading uptown and throughout Manhattan for many years in a trend unlikely to be reversed.
After accommodating the needs of Wall Street, the Bond and Commodity Markets, we should entertain other forward-looking opportunities. Why not a biotech complex, information technology center, fashion industry metroplex?
And I want to stress that we do not need another bureaucratic agency to handle the recovery/ clean up effort. The current administration is doing an admirable job and the MTA and Port Authority are certainly able to supervise the Subway and PATH reconstruction.
We do, however, need an agency for debt issuance - either the Temporary Financing Authority or something similar.
However, we must keep in mind that in building for the future, the World Trade Center site, maybe our most immediately pressing priority, but it is not our only priority.
We have to continue building the infrastructure necessary to support economic growth and provide good jobs for our citizens.
Energy and Connectivity
One area to focus on is energy and connectivity.
A mayoral taskforce on energy is needed to facilitate communication among utilities, business and environmentalists. This communication is critical to accomplishing an essential upgrade of existing power plants for greater productivity and reduced emissions while assuring the business community of a secure, reliable energy supply in future years.
And we must improve our high-capacity "connectivity." New York City should inventory its broadband infrastructure to identify potential service gaps and assure adequate supply in response to a growing demand. Utilize sewer lines, water lines and whatever underground conduits are available to provide connectivity.
The World Trade Center attack showed that we don't know enough about the variety of phone lines, power lines, etc. that run under our streets. The City needs to track its utilities better using modern technology.
Our other most pressing infrastructure concern is transportation.
In lower Manhattan, Federal assistance is essential to rebuild subway stations and to alleviate transportation congestion on overburdened lines.
If people can't get to jobs, restaurants and stores in an area, those enterprises don't survive. The new MTA map shows what's been lost: no # 9 service, no C service, no # 1 service south of Franklin Street, no N and R service south of City Hall, no PATH service to lower Manhattan.
While the MTA has quickly patched together alternate routes, these are no substitute for the service that workers and residents need.
The Federal Government has separate funding for transportation projects that we can access, independent of the emergency funds for clean up and reconstruction.
We also must maintain and encourage private investment in ferry service that has developed since the September 11th disaster with special attention given to areas currently underserved by public transportation.
Among the most critical transportation projects for our City are:
Finding immediate alternatives to fill the needs created by the loss of the PATH lines and several subway stations in Lower Manhattan. The City must speak out on behalf of the MTA and Port Authority, which own and will have to reconstruct the tracks and tunnels.
The redevelopment of Penn Station: Funding is available, and it appears that with the help of the President, the Post Office is "back on track" to support this critical initiative. Now, we must ensure its completion.
The extension of the #7 line: This must be part of any Javits Center area development. Its impact on the whole West Side is hard to overstate.
The East Side Access of the LIRR into the Grand Central Terminal is going to be a tremendous success story. It is funded in the MTA capital plan, appears to be moving forward on schedule and will dramatically improve Long Islanders ability to work and shop in Manhattan.
A full length Second Avenue subway is vital. But the fact is that it was not funded before September 11th, and monies are even less available now. The only short term practical solution to East Side overcrowding is express buses in camera enforced bus lanes.
And we must remember, New York is a city of water, islands and peninsulas. We should work with private ferry operators to get more ferries in the water. Ferries work, and can provide critical support at this time.
There are also some very innovative transportation initiatives on the drawing board that we should seriously consider, moving forward, such as congestion pricing in the central business district and the extension of the No. 7 line.
The NYC 2012, the Olympic proposal, presents us with a blueprint for passenger transportation development in and around the Cammerer Hudson yards on the west side of Manhattan, where a single transportation hub can emerge from a currently inaccessible area by linking the No. 7 line, Metro-North, the Long Island Rail Road and AMTRAK.
And transportation doesn't just mean public transportation. We also have to address surface traffic.
The State must pass legislation to allow expanded use of technology, including cameras, to facilitate pedestrian and vehicle flow.
NYC doesn't have the resources to put a human being every place we need security or law enforcement. The law must let New York City issue summonses using modern methods.
Red-light-running drivers are killing too many seniors and endangering everyone - and mass transit will never replace the automobile unless we can enforce the law regarding "buses only" lanes by using automatic ticket issuing devices.
The only short-term solution to our traffic problems is limited stop bus service in restricted access lanes. The only affordable way to keep cars and trucks out of those lanes is with technology.
Additionally, we should have more ferry service to, from and around Manhattan. The City should work with companies to market this mode of transportation to people that don't consider using it. The Staten Island Ferry shows how efficient water service can be; let's take advantage of it.
But we must also remember that beyond capital construction and infrastructure improvements, there are many other areas that we must address in the effort to build a thriving economy and create good jobs for all New Yorkers.
And one critical lesson of the last eight years is that the public sector has to keep its finances in order to create an economic environment that is conducive to private sector growth. We have to show that we can keep our books in order, or the private sector won't have confidence in our City and our economy.
Which is why we must have a Balanced Budget: first and always.
Tax revenues are falling and are likely to remain lower than pre-September 11 forecasts for the short-term future. Worse, the immediate rate of decline could be greater than the City's ability to adjust its expenses, most of which are fixed costs that are required by law, mandated by court order, covered by contract, or debt service.
New York City has several revenue streams. The sales and personal income taxes are affected immediately by the September 11th disaster. The third, property taxes, fortunately is less susceptible to short term fluctuation.
Raising taxes is not an option. Higher taxes are a disincentive to those considering moving into the City - and encourage those already here to leave. The net effect of almost any tax rate increase would probably be a reduction in total tax revenues received!
This means we need to control expenses, or raise revenues through economic development rather than new taxes.
Since 50% of all City expenses are labor and the other half is fixed, clearly we will have no choice in the short term but to reduce personnel costs. Out of fairness to the very people we need to improve the way city government works, the focus must be on a combination of a temporary hiring freeze, attrition and voluntary retirements.
The great challenge for me as the next Mayor is how to encourage those workers
that we desperately need, while simultaneously implementing efficiencies
to replace those that retire.
A cost reduction "partnership" has to be formed immediately with all municipal unions. Our employees must be significantly more efficient if NYC is to survive - and they will accomplish this much more enthusiastically if they share in the savings. With the right gain-sharing structure, we'll be amazed how much more we can do with less.
We also need some legislative help from the State and Federal government to ease some of the financial pressure.
For example, under current federal law, all monies sent to the City are distributed through the State. The State keeps * of 1%, or $100 million out of $20 billion for "administrative" costs.
The federal law should be modified for the disaster relief funds, given the magnitude of the sums involved and the fact that the City has the structures in place to receive and distribute the funds itself. Likewise with monies for rebuilding transportation destined for the MTA or Port Authority.
We need less bureaucracy not more.
The City also needs to control its own destiny.
Currently, if the City incurs a deficit of $100 million or more, the Financial Control Board steps in to "run the City." This trigger level has never changed since the fiscal crisis of the 1970s, even though our government budget has grown four fold.
Should the economic impact of September 11th result in the "worst case"
scenario, a real possibility exists that this limit will be violated
shortly after I take office.
In the interest of democracy, we must find a legislative distinction between a one time terrorist attack and profligate spending.
And we should push for the removal of IRS' restrictions on our debt.
There currently exists an IRS restriction that tax-exempt debt can be refunded only once. Much of New York City debt has already been through this interest rate lowering process. We need relief from this arbitrary limitation. The City could save $120,000,000 in present value terms by refunding existing debt at current lower interest rates.
We also need to get better access to the bond markets. And as an ex-bond trader, I'd love to discuss the esoteric intricacies of the municipal bond market, but my advisors warned me against adding a half-hour to the speech.
We have needs that are long term and unlike ongoing expenses, should be financed with long-term debt.
To accomplish this, we should have the Transitional Finance Authority sell bonds -- up to $12 billion worth -- backed by the sales tax revenues currently committed to paying off the Municipal Assistance Corporation debt.
We can't let money we do spend to waste. We should model failing organizations after those that work. For example, the School Construction Authority does not build schools on time and on budget but the New York State Dormitory Authority does. Let's learn from their example. Our kids and our City can't afford to wait any longer.
2. Private Sector Growth
Now, after minding our municipal finances, the other piece of creating jobs is what we do for our private sector. And one very important area to focus on is Public/Private partnerships for economic development.
For example, we could try and get labor to invest in housing construction. In return for Project Labor Agreements, we probably could convince the AFL-CIO pension funds to invest in office and housing construction in New York City the way they do in other municipalities.
The most difficult problem for large-scale private development in New York is simply getting enough contiguous land to make a project economically viable. The City has the legal authority to facilitate this activity.
While we have to be sensitive to individuals' rights, society does have legitimate concerns in continuing progress. A balance is required, but we do need to build large-scale housing developments, schools and hospitals.
Additionally, the State must enact effective brownfields legislation to make unused and vacant land throughout the five boroughs productive for their surrounding communities. The State should limit the liability on land after it's cleaned up, thus removing any uncertainty for developers. We then can make this land available at low cost, providing developers an economic incentive to construct desperately needed "affordable housing."
And we should encourage the creation of Business Improvement Districts in areas that are not experiencing economic resurgence, because BIDs have been successful across the city.
Venture Capital To Develop New Industries
Venture capital is another important tool -- often determining where emerging industries locate.
The City's Emerging Industries Fund, created years ago, has funded only one equity investment in a biotechnology company and no investments in information technology, telecommunications -- or anything else! We should not miss the opportunity to encourage new industry growth.
We need local advisors who will reach out to potential targets of investment and provide links with technical assistance. The fund should be for high-risk, flexible investments, not sure-fire profit-making ventures. We cannot just focus on retaining financial services.
New industries such as biotech and Nanotechnology - and old ones like "culture," media, fashion, etc. are just as important to our future.
Help Small Businesses
And many of those are really made up of a lot of small businesses. Half of all our employed population works at companies of 10 people or less. You know, this is an area very near and dear to my heart. I started my company in two rooms with one pot of coffee. I know the challenges small business owners face and I understand the courage it takes to build a your own business.
These stores, restaurants, light manufacturers, services companies etc. are the most vulnerable to the current economic slowdown and the World Trade Center disaster. We must keep them in business!
Many of these businesses that can't make ends meet desperately need small Business Adminsitration loans and outright small cash grants from foundations.
A grace period on rent payments offered by landlords and encouraged by tax incentives to those building owners would also assist during the current steep decline in business.
Our tax incentive programs are geared toward large corporate businesses that own their own buildings. In the new global economy, emerging industries often consist of small shops with only a handful of workers and they are likely to rent space rather than own it.
Therefore, traditional real-property exemptions and abatements don't benefit them. Incentives should be geared to occupants, not just owners.
We must periodically evaluate and monitor tax benefit and business retention programs. Performance standards have to be developed to evaluate the effectiveness of benefits. Are we getting the job creation promised? Is the community getting the amenity promised by a developer? If not, developers should pay back the money to the City. Tax incentives are an agreement and both sides have to uphold their end of the deal.
And Tax incentive programs for residential and commercial/manufacturing must work together. When they were first created, business and residential uses were separate and distinct.
Today, those working in high-tech industries can work from their residences. Our existing tax programs must be reviewed and revised to reflect the current marketplace.
In addition, some activity currently categorized as manufacturing is actually commercial in nature -- such as jewelry making -- and can readily co-exist with residential uses.
The State must redirect tax incentives to facilitate the development of mixed-use construction and rehabilitation in communities appropriate for development. Those areas with mixed use have the economic diversity to improve chances of success.