Remarks delivered at the New School
Introduction: A Clear Choice Ahead for the NYC Economy
Thank you for that (generous) introduction. [And let me say something I've wanted to say badly over the last few months but can only say here at the New School. Congratulations President Kerrey. You are doing a great job.]
And I'd like to thank the New School for inviting me. This school has always been a place that encourages new ideas. I hope to offer a few ideas today about our city's future and keep up a little with the school's rich tradition.
Many of us were deeply distressed by the results of this November's election. I, and many New Yorkers, believe George Bush has been bad for the national economy, our national deficit, and that he's been awful at building the international support necessary to help defeat terrorism.
But while many New Yorkers saw a clear choice in the national election, some people have argued that there aren't real issues at the local level -- that there aren't real choices this Mayor and City Council are making that concern our City and regional economy.
In his State of the City address the Mayor argued that we don't need to make any choices or changes for that matter because the economic picture is so rosy. But in fact, a lot of New Yorkers would say that things are pretty rough. Per capita income is lower, and unemployment in the outer-boroughs is higher, than at the end of 2000, while every day in New York City, one in three people on line for food relief are children. Even today's New York Times confirms that our economic situation needs attention. That we rely on promoting economic diversity more than ever and that our recovery trails the rest of the nation's.
So I believe that New York faces some very important issues that should frame this year's mayoral election. I will be laying out an education plan for the City in the near future, as well as plans on affordable housing and controlling taxes. But today I want to describe a basic economic perspective, and some specific ideas, that I think are missing from the current debate. I believe the central question is: do we continue to invest all our capital in large projects in Manhattan or do we attempt to spread growth to all five boroughs? Put another way, is our future with big developers or small business, and is our economic plan focused on a few special interests or to helping working families?
These are not abstract things to me - I grew up in Brooklyn and I live in Queens. My mother was a public school teacher and my Dad is a neighborhood lawyer who literally hung a shingle outside the house. I went to public schools. And when we needed something from the store, my mother used to send me out to "the avenue" to run errands. My vision of a thriving neighborhood is one where the neighborhood strip of stores is a healthy center of economic activity for the community.
So I have different vision of this City than a Mayor who grew up in Massachusetts and lives on the Upper East Side. When I close my eyes and conjure an image of my city, I don't think of the glorious skyline of Manhattan. I think of the rows of stores on a street like Brighton Beach Avenue or Forest Avenue on Staten Island.
Many of you know that I am thinking of running for Mayor, and the reason is because I know the working people who live in our outer boroughs. I come from there and represent them. And I believe it makes a huge difference whether local businesses succeed, whether there are good jobs, whether working families can hold on to an apartment, or even dream of owning a house and sending their kids to college. Those are the people I represent, and frankly I think they are too often forgotten or dismissed in the corridors of City Hall.
We all have heard of the "broken windows" school of thought about crime. If you let a small sign of disorder - like a broken window - persist it sends a signal to criminals that it is ok to commit crime. I have a similar theory about the way to measure our economy. When a small business goes dark in our neighborhoods it sends a troubling signal to home buyers, investors and other businesses. We need leaders who see these signs and who are more devoted to the small business and the working person and less to the big developer.
Today, I want to lay out real choices in how we make economic plans for this City, where we invest our resources, and in what we invest. A different How, Where and What for the City's future. Together, I think this can modestly be called a common-sense plan for working people of all five boroughs.
The West Side Stadium
Let me start with the economic topic that has captured people's attention. The Mayor's plan to build a multi-billion dollar stadium on the West Side of Manhattan.
The stadium is symbolic of the Mayor's approach to public investment and what he would do with the next four years. And I believe the West Side stadium project will likely become a metaphor for many of the differences New Yorkers have with the Mayor. If you like his plan, you will vote for him, if you don't, you will look elsewhere.
I believe the stadium is a mistake but it is also a useful template because it shows how the Mayor is conducting his Administration. The stadium is an example of his wrong choices and a profoundly uncreative vision for the City's future.
First, the How. We should have decisions that are transparent and accountable. But the Mayor's scheme uses a myriad of non-Democratic boards and non-public transactions to funnel at least $600 million of public money to the owners of the New York Jets. While I have substantive complaints with the stadium plan, I would be willing to lose the debate if the deal was done with public debate and accountability.
I have a chart here that details how the money is funneled to avoid public scrutiny and votes. You'll see the Rube Goldberg design. Just take a look at the ownership arrangement they have designed. The city and the state create a new, unaccountable public authority - the Local Development Corporation. It issues $600 million in bonds to pay for the platform under, and the roof over, the stadium, which the city and the state supposedly agree to repay. Then the TBTA conveys the rights to the rail yards to the MTA. The MTA leases the airspace above the Rail yards to the LDC. The LDC leases airspace to ESDC. ESDC leases the airspace to the city. The city leases the airspace back to ESDC. ESDC leases the airspace to the LDC. The LDC leases the airspace to Jets Development, and then issues another $400 million in Jets Bonds for the Jets - ultimately backed up by the taxpayer - to help build the stadium itself. Finally, the ESDC leases the platform that's built to the MTA for $1. If you understand it, you weren't supposed to.
This system is intended to avoid real debate and input. This may be the way of a privately held corporation, but it is downright offensive when it is our tax dollars and our land. We must reform these authorities so they are open and understandable to all New Yorkers.
Second, the Where. The Mayor's economic growth strategy simply does not include the outer boroughs. Again, let us use the example of the new stadium. The Mayor has argued that there is no better place than the far west side. Well I have a better place - Queens. I have proposed Willits Point on the water front near Shea Stadium.
Willits has some obvious selling points. First is that unlike Manhattan, this area of Queens has an abundance of all the infrastructure elements a stadium needs. Its sits near the LIE, the Van Wyck, the Grand Central and of course that most New York of Subway lines - the 7. It also has plenty of parking. Remember that when real New Yorkers say they want to bring the Jets home - they mean the borough they left - Queens.
It would also be an undeniably less expensive option. An internal memo by Dan Doctoroff's own organization, NYC2012, said: "construction costs [in Willets Point] would be substantially lower than on the West Side." The cost of doing the Javits Center and the West Side Stadium would be $2.8 billion dollars. The cost of doing a Willets Point Stadium and the Javits Center - assuming the facility in Queens costs roughly the average of the last five NFL stadiums - would be $1.8 billion. That represents a cost savings of almost $1 billion, or 34% percent.
But when the idea was floated to the Deputy Mayor it was dismissed out of hand - Queens, he argued, is not attractive for economic development. Tell that to airports there, tell that to the most profitable sporting event in the nation - the US Open, tell that to the tens of thousands of businesses that are thriving there. Even if this Administration had a good argument for putting the stadium in Manhattan - what does it say about the perspective of this Administration that rather than think how to make economic growth in Queens more feasible, they simply reject it out of hand and continue closed room deals to free up space in Manhattan?
Distributing Economic Development Funds Equitably
This thinking is a metaphor for the Mayor's approach to New York economics. In the past five years, the Economic Development Corporation reported that it dedicated twice as much funding to Manhattan in incentives as the other four boroughs combined. More than 75% of the population of New York lives outside of Manhattan - it's not enough to rely on one borough for job growth. Indeed, this lack of investment is having real impacts on Bronx, Brooklyn, Staten Island, and Queens. Point Two of a real economic plan for New York includes a guarantee that all four boroughs receive some fair share of EDC funds - I suggest at least 25% of EDC funds be distributed on an equitable basis to each borough.
A couple of last, quick points about the stadium. If the mayor truly believes this is the best use of the site and that the marketplace demands a $1.4 billion dollar stadium - put it out to bid. See what other proposals come in. See if - as I suspect and experts like Dick Ravitch have predicted - a developer of housing or commercial or parks might not pay us for the right to build something better. Four directional unobstructed views on the West Side of Manhattan - and we are paying someone to develop it?
Finally on the impact on Manhattan. Even the fiercest advocate of the stadium would concede that the quality of life impact on the businesses and residents during the construction and during game days would be stifling. But the questions about the economic impact on other parts of the borough have not been fully thought through. Shelly Silver has pointed out that the proposal involves New Yorkers deciding to essentially bid against ourselves. At the same time that lower Manhattan will be bringing 2 million sq. ft of commercial and office space on line, is it really wise to create huge new spaces at the same time on the far west side?
As I said earlier, this speech is not only about the stadium.
A Faster, Smart, Cheaper Transportation Network
Any one considering our plan for all five boroughs of New York has to consider what we have done right, and then dream bigger. Just as we created a subway system to help our whole city grow, we now need a comprehensive ferry system. Neighborhoods like Long Island City, Sheepshead Bay, Marine Park, Coney Island, Bayside and the areas around LaGuardia and JFK airports could all benefit.
I will be discussing my plans to improve transportation in our city in a separate speech, but I'll give you a preview because is many ways transit and business are interwoven.
We should install ferry landings along the coasts of New York. The City or State already owns the bulkheads in dozens of neighborhoods, all we need are relatively inexpensive ferry landings. I've led the fight to fund the building of one in Rockaway. We should do more. The city should purchase a fleet of small high speed ferries and begin to help commuters from and customers to these neighborhoods.
I'm ready to work with this Mayor to get started on creating a ferry service as part of the integrated transportation network that our city is famous for. As a member of the Transportation Committee I am committed to delivering the federal funds to purchase the first ferries for a new, fast fleet. I am prepared to secure $15 million for three high speed ferries that could begin service to Rockaway and maybe even the elusive half hour service to Staten Island residents. If the Mayor would just say "Yes" this is a good idea, I can guarantee the federal funds.
Better transit is the only thing holding back job creation and neighborhood growth in places like Red Hook. And easing stifling gridlock is good for commerce in all corners of our city - not to mention that is good environmental policy.
And there are other opportunities for improved travel in the City. For example, we can take the concepts of light rail and apply it to buses through a transportation system called "Bus Rapid Transit," already in use in many cities throughout the world. Bus Rapid Transit lines create bus-only lanes on the major streets just like we do on the highways during rush hour. Bus Rapid Transit systems in other cities have increased ridership by 15-150% and speed up times by 40%.
NYC's Bad Attitude Towards Small Businesses
The third economic choice New York has is the What. What is our focus? And what is the concrete modern agenda to create jobs and foster business. First let me make it clear that I am committed to making sure that FIRE continues to burn bright in New York. Finance, Insurance and Real Estate are part of the DNA of New York and I will continue to be a fighter for those industries and the jobs they bring.
We need to continue to support these industries, but we must also create a hot house of other new businesses to promote more diverse growth.
Health care. The Arts. Nightlife. And of course education. While we have been winning fewer financial services jobs, these new areas of growth have spurred activity and dollars in all five boroughs.
And then there is the giant of our economic machine - the more than 200,000 small businesses in New York City, representing 98% of all businesses. They dominate many industries and are the majority of businesses in every borough. Small businesses account for 50% of all New York City private-sector jobs and generate $4.5 billion in annual city tax revenues. Yet the way we treat small business in this town runs from benign neglect to outright contempt.
Let me give you an example. Spend an afternoon at 66 John Street. That is the address of an agency that most New Yorkers don't even know but small businesses fear - the Environmental Control Board. They hold hearings for summonses on a wide range of violations. Sit at 66 John and watch as shopkeepers are herded like cattle before a hearing officer who doesn't see an employer in front of them, but more likely sees a dollar sign or a hash mark in their quota book.
More so than any time in recent memory, the city's policy is to use the ticket book as the tax roll. In the past year alone, the city reported a 33% increase in the number of summonses for "quality-of-life offenses," to 708,349. Parking tickets were up 20% to almost 10 million in one year. The repercussions of the ticket blitz are clear: in a recent survey of business owners, the Brooklyn Chamber of Commerce cited ticket violations as one of the top obstacles to business growth. And when you have a top ticket of $180, with a couple of violations the average New Yorker is paying more in tickets than they do in income taxes. $180 for a parking ticket? $1,000 for an oversize awning? It isn't a deterrent, it's a backdoor tax.
It is this hostile attitude that's driving jobs to the suburbs.
Wal-Mart: A Fight for the Soul of the NYC Economy
Speaking of which, a word about the plan to grant an exception from the zoning laws to allow a Wal-Mart in Rego Park, Queens. As you may have read, the Mayor has shrugged that this is simply more "competition." I have led the fight to stop this plan and I want to tell you why. And what this fight says about the future of our city.
A creative vision for the City's future economy would create level playing fields in the outer boroughs so huge stores like Wal-Mart meet New York standards for worker protection and pay. I know the Mayor says it's good if Wal-Mart moves in-- but the reality is Wal-Mart has real negative consequences for New York's economies. The company offers lower wages, no health care, attacks unions, and crushes small local stores. That is not good news for the City.
Wal-Mart's business model is well known. Undercut every business in the area. Underpay and underinsure its workers - thus pushing many to require aid from the city for health care and basic needs - and then when competition is gone they increase prices to above the level they were to begin with.
Never mind the high minded macro economic theory of globalization and competition. The fight against Wal-Mart is a fight for the soul of New York's economy - the small outer borough business. If you think I'm being too dramatic, look at the numbers. On average a town that gets a Wal-Mart loses three supermarkets and every hardware store. If, as I suggested earlier, the empty store is to our economy what a broken glass is to crime Wal-Mart would be devastating.
Be an Ally, Not an Enemy, of Small Businesses
We have to make things easier for small business. First, we need to invest in them. I've discussed the need to set aside larger proportions of our resources for these outer borough businesses. Second, let's adjust the fines downward as the city issues more of them. To ensure that an increase of tickets isn't seen as a way to balance the books, take away the incentive. Here is how it would work. The city expects to gain $17 million in revenue from a new, computerized, system to increase the reliability of its ticketing. This newfound revenue should be exclusively dedicated to cut fines for small businesses, specifically for those that businesses cite as most onerous. This would reduce the incentive to try to use shopkeepers as a cash cow.
Third, it is not enough for the Mayor to tell businesses that if you have a beef you should call 311. I think that the Department of Business Services should have a team of ombudsmen on duty at 66 John to help keep the shop keepers from losing their minds and keep New Yorkers from losing their jobs.
For businesses that do manage to make it in the outer boroughs - the underdogs of the city's economy -- we need to expand the new innovative programs that work. One new approach that deserves expansion is the Business Improvement District program. If you poll shoppers of Queens about what they'd like to see on Astoria Boulevard or Nostrand Avenue they say some common things. They want less trash. Better lighting. Graffiti removed. And of course some help with parking.
Thanks to the BID program, businesses can self assess a fee and hire clean teams, design streetscapes and even help with the parking problem. A BID in Brooklyn even hired a guy with a bag of quarters to engage in a game of quick draw with ticket agents on behalf of shoppers. Yes. I know. It's illegal to feed the meters. I'm sure the Mayor will be setting up stings to add to their ticket take.
The bottom line is that right now, BID creation is too difficult and complicated - there are 17 different steps you need to take towards approval. Even the most eager business owners often can't get a BID started without practically shutting down their own stores. Finding absent landlords, organizing planning meetings and filing paperwork requires a full time staff - and that's before the BID is even approved. Unlike the mega BIDs of Manhattan, the shopping strips can't hire a grant writer or an organizer. The city should do this work for them
What is so urgently needed is more creativity and energy devoted to thinking how we can help small businesses grow.
I propose we kick start investment in innovation. One good idea is dedicate a small fund, say $10 million, to provide "seed" capital micro-loans to innovative businesses identified by private sector venture capitalists with a commitment to New York City. These loans could be as little as $10,000 or in the range of $100,000-$200,000 and would go to emerging businesses that do not yet qualify for large venture capital investments or private loans but are identified as unusually promising. If they prove successful, the private sector would pick up the funding, contingent on the businesses staying in the New York. It's not a government venture to pick winners and losers, rather it's a way for the city to leverage capital to give an incentive to the financial sector to invest here in the city, rather than across the globe.
The city should also create a "ShopNYC.com" initiative to help small businesses use the internet to better market their goods and services. If New Yorkers want to show their pride in the Big Apple or simply shop in cyberspace from a company they can reach in real space, we should help make shopping for New York goods easier. We could even enlist some of the HTML geniuses in our local high schools to do the design work.
Conclusion: Understanding What Drives the New York City Economy
I've talked a lot about the How, What, and Where of a new economic plan for the City - but I want to conclude by talking a little bit about the Why.
As I mentioned earlier, I grew up in Brooklyn, and have spent my 13 years in elected office representing Brooklyn and Queens. My view of New York has been molded by the families I have met in the diverse communities that have elected me. From Park Slope to Forest Hills. From Sheepshead Bay to Bayside.
As I travel the city I realize that my New York experience is like that of so many of the working families of New York.
My parents gave our family and me a great life here. But the work that produced the gift of our opportunity began before them, before even my grandparents, when my great grandfather moved here and worked in a little business on the Lower East Side.
Like so many New Yorkers, their generation came, worked hard, built something up and left a stronger foundation for the next generation. And so on in turn.
The families from Ireland, Italy, Russia, the Dominican Republic, from South Asia, from Haiti, they all understand that -just as my great grandfather did. We live and succeed today because of their hard work. Because they fought for a better life for themselves, and for their children.
So I want us to fight for a better life too, and I want a Mayor who will fight for more opportunity for everyone.
You have to fight Albany, you have to struggle to get a fair share from Washington. It is not enough to say the Republican President is our friend and take what we get.
It's not right or fair to close down fire houses and raise property taxes. It's not right or fair to give phony tiny tax cuts for working people and huge subsidies for the richest special interests.
New York values are fighting for the whole City, for all five boroughs, for small businesses not just large ones.
That is New York values. We need a new plan for economic growth based on those values, for this whole City.