The notion of luring multi-million and billion dollar businesses via tax abatements and other goodies has always been something that has irked us. Often, public monies are heaped upon out-of-state developers whose projects will hurt or destroy indigenous business. Moreover, these same business incentives are either not as readily available to small business or not publicized.
In the case of the Bronx Terminal Market, the City has demonstrated an incredible largesse vis-à-vis Related in a deal that may result in the displacement of 23 predominately minority entrepreneurs and their unique ethnic market. Not only will the developer receive $80 million in Liberty Bonds, but if the project fails to garner the necessary approvals the city will buy back the property!
This same situation occurred during the Giuliani Administration when we fought a Pathmark in East Harlem. Here too, the developer was being lured with a corporate welfare package due to the promise of job creation. However, just like with the current Wal-Mart situation, the Pathmark proponents failed to consider whether this promised job creation would offset the job loss at the surrounding (mostly Hispanic) supermarkets and whether the idea of subsidies was even appropriate.
As Louis mentions, there has been very little oversight after subsidies have been granted and little analysis to determine if it was wise to spend the public money in the fist place (in part due to poor transparency). However, this New York Times article from 2003 starts to dissect the question of whether tax incentives are worth it:
A huge, light-gray building, trimmed jauntily in blue, rises from the rolling, grassy fields on the far side of the runways at Indianapolis International Airport. From the approach road, the building seems active. But the parking lots are empty and, inside, the 12 elaborately equipped hangar bays are silent and dark. It is as if the owner of a lavishly furnished mansion had suddenly walked away, leaving everything in place.Corporations that receive subsidies, unlike small businesses, have very little incentive to stay in the area if times get rough or if a better deal comes from somewhere else. More generally, we must start asking whether these subsidies are fair and, in the end, make economic sense? It is imperative to support the work of Good Jobs New York and in general impress upon our elected officials that enormous public subsidies, especially for projects that kill other business, have no place in New York City.
That is what happened. United Airlines got $320 million in taxpayer money to build what is by all accounts the most technologically advanced aircraft maintenance center in America. But six months ago, the company walked away, leaving the city and state governments out all that money, and no new tenant in sight.