The Paper of Wreckage

The 'Times' Bulldozes Its Way to a Sweetheart Land Deal You Will Pay For

Since city and state economic development officials have refused to discuss the project, there has been no explanation of how their estimate of the property's value could swing so wildly from one year to the next.

But the suit faces a high threshold—the opponents must prove, essentially, that a crime occurred. As the Times argued in legal papers, it is not enough for the opponents to show the Times is getting a windfall at public expense.

But to condemn the property, the state will need to prove in a separate case that the area is "blighted."

illustration: Marc Phares

In a pointed page-one article in 1997—which said Reuters' heavily subsidized Times Square building was an example of how companies were getting tax breaks "at a time when New York's economy appears to be thriving"—the Times noted that "blighted is not a word anyone would use to describe Times Square today."

The Opening Move

Scot Cohen runs his family’s fabric business on the planned Times HQ site.
photo: Stefan Hester

With the real estate market in Times Square booming, Times vice chairman Michael Golden sent an October 19, 1999, letter to city and state officials that sought the Times Square property, saying he wanted to keep the company in its "namesake district."

He said the Times had two choices for expansion. One was to renovate its current headquarters and transfer 750 workers to offices built on the site of a Times printing plant in Edison, New Jersey. The second was to sell the existing headquarters and build an office tower on Eighth Avenue between 40th and 41st streets.

Golden, a cousin of Times chairman and publisher Arthur Sulzberger Jr., offered an analysis that said it would cost $135 million more over 30 years to keep all the jobs in New York. It was up to the state and city, the letter indicated, to make up the "gap."

In February 2000, the Times teamed with Forest City Ratner Companies, headed by Bruce Ratner, a key Giuliani fundraiser.

When negotiations began in earnest in April 2000, the state and city offered to condemn the site at $90 per square foot, or $123 million. On April 4, Ratner swung into action, meeting with Empire State Development Corporation chairman Charles Gargano, according to city lobbyist disclosure records. He also met with Carey on April 18 and then deputy mayor Harding the following day, records show.

On May 18, 2000, a preliminary deal was reached on the finances—for $85 million, well below the $102.7 million records show the Times and Ratner proposed. As part of the deal, the PILOT was set at $10 per square foot, higher than the $4 the Times proposed.

While state officials have portrayed the PILOT as approximately the same as real estate taxes, the city Finance Departmentcalculated the property tax at $11.62 per square foot, records show. This means the developers were getting a 14 percent break.

But opponents of the deal charge the PILOT is further skewed in the developers' favor because it is based on rental prices of $52 per square foot, while, as the Times reported, Ratner has said he'll seek tenants at $75 to $85.

The city also negotiated a deal for the New York Times Co. to get $29.7 million in additional tax breaks because it had agreed to "retain" 4142 jobs, including the 750 "at risk of leaving," and add other jobs over 30 years.

The following year, the deal had to be changed because the Times workforce in New York was already shrinking. While the workforce estimate dropped 20 percent, the Times' tax break fell only 12 percent, to $26.1 million.

In an internal document, the city EDC acknowledges that there is a discrepancy in the Times' favor. The reason, it explains, is that the Times' initial cost of acquiring the land had risen sharply and was "huge."

The EDC, having told the mayor's office repeatedly that an appraisal showed the land's cost was lower than projected, was now concluding the opposite—once again, in the Times' favor.

Paul Moses, a former city editor at Newsday, is a freelance writer.

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