Deputy Mayor discusses post-Rudy NYC

Real Estate Weekly, Jan 31, 2001 by Doug Miller

It is becoming such a common opinion, such an accepted feeling, among New York's business community that Mayor Rudolph W. Guiliani has been a positive force that 2002 is being dreaded as Year 1 A.G.

Visiting the Mortgage Bankers Association at the Yale Club Wednesday was deputy mayor Robert Harding, who advises His Honor on economic development, labor and housing issues. And because he is a former city budget director and Giuliani announced his final budget the next day, his remarks were quite timely.

He began by posting his theory that three closely related factors held the key to the city's health: crime, economic development and finance. When Giuliani took office in 1994, the city was hardly a poster child in any of those departments. There were on average 2,000 murders in New York every year, the city was blacklisted by a national convention group and it had only recently emerged from the near-bankruptcy of the 1970's. Between 1990 and 1993, the city lost 348,000 jobs, Harding said, and the numbers were climbing.

Of course, everybody knows what the mayor has done for public safety, and five days before Super Bowl XXXV, Harding was careful to mention New York was now 14 times safer than Baltimore.

But the rapid recovery of the city's financial state was what Harding was there to speak on, and the tale was worth telling.

When Rudy was sworn in Jan. 1 , 1994, he faced a $2.3 billion deficit that had to be erased in the three weeks before his budget was due. So when the budget was announced, the story was he had controlled spending while cutting the hotel occupancy tax. Albany looked at the numbers and politely asked who he thought he was reducing taxes.

"I was in Albany acting as the city's de facto lobbyist. I was looked at with a lot of watery eyes, but Albany passed it. We had cut $30 million in taxes, which today wouldn't get two lines in the newspaper but at that point attracted 'Men Walk On Moon' headlines.

The headlines caught the attention of the convention-goers, who restored the city to good standing for their members.

"Now we collect $250 million more each year with the reduced tax rate. And now if you can find a hotel room for $300 for a weekend call me, and I'll send the health department."

Tourism became such a growth industry so quickly that Marriot opened the first new hotel in Brooklyn in 50 years.

More tax cuts, especially targeted ones, followed. He defined "targeted" as a cut with a specific goal, not a specific recipient. The recent retail boom he credited to the sales tax exemption, which made clothing non-taxable up to $110. This not only encouraged people to shop in the city instead of, say, Roosevelt Field, it created jobs, which reduced the welfare rolls, which saved the city money, which decreased crime, etc. etc. etc.

The problem with the real estate industry in 2001, he said, is "We're overcrowded."

"These dot-coins, well, what can you say, they're young, they didn't know that $72 a foot was high, they said 'Sure, I'll take 50,000 feet, I'm good for it.' But before the dot-coms, downtown was 11 percent vacant. We saw that tech was the future and created the incentives to build Digital-NYC.

"Now we have to identify the next future."

The West Side rail yards will be developed ("Sometime between shortly and in fifty years.") but the city has to figure out how to begin to talk about agreeing on what to put there.

"There are no 'ors' in this discussion. Only 'and-ors.' As in it will be a facility for the Yankees and Jets, and-or a convention center and-or commercial development."

There is a saying, Harding reminded the crowd of about 50 at the Yale Club, that "New York City goes into a recession first and comes out last." And yes, he agreed, both the U.S. and New York economies are showing signs of slowdown, but "We are still outpacing the U.S., and our slide is happening slower.