Mixed reviews for biz growth proposals - New York mayoral task force on incentives and tax policy

Real Estate Weekly, Feb 19, 1992 by Lois Weiss

The creation of an economic development bank and the phasing out of the occupancy tax are two of the recommendations of a mayoral task force on incentives and tax policy.

The Mayor's Management Advisory Task Force Committee on Incentives Tax Policy, better known as the Blue Ribbon Panel and headed by Arthur Levitt Jr. has submitted a draft of its report to Mayor David Dinkins.

Levitt said he expects a final report in the next two weeks. "It depends on how the committee reacts to it and the mayor reacts to it," he said. The full committee, made up almost entirely of private sector individuals, will be meeting this week to discuss some changes which Levitt declined to reveal.

"It was extraordinary," Levitt said, "that people who had such disparate interests were able to put them aside and bring out this report with virtually unanimous support."

Some of their recommendations are: * Creation of an economic development bank capitalized with $500 million per year for five years, with investment split between city money raised by bonds, and other state and public authorities * Renewal of the ICIP and extension to lower Manhattan for renovation "virtually identical to the Mayor's proposal," Levitt said. * Tax credits against the commercial rent tax for businesses that donated to cultural institutions, libraries and parks. For every dollar over last year's contribution, the company would receive a 50 cent credit, Levitt said. * Phase out of the "inequitable" commercial rent tax and unincorporated business tax beginning in 1994 * A 10-fold increase of the micro-loan program from $1 million to $10 million for retail and service businesses * Matching funds for job training programs

The real estate industry, which has been eagerly awaiting the report, was happy about a number of the draft proposals, but there were doubts about their feasibility and there were some things missing.

Steven Spinola, president of the Real Estate Board of New York, said they have not gone over the full report, but they have some serous concerns that it is an expensive program. "I don't know where $500 million annually will come from," he said. "There are questions as to whether or not you can sell these bonds and who makes the guarantees."

At the same time, he noted, the city is looking at curtailing its capital program because of debt costs. "It may be premature to be critical," he added.

Levitt said there will be "more" to the funding. But after the initial years it would be self-sustaining, he said.

Although the Real Estate Board welcomes the phasing out of the occupancy tax, Spinola does not see anything that helps a tenant to stay here by reducing costs. "We called for lease signing incentives and job incentives and there are none here," he noted. "We need programs to encourage people to make commitments to New York City and expand their operations by creating jobs."

Spinola said the recent decision by the City Council Committee recommend extension of the ICIP program was good, but he agreed with others who testified that the administration should not have let it expire. "We have been waiting too long for a new program and we would echo that criticism," he added. (The extension is for six months and is designed to bridge the gap until a more extensive program can be developed based on the recommendations of the Blue Ribbon Panel.)

Levitt said The New York Times characterization that Jerry Speyer was alone in his support for the ICIP was wrong.

Spinola said, "The reality is that the ICIP does not go anywhere near enough to make an impact. I don't know where the Times got that misconception."

Daniel S. Bayer, vice president of economic development for the New York City Partnership and Chamber of Commerce, echoed Spinola's comments. "For most of the ICIP issues, Jerry [Speyer] was in the majority," said Bayer. He said there was some disagreement over the ICIP but the majority of the panel thought it made sense, certainly for the report. "The development bank has a lot of merit and deserves serious consideration," he said. While the Task Force was looking into other city's policies, they discovered that New York City trailed all of the major cities on capital spending.

Bayer said the proposal to strengthen cultural institutions was an innovation worth a serious look. He said the institutions are a draw for tourism and foreign business and impacts the city's economy.