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December 8, 2004
Talk of the Town, Financial Page: "It Pays to Stay"
The New Yorker: NoLandGrab readers are familiar with the Toledo case of a eminent domain abuse filed by the Blankenships that is winding its way through the appeals courts (see, Eminent Domain, Nov. 28). The deal the City of Toledo struck with Daimler-Chrysler for a Jeep manufacturing plant has spawned another lawsuit that has determined that corporate welfare is unconstitutional.
James Surowiecki outlines the pros and mostly cons of states lavishing subsidies on corporations. A Sixth Circuit Court of Appeals ruling might provide relief to municipalities who are forced to compete against each other using money that otherwise could be put to better use. The court in Cincinnati "ruled that the credits interfered with interstate commerce, which only Congress has the power to regulate."
[Corporations] have mastered the location-shopping racket, pitting cities against each other in search of a sweetheart deal.
The cities are often easy marks. The classic example, of course, is the new sports stadium: a team threatens to leave, and the home town panics, spending hundreds of millions of dollars on a white elephant.
What does this have to do with Atlantic Yards? Ratner has demanded infrastructure improvements for the arena or the deal is off. Also, the reason public officials give for supporting Ratner's plan to build over 2 million square feet of office space is that we need to keep corporations in NYC. They subsidize and support the developer, and then do the same for the corporate tenants (see Metrotech). Meanwhile millions of square feet of office space is CURRENTLY being built in NYC, making economists worry about high vacancy rates in the future should the economy stagnate.
Posted by lumi at December 8, 2004 7:40 AM