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Federal Funds Will Keep 14 Companies Downtown


April 27, 2002

City and state officials announced yesterday that a university, a department store and three law firms were among 14 companies to receive nearly $33 million in federal grants intended to revitalize Lower Manhattan's economy.

The grants represent the first round of an effort to keep major employers downtown and to attract new companies to Lower Manhattan which has been wracked by layoffs on Wall Street, corporate relocations and transportation problems since Sept. 11 Mayor Michael R. Bloomberg and Gov. George E. Pataki said at a news conference at City Hall. The 14 employers, which represent a combined total of 10,272 jobs, have committed themselves to remaining downtown for seven years or more.

"Because large companies employ more than half of the private jobs in Lower Manhattan, the stabilization of these corporations is essential," Mr. Bloomberg said. "These employers will revitalize the downtown community by restoring confidence in the area, stabilizing the job base, and providing needed foot traffic to small businesses."

It is unlikely that the employers Pace University, the Century 21 department store, Deloitte & Touche, Brown Brothers Harriman & Company, the law firm of Fried, Frank, Harris, Shriver & Jacobson or any of the nine other firms awarded the grants yesterday were even thinking about leaving Lower Manhattan. Most of them have long-term leases for office space in buildings that escaped damage from the terrorist attack last September. The biggest single grant, $13 million, went to Deloitte & Touche.

But city and state officials are hoping to create a sense of momentum in the reconstruction effort downtown. They also want to restore confidence in the viability of the district and make it easier to hammer out deals with other companies and lure new business to the area.

The next round of companies, however, may prove to be far more difficult to nail down. The Bank of New York, for instance, is moving back to 101 Barclay St., but is planning to transfer some employees to Jersey City or the Atlantic Terminal area, in Brooklyn. AIG, the giant insurance company that is one of the largest downtown employers, is considering moving as many as 1,500 workers to Jersey City or to Brooklyn, according to real estate executives.

Aon, the insurance company, which had its offices in the World Trade Center, is still looking for a home, possibly at 55 Water Street or 75 Wall Street.

Many companies are reluctant to sign deals committing them to keeping a specific number of employees downtown, said real estate executives and lawyers, although they certainly would want subsidies to move technical and database operations to Brooklyn or Long Island City.

"There's no question that there are more complicated cases than some of those we signed up today," said Deputy Mayor Daniel Doctoroff. "Our goal is to have every single company sign up and commit to staying in Lower Manhattan. We're beginning to see a snowballing of confidence."

The other employers whose grants were announced today are Ambac Financial Group; Bank of Nova Scotia; Deloitte Consulting; Holland & Knight, a law firm; Hughes Hubbard & Reed, another law firm; Media Planning Group; Nomura Holding America; Refco Group, a financial firm, and Wildcat Service Corporation, which does job training. The money is part of $700 million in community development block grants from the federal Department of Housing and Urban Development.

Mr. Doctoroff said that the city and the state decided early on to offer benefit packages to all 145 companies in Lower Manhattan that have more than 200 employees. Those at risk of leaving the city may get more than others, he said.

The mayor and the governor, who are both Republicans, were joined at the news conference by three Democrats, Senators Charles Schumer and Hillary Clinton and State Assembly Speaker Sheldon Silver, who all congratulated each other on cooperating on downtown reconstruction.

Bettina Damiani, director of Good Jobs New York, a private foundation, said that public officials should also invest in job training for thousands of hotel workers, clerks, mechanics and others affected by the disaster. "Future funds need to be used to develop coordinated job training and industry development," she said. "They need to address the 75,000 low-wage workers who lost their jobs."

After 2,800 people died at the trade center and more than 13 million square feet of office space was destroyed, some financial firms, like Lehman Brothers, decided to abandon downtown, while many others sought to disperse their operations.

American Express and Merrill Lynch have moved back to the World Financial Center, although hundreds of workers at both companies have been laid off.

As a result, the vacancy rate in downtown office buildings has soared to 17 percent, from 4 percent two years ago, according to TenantWise.com, a commercial real estate broker.

"This is clearly a step in the right direction," said M. Myers Mermel, chief executive of TenantWise. "But the economy continues to exacerbate a soft real estate market created by the flight of tenants from Lower Manhattan post 9/11."

Raymond Gindi, the chief operating officer of Century 21, which employs 1,000 people at its store at 22 Cortlandt Street, said he was glad to see the grant money. The store, which was damaged in the collapse of the twin towers, reopened two months ago. The street in front of the store is still closed to traffic, he said, and business is still off. He is hoping to survive until nearby subway and PATH train stations are rebuilt.

"We're appreciative of what we're getting," Mr. Gindi said, "but we need all the help we can get."

Copyright 2002 The New York Times Company

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