The Lower Manhattan Development Corporation HUD Funded by alicejenny

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									     The Lower Manhattan
   Development Corporation’s
HUD-Funded Projects and Programs:

  Leading Economic Revitalization in Lower Manhattan


                      APPLESEED

               The Louis Berger Group, Inc.
                    In association with




                     November 2004
EXECUTIVE SUMMARY
Three years after the September 11th terrorist          STRENGTHENING LOWER MANHATTAN’S
attacks, the revitalization of Lower Manhattan is       RESIDENTIAL COMMUNITY
well under way. Under the leadership of Governor
Pataki and Mayor Bloomberg, and with the support        Following the September 11th attacks, residential
of funding from the federal government, the Lower       occupancy rates in Lower Manhattan, especially in
Manhattan Development Corporation has played a          areas near the World Trade Center, fell sharply.
pivotal role in the recovery.                           LMDC’s residential grant program helped stabilize
                                                        the residential market through the provision of cash
LMDC’S REDEVELOPMENT STRATEGY                           incentives for families to stay in or move into the
                                                        area. LMDC allocated $280.5 million to this pro-
From the beginning, LMDC recognized that there          gram; to date, $225.9 million in grants have been
was no single key to restoring Lower Manhattan’s        approved.
economy; recovery would by necessity be a multi-
faceted process. In collaboration with the City, the    Historically a business district, Lower Manhattan has
Port Authority, the Metropolitan Transportation         lagged other communities in Manhattan in the avail-
Authority and other agencies, LMDC formulated an        ability of parks and open spaces. To improve the
overall strategic framework to guide its redevelop-     quality of life for Lower Manhattan residents, LMDC
ment efforts. LMDC’s strategy focused on:               allocated $30.7 million in improvements to public
Strengthening Lower Manhattan’s residential com-        parks, helping to make neighborhoods from
munity through grants to residents, investment in       Tribeca, the Lower East Side and Chinatown to the
parks and other quality of life improvements;           Financial District and the Battery more attractive
• Stabilizing businesses severely affected by           places to work and live.
    the terrorist attacks;
• Retaining and attracting jobs;                        LMDC also allocated $3.0 million in capital funds
• Supporting cultural activities that reinforce         needed to finance the opening of Millennium High
    Lower Manhattan’s identity as an attractive         School – the first public high school specifically
    place to live and work, and at the same             intended to serve Lower Manhattan’s growing
    time attract visitors to the area;                  school-age population.
• Long-term planning for development of the
    World Trade Center site; and                        Economic Impact
• Restoring Lower Manhattan’s vital trans-              Overall, we estimate that LMDC programs aimed at
    portation infrastructure, and overcoming            strengthening Lower Manhattan’s residential com-
    long-standing weaknesses in the area’s con-         munity have generated:
    nections to other parts of the metropolitan         • A one-time impact of $270.9 million in city-
    area.                                                   wide economic output and 2,063 jobs, as a
                                                            result of the expenditure of residential
LMDC’s use of the special allocation of Community           grant funds and spending on construction;
Development Block Grant funds provided by the               and
Department of Housing and Urban Development
reflects this strategic approach.




                                                       2.
•   An ongoing annual impact of $231.4 million           If we take into account the $339.5 million that ESDC
    in citywide economic output and 1,721                itself allocated to the BRG program (over and above
    jobs, as a result of spending by families and        LMDC’s contribution) the one-time impact of the
    individuals who, but for the initiatives             total program has been $880.9 million and 6,346
    undertaken by LMDC, might not be living              jobs.
    in New York City. Thus, our estimate of the
    ongoing annual economic impact of the                Just as important in the long run, the Business
    program is greater than the one-time total           Recovery Grant Program helped maintain the infra-
    cost of LMDC’s grants to residents.                  structure of small businesses – the retailers, restau-
                                                         rants and providers of other neighborhood services
HELPING BUSINESSES RECOVER FROM THE                      that are so essential to maintaining Lower
EVENTS OF SEPTEMBER 11TH                                 Manhattan’s attractiveness as a place to live, work
                                                         and do business.
The September 11th attacks severely disrupted busi-
ness activity in Lower Manhattan. Whether as a           RETAINING AND ATTRACTING JOBS
result of disruption of their own operations or
because the decline in employment and population         Following the September 11th attacks, approximate-
in the area sharply cut into their business, many        ly 65,000 jobs were lost in Lower Manhattan. The
firms faced dire economic conditions. LMDC helped        PATH system, New York City subways and local
stabilize Lower Manhattan’s small business commu-        streets were all severely damaged, making it diffi-
nity by funding the Empire State Development             cult for those employees who remained to get to
Corporation’s Business Recovery Grant program.           work. The destruction of Con Edison’s World Trade
Using LMDC’s funds, ESDC has provided assistance         Center substation and Verizon’s facilities at 140 West
to 6,858 companies affected by the September 11th        Street severely disrupted Lower Manhattan’s energy
attacks.                                                 and telecommunications infrastructure of Lower
                                                         Manhattan, and raised doubts about whether key
LMDC also allocated $33.0 million in ESDC assis-         financial service companies and institutions would
tance to ten other companies that suffered “dispro-      remain in Lower Manhattan.
portionate losses” on September 11th. An addition-
al $0.5 million was allocated to the World Trade         LMDC’s strategy for recovery of business confi-
Center Employment Training Assistance Program.           dence, and for attracting and retaining jobs, includ-
                                                         ed several elements.

Economic Impact                                          LMDC allocated $150.0 million to ESDC’s Job
                                                         Creation and Retention Program. LMDC funds have
We estimate that expenditure of the funds provided       been used to provide incentives to 30 companies
by LMDC for businesses adversely affected by the         that have committed to keeping or creating 30,230
September 11th attacks generated a one-time impact       jobs in Lower Manhattan. LMDC also allocated
of $388.9 million in citywide economic output, and       $50.0 million to ESDC’s Small Firm Attraction and
2,682 jobs.                                              Retention Grant (SFARG) program.




                                                    3.
LMDC has committed a total of $750.0 million to           •   An ongoing impact of $2.6 billion in annu-
ESDC’s Utility Restoration and Infrastructure                 al citywide economic output, and 11,784
Rebuilding Program, to pay for the speedy restora-            jobs, through the retention of businesses
tion of energy and telecommunications services in             and jobs in Lower Manhattan.
Lower Manhattan after September 11th, and for
improving the reliability of the area’s energy and        If we include in our assessment of the program’s
telecommunications infrastructure.                        impact ESDC’s own commitment of $170.0 million
                                                          to JCRP and $105.0 million to SFARG, the estimated
After September 11th, workers’ access to the World        short-term impact increases to $1.8 billion and 8,513
Financial Center was complicated by the void at the       jobs; and the ongoing annual impact to $6.5 billion
World Trade Center site, and by the destruction of        and 28,965 jobs.
the pedestrian bridge that had connected the Trade
Center to the Winter Garden. To alleviate this prob-
lem, LMDC funded the construction of a new pedes-
trian bridge at Vesey Street.                             REINFORCING LOWER MANHATTAN’S
                                                          CULTURAL IDENTITY AND
In the months following the terrorist attacks, the        PROMOTING TOURISM
physical barriers and other provisions required to
secure the streets around the Stock Exchange creat-       Lower Manhattan was for hundreds of years the pri-
ed the impression of an area under siege. As              mary gateway for travelers to New York. Today,
enhanced security has become a continuing part of         tourism continues to play a critical part of the life of
our daily life, it was critical to redesign and refine    the area, with an estimated 8 million visitors com-
security provisions so that they would not be per-        ing to Lower Manhattan each year. However, with
ceived as an imposition. To address this problem,         the destruction of the World Trade Center and the
LMDC has allocated $10.0 million in street and secu-      temporary closing of the Statue of Liberty, some of
rity improvements in the Stock Exchange area. LMDC        the most popular destinations for visitors were no
has also allocated $4.0 million to support streetscape    longer available. Given these realities, it was neces-
improvements along Broadway.                              sary to reinforce the area’s cultural identity, and to
                                                          increase awareness of that identity to attract visitors
                                                          and to enhance Lower Manhattan’s appeal as a
Economic Impact                                           place to live and work.

We estimate that the LMDC-funded initiatives aimed        To address this need, LMDC supported the creation
at retaining and attracting businesses and jobs will      of new cultural events, including the River to River
generate:                                                 Festival, the Tribeca Film Festival and the Splendor of
• A one-time impact of $1.4 billion in city-              Florence Festival. LMDC has also funded marketing
     wide economic output, and 5,848 citywide             programs aimed at promoting visitor traffic in Lower
     jobs, through the expenditure of LMDC                Manhattan, including the Museums of Lower
     incentive grant, utility restoration and con-        Manhattan campaign and the Chinatown Tourism
     struction funds; and                                 and Marketing campaign To date, LMDC has allocat-
                                                          ed $11.9 million to these programs and other com-
                                                          munications outreach initiatives.




                                                         4.
Economic Impact                                            World Trade Center redevelopment

We estimate that the economic impact of the above          In collaboration with the Port Authority of New
listed initiatives includes:                               York and New Jersey and the City of New York,
• A one-time impact of $76.8 million in city-              LMDC sponsored the formulation of plans for the
     wide economic output and 991 jobs, as a               redevelopment of the World Trade Center site. The
     result of direct spending on the events and           plan calls for the creation of the permanent World
     campaigns themselves, as well as increased            Trade Center memorial, and the development of 10
     visitor spending; and                                 million square feet of office space, and space for
• An ongoing increase of $15.0 million in                  retail, cultural uses, and a hotel.
     annual citywide output and 225 jobs, gen-
     erated by a sustained increase in visitor             When the redevelopment of the site is complete
     spending resulting from these campaigns.              and the newly-developed space is 90 percent occu-
                                                           pied (assumed to occur by 2015), Appleseed esti-
Taking into account funds committed to these pro-          mates that businesses and institutions at the World
grams from sources other than LMDC, the one-time           Trade Center site will directly or indirectly generate
impact increases to $125.7 million and 1,511 jobs.         $15.7 billion in citywide economic output, and
The ongoing annual impact rises to $21.9 million           77,000 jobs (including 32,000 net new jobs on-site
and 325 jobs.                                              and 45,000 jobs elsewhere in the City created
                                                           through the “multiplier effect”).

                                                           Improving Lower Manhattan’s
PLANNING FOR LONG-TERM                                     transportation infrastructure
REDEVELOPMENT
                                                           In the months following the September 11th attacks,
Since its founding in 2001, the Lower Manhattan            LMDC recognized that the rebuilding of Lower
Development Corporation has played a dual role:            Manhattan’s transportation infrastructure was one of
providing immediate assistance to residents, compa-        the most critical factors affecting the area’s future. A
nies and communities affected by the attacks on the        team of agencies that included LMDC, the
World Trade Center; and planning for the long-term         Metropolitan Transportation Authority, the Port
redevelopment of Lower Manhattan. Planning is an           Authority of New York and New Jersey, and city
essential first step in securing the public and private    and state transportation departments set to work on
investments needed to ensure Lower Manhattan’s             formulating plans for use of funds made available
future. The long-term payoff from those invest-            for this purpose by the federal government. As a
ments can be enormous.                                     result of this effort, Governor Pataki in April 2003
                                                           announced a plan for improvements that are sched-
                                                           uled to be completed by 2009.

                                                           Working with the City, the MTA and the Port
                                                           Authority, LMDC subsequently financed a study of a




                                                      5.
potential new rail link serving Lower Manhattan.         SUMMARIZING LMDC’S IMPACT
This new link will provide a direct connection
between the Long Island Rail Road’s Jamaica Station      The near-term, one-time impact of initiatives under-
and Lower Manhattan, as well as a one-seat ride          taken to date by LMDC totals approximately $2.1
between John F. Kennedy Airport and Lower                billion in citywide economic impact and 11,584
Manhattan.                                               jobs. In the long term, we estimate that these same
                                                         initiatives will produce an ongoing impact of
According to an analysis prepared for LMDC by            approximately $1.3 billion annually and 6,468 jobs.
Hamilton, Rabinovitz & Altshuler, new development
occurring as a consequence of improved access will       In addition, we estimate that if completed as
result in the creation of between 56,000 and 80,000      planned the redevelopment of the World Trade
jobs in Lower Manhattan and Downtown Brooklyn            Center site, along with major improvements in
and an annual output in the region of $9.0 to $12.0      transportation, would by 2025 increase citywide
billion generated by activity in Lower Manhattan         economic output by $16.5 to $18.5 billion, and
and Brooklyn.                                            increase employment by 85,000 to 100,000 jobs.
                                                         Thus, the combined long-term impact of LMDC’s cur-
When the overlapping effects of these two develop-       rent initiatives, World Trade Center redevelopment
ments are taken into account, we estimate that by        and major transportation improvements would by
2025 they will, in combination, increase total output    2025 total $19.4 to $21.4 billion annually, and 98,700
in New York City by $16.5 to $18.5 billion, and          to 113,700 jobs.
increase citywide employment by 85,000 to 100,000
jobs.                                                    When we take into account the additional impact of
                                                         funding provided by other sources, the short-term one-
                                                         time impact increases to $3.2 billion in citywide output
                                                         and 18,974 jobs. Similarly, when additional funding
                                                         from ESDC and other sources is taken into account, the
                                                         combined long-term impact of these initiatives rises to
                                                         a total of $23.2 to $25.2 billion in annual output in
                                                         2025, and 116,000 to 131,000 jobs.




                                                        6.
      **




     **




† Does not include the $50 million allocated to the Affordable Housing Program.
* Includes the cost of acquisition of 130 Liberty Street.
** LMDC funded portions of ESDC administered Business Assistance and Retention Programs.




                                                    7.
INTRODUCTION
Three years ago, in the aftermath of the terrorist attacks that destroyed the World Trade Center and devastated the sur-
rounding area, Governor George Pataki and then-Mayor Rudolph Giuliani created the Lower Manhattan Development
Corporation (LMDC) to lead a concerted effort to rebuild and revitalize Lower Manhattan. From the beginning,
LMDC recognized that there would be no single solution to the challenge of restoring Lower Manhattan’s economy.
Recovery would require both a coherent vision of the area’s future and a multi-faceted strategy for achieving that goal.
It would also require immediate action to improve the quality of life in Lower Manhattan.

The cornerstone of LMDC’s vision was to preserve and enhance Lower Manhattan’s position as a leading twenty-first
century business district, while at the same time making the area one of New York City’s most attractive places to live.
In collaboration with the City, the Port Authority of New York and New Jersey, the Metropolitan Transportation
Authority and other agencies, LMDC formulated an overall strategic framework to guide its redevelopment efforts.
LMDC’s strategy included a number of key elements:

• Strengthening Lower Manhattan’s residential community;
• Stabilizing businesses severely affected by the terrorist attacks;
• Retaining and attracting jobs;
• Supporting cultural activities that reinforce Lower Manhattan’s identity
  as an attractive place to live and work, and at the same time attract visitors to the area;
• Long-term planning for the development of the World Trade Center site; and
• Restoring and revitalizing Lower Manhattan’s vital transportation infrastructure.

LMDC’s use of the special allocation of Community Development Block Grant funds provided by the federal
government reflects this strategic approach. A review of the economic impact of the LMDC programs follows.




                                                          8.
WASH
 INGTO
   N ST




            ST
J.P. WARD




            ST
J.P. WARD
STRENGTHENING LOWER MANHATTAN
AS A RESIDENTIAL COMMUNITY
Strengthening Lower Manhattan as a                               •    Family Grants offered $1,500 to each house-
                                                                      hold with at least one child under 18 that com-
Residential Community                                                 mitted to living in Zone 1 for at least a year; and
LMDC’s strategy for strengthening Lower Manhattan’s                   $750 to each household making a one-year com-
residential community has had three key components:                   mitment to living in Zones 2 and 3.
                                                                 •    Two-Year Commitment Grants were provided
•   Stabilizing the area’s resident population (and                   to renters who signed two-year or longer leases
    housing market), and encouraging new con-                         on apartments in Zone 1 and Zone 2. Grants
    struction;                                                        were calculated at 30 percent of housing cost.
•   Improving the quality of life enjoyed by Lower                    Existing owners of owner-occupied housing
    Manhattan residents, through improvement of                       units who had completed the payment of their
    parks and public spaces; and                                      mortgages were similarly eligible to receive grants
•   Supporting the creation of a high school to meet                  totaling up to 50 percent of their monthly main-
    the needs of growing families.                                    tenance costs and real estate and related taxes. In
                                                                      both cases, the grants were subject to a minimum
                                                                      of $4,000 and a maximum of $12,000 within
THE RESIDENTIAL GRANT PROGRAM
                                                                      Zone 1 and a minimum of $2,000 and a maxi-
                                                                      mum of $6,000 within Zone 2.
The September 2001 attacks on the World Trade Center
brought to a sudden halt more than a decade of vibrant           As Table 1 shows, more than 65,000 grants have been
growth in Lower Manhattan’s resident population.                 awarded to residents of Zones 1, 2 and 3. Two-Year
Between 1990 and 2000, the number of people living               Commitment Grants accounted for 83 percent of total
below Houston Street had increased by 8 percent, to              spending, with grants averaging nearly $7,100 per house-
156,086. New residential development was especially              hold.
strong in the area below Chambers Street; between 1990
and 2000, the number of people living in this area rose by
67 percent, to 22,904. The gradual transformation of
Lower Manhattan into a mixed-use, “24/7” community
was widely seen as a major factor in the area’s economic
resurgence during the years before 2001.

In the days and weeks after September 11th, however,             As Figure 1 shows, residential grants were broadly distrib-
thousands of families and individuals left the area.             uted across the neighborhoods of Lower Manhattan.
Occupancy rates below Chambers Street plunged. Battery           Residents of Battery Park City and the financial district
Park City, which had led the re-emergence of Lower               benefited from these grants – and so did residents of
Manhattan as a residential community, was especially             Chinatown.
hard-hit. Three months after September 11th, only 61
percent of Battery Park City’s 6,167 apartments were
occupied.                                                                  LMDC has provided $225.9 million
                                                                             in grants to more than 65,000
Thus, one of the Lower Manhattan Development                                           households
Corporation’s earliest initiatives was thus to provide incen-
tives for people to stay in – or move to – Lower
Manhattan.                                                       The Lower Manhattan Development Corporation’s resi-
                                                                 dential grant program contributed in several ways to New
•   September 11 Residential grants provided a                   York City’s economic recovery and to the revitalization of
    one-time grant of $1,000 per household for peo-              Lower Manhattan. Most immediately, the infusion of
    ple who were living in Zones 1, 2 and 3 in Lower
                                                                 $225.9 million in federally-funded grants provided a
    Manhattan on the date of the attacks.
                                                                 short-term stimulus that helped alleviate the adverse eco-
                                                                 nomic effects of the loss of jobs and the exodus of residents
                                                                 from the downtown area.



                                                                10.
                                                     LEGEND
                                                      LEGEND
                      TOTAL NUMBER OF RESIDENTIAL   BREAKDOWN OF EACH ZONE’S NUMBER
                      GRANTS, BY TAX LOT:           OF RESIDENTIAL GRANTS, BY RESIDENTIAL
                                                    GRANT TYPE:
                           1 - 14                                    RESIDENTIAL GRANT ZONES
                           15-90
                                                                    FAMILY GRANTS
                           91-262
                                                                    2-YEAR COMMITMENT-
                           263-846                                  BASED GRANTS
                                                                    SEPTEMBER 11, 2001 GRANTS



           Figure 1
Residential Grant Distribution




            11.
Even more important than this direct spending impact,         The absence of these households, moreover, would have
however, has been the residential grant programs’ contri-     had an impact extending well beyond Lower Manhattan.
bution to the quick stabilization and subsequent recovery     In the near term, many of those who without LMDC’s
of the Lower Manhattan residential market. At a critical      grants would have chosen not to live in Lower Manhattan
moment in time, LMDC’s grants helped to reverse the           would in all likelihood be living elsewhere in New York
outflow of residents, and re-establish Lower Manhattan’s      City instead. But some would have chosen not to live in
identity as the City’s fastest-growing community. By the      the City. For purposes of this analysis we assumed that
end of 2002, occupancy rates below Chambers Street had        one-third of these 10,150 households (that is, 3,383
returned to pre-September 11 levels; and the occupancy        households) would not be living in the City without the
rate in Battery Park City had risen to 97 percent.            residential grant program. The additional income and
Occupancy rates have since remained high, despite the         consumer spending associated with these households gen-
development of thousands of new apartments in Lower           erates $231.4 million in annual citywide economic output
Manhattan. According to the Alliance for Downtown             and 1,721 jobs.
New York, the current population below Chambers Street
is 31,984.
                                                                       The ongoing annual impact of the
                                                                           residential grant program is
        By the end of 2002, the vacancy rate in                    $231.4 million in citywide economic impact
       Battery Park City had fallen to 3 percent                 and the creation of 1,721 jobs in New York City


A survey of residents conducted in May 2004 by the            In addition to the impact on spending and jobs, an
Alliance for Downtown New York found that nearly 32           increase of more than 10,000 in the number of households
percent of all current residents living below Chambers        living in Lower Manhattan (over and above what the resi-
Street had moved to the area between September 2001           dent population would have been in the absence of
and May 2003. Among those new residents, 57 percent           LMDC’s grants) will also have a long-term effect on resi-
said LMDC’s grants had been a factor in their decision to     dential property values in the area.
move to Lower Manhattan. More than 38 percent of these
new residents said that LMDC’s grants had been a “very        LMDC’s residential grant program, in combination with
important” factor and 19 percent said that the grants had     Liberty Bond tax-exempt financing, has played a major
been a “somewhat important” factor.                           role stimulating the development of additional housing in
                                                              Lower Manhattan. The grant program stimulated the
                                                              decline in vacancy rates to less than 5 percent, creating an
For 57 percent of all new Lower Manhattan residents,
                                                              environment in which there was strong demand for addi-
      LMDC’s grants were an important factor
       in their decision to move into the area                tional units. The allocation of $1.6 billion of tax-exempt
                                                              bond financing spurred the construction of new residen-
                                                              tial units as well as the conversion on under-utilized Class
If we assume for the purpose of this analysis that 38 per-    B and Class C office space. Starting in mid-2002, residen-
cent of all Two-Year Commitment Grant recipients would        tial developers have announced and undertaken several
not have come to or stayed in Lower Manhattan without         major projects in Lower Manhattan. The Alliance for
this incentive, we can estimate that without LMDC’s           Downtown New York estimates that there will be 7,445
grants there might today be 10,150 fewer households liv-      new residential units below Chambers Street by 2008,
ing in Lower Manhattan.                                       including 3,018 units currently under construction and
                                                              4,427 units in the planning stage.




                                                         12
                                                                 IMPROVING LOWER MANHATTAN’S
    LMDC’s residential grants played a central role in           PARKS
    restoring occupancy rates to more than 95 percent,
              and in spurring new investment                     For much of its history, Lower Manhattan’s residential
                                                                 neighborhoods have been underinvested, relative to other
                                                                 New York City communities, in parks and other public
Overall, we estimate that LMDC’s grants to residents have        spaces. Particularly as more families move into the area,
generated:                                                       the need for public space improvements has become more
                                                                 pressing.
•     A one-time impact of $221.7 million in citywide
      economic output and 1,604 jobs, as a result of             LMDC has made a major commitment to improving and
      the expenditure of grant funds by households               expanding parks and other public spaces in Lower
      that received them, and                                    Manhattan. LMDC’s allocation of $30.7 million will be
•     An ongoing annual impact of $231.4 million in              used to improve approximately 124.2 acres of park land,
      citywide economic output and 1,721 jobs, as a              as shown in Table 3.
      result of spending by families and individuals
      who, but for the assistance provided by LMDC,
      would have left New York City.


In assessing the “return” to the City’s economy that results
from LMDC’s investment in the residential grant pro-
gram, it is worth noting that our estimate of the ongoing
annual economic impact of the program is greater than
its total one-time cost.




               The ongoing annual impact of
            LMDC’s residential grant program
          is greater than its one-time initial cost




                                                           13.
                                                      Figure 2
                                                 Park Improvements

LMDC has contributed to a wide variety of improvements        419 jobs. Total spending from all sources will generate
in sixteen parks and other public spaces, stretching from     $51.8 million in citywide output and 489 jobs.
Sara D. Roosevelt Park on the Lower East Side to the
Financial District and the Battery. For example, improve-     Investments in parks and open spaces have quantifiable
ments have included new ball fields, a running track, new     economic benefits over and above the spending impact. A
drainage systems, lighting, picnic tables and benches, and    study of the economic impact of public parks, conducted
many others.                                                  in 2002 by New Yorkers for Parks and Ernst & Young,
                                                              found that:

     Improvements to 16 Lower Manhattan parks
                                                                   Parks are community assets, and as such, the potential
           could increase residential and
                                                                   impact of a neighborhood park is a strong consideration as
      commercial property values by $56 million
                                                                   part of the decision to purchase, invest or finance a proper-
                                                                   ty. Capital improvements can result in increases to both
The location of LMDC-funded park improvements is                   commercial and residential real estate value. Close proxim-
shown in Figure 2. Almost the entire population below              ity to a quality park is a positive site attribute that can
Houston Street lives within a half-mile of at least one of         enhance the ‘curb appeal’ and value of adjacent real estate.
the parks that are benefiting from LMDC’s investment.
This means that approximately 150,000 Lower                   It is too early to gauge the actual impact of the improve-
Manhattan residents will have the opportunity to enjoy        ments financed by LMDC, since many of these invest-
these improvements on a regular basis.                        ments are just getting underway. Based on experience else-
                                                              where, however, we can estimate the potential magnitude
LMDC’s share of spending on parks improvements trans-         of this impact.
lates into a total of $44.4 million in economic impact and




                                                             14.
Studies conducted in New York City, Boston and else-                         MILLENNIUM HIGH SCHOOL
where suggest that the premium attached to residential
real estate adjacent to a park can be as much as 20 percent.                 The continued growth of Lower Manhattan’s residential
For purposes of this analysis, we have assumed:                              community is creating new demands for a variety of com-
                                                                             munity facilities. Perhaps most significant among these
•     An average value of approximately $450 per                             demands is the need for schools. Millennium High
      square foot in Lower Manhattan;
                                                                             School, which opened in September 2003 in renovated
•     That parkside locations increase property values
                                                                             space at 75 Broad Street, is the first high school in Lower
      by an average of 15 percent; and
                                                                             Manhattan that is specifically intended to serve students
•     That LMDC-funded improvements increase this
                                                                             living south of Houston Street.
      premium by an average of 20 percent (that is, 3
      percent of the total value of the apartment).

Based on these assumptions, we can estimate that the                             Millennium High School: Helping make Lower
value of approximately 2.7 million square feet of residen-                       Manhattan a place for families to stay and grow
tial real estate adjacent to the affected parks will increase
by approximately $36.4 million.1

Parks improvements also benefit the commercial proper-
ties in the area. As with residential properties, we can esti-               LMDC helped lead the effort to create Millennium High
mate the potential magnitude of this increase in value.                      School, and allocated $3 million toward the $16.9 million
There are 21 commercial office buildings with a total of                     cost of converting several floors of office space into a
12.8 million square feet of office space bordering on the                    school. LMDC’s share of construction spending translates
improved parks. If a parkside location increases office rents                into a total of $4.8 million in economic impact and 40
by 10 percent, we can estimate that in Lower Manhattan                       jobs. Total construction spending from all sources will
such locations will command approximately $3.20 per                          generate $27 million in citywide output and 228 jobs.
square foot in additional rent. If the improvements
financed by LMDC increase this differential by 10 percent                    The new school will aid the continuing evolution of
(that is, an additional 32 cents per square foot), we can                    Lower Manhattan as a residential community. In particu-
estimate that improving the parks will generate an addi-                     lar, it makes Lower Manhattan a more attractive place for
tional $4.1 million per year in commercial rents.                            families with children approaching school age. In 2000,
Capitalized at 8 percent, this stream of revenue translates                  27,865 children lived below Houston Street; 23 percent of
into an increase of $20.0 million in the value of buildings                  all households in the area included at least one person
bordering the park.                                                          below the age of 18. The presence of a high-quality high
                                                                             school will help make Lower Manhattan neighborhoods
                                                                             more attractive both to parents and students.

    CALCULATING THE IMPACT OF PARK IMPROVEMENTS
                     ON COMMERCIAL RENTS:
    1) Average office rent per sf         $32.00
    2 Value of parkside location
       (10% of line 1)                     $3.20
    3) Value of park improvements
       (10% of line 2)                      0.32




1 Because several of the parks in which LMDC has invested are adjacent to publicly-owned or other subsidized housing, improvements will not in
all cases be translated into increased market values. Nevertheless, assuming for purposes of analysis that improvements in these parks could translate
into higher home values gives us a way to estimate the implicit value of better parks to residents, regardless of their incomes or the type of housing
they live in.


                                                                       15.
OVERALL ECONOMIC IMPACT
OF RESIDENTIAL INITIATIVES

Over time, the growth of the resident population will sup-
port the growth of retail, restaurants and consumer servic-
es. Moreover, the benefits of residential development will
spill over into the commercial sector, by making Lower
Manhattan a more attractive place to do business as well.

As noted above, LMDC’s direct spending on the residen-
tial grant program, on park improvements and on the ren-
ovation of the Millennium High School building will also
ripple through New York City’s economy, generating a
citywide spending impact. Taking into account the mul-
tiplier effect, LMDC’s spending on the Residential Grant
Program, parks improvements and Millennium High
School will generate a one-time impact of $270.9 million
in citywide economic output and will support 2,063 jobs.

In addition, we estimate that the increase in Lower
Manhattan’s resident population that results from the ini-
tiatives described above will result in an ongoing annual
impact of $231.4 million (in 2004 dollars) and 1,721
jobs. Our estimate of the ongoing economic annual
impact of LMDC’s residential initiatives is thus greater
than the one-time total cost of those initiatives. Park
improvements will also have a long-term impact on both
residential and commercial property values.




                                                              16.
HELPING BUSINESSES RECOVER FROM
THE EFFECTS OF SEPTEMBER 11TH
In the immediate aftermath of the September 11th                •    The Business Recovery Grant program provid-
attacks, Lower Manhattan’s future as a major business cen-           ed financial assistance to businesses that were
ter was in serious doubt. More than 65,000 jobs had been             located south of 14th Street2 on September 11th
lost, more than 13 million square feet of office space had           and that had fewer than 500 employees. The
been destroyed, and millions of additional square feet had           amount of assistance each firm could receive was
been damaged. Hundreds of companies that had occupied                based on its proximity to the site of the attacks,
these buildings were forced to relocate, and thousands of            and on estimates of direct losses incurred (prop-
others suffered at least temporary disruption of their busi-         erty damage, temporary relocation costs, clean-
ness. Major elements of the area’s energy and telecommu-             up and repair costs, etc.) as well as lost revenues.
nications infrastructure had been destroyed or severely              Firms in the “restricted zone” (the World Trade
                                                                     Center itself and the immediately surrounding
damaged. Transit infrastructure had also been destroyed,
                                                                     area) were eligible for grants equaling as much as
making it difficult for employees of Lower Manhattan
                                                                     10 percent of the preceding years revenue; firms
companies to get to work. As a result of these problems,
                                                                     between Houston and 14th Streets were eligible
some companies left Lower Manhattan. Others did not
                                                                     for grants equaling 2 percent of the previous
leave immediately but have seriously considered doing so
                                                                     year’s revenue.
whenever their current leases expire.
                                                                •    The Disproportionate Loss of Workforce
       LMDC-funded Business Recovery Grants                          Grant program aided companies that were locat-
         helped stabilize 6,858 firms with                           ed below Canal Street on September 11th, and
           more than 52,000 employees                                that suffered a loss of at least 50 New York City
                                                                     based workers in the attacks or lost at least 20
                                                                     percent of their New York City based employees.
In the months following the attacks, the Empire State
Development Corporation launched several business assis-        •    The World Trade Center Employment
                                                                     Training Assistance Program provided grants to
tance programs that were funded in part from LMDC’s
                                                                     companies located south of 14th Street to pro-
allocation of Community Development Block Grant
                                                                     vide training opportunities for employees affected
funds. These programs have made a notable contribution
                                                                     by the September 11th attacks.
– first to the stabilization of Lower Manhattan’s battered
economy, and then to its continuing recovery.                   2 The BRG program was administered by the Empire State Development
                                                                Corporation, using a combination of funds provided by LMDC and
                                                                funds that Congress allocated directly to ESDC.




                                                          17.
As Table 5 shows, 6,858 firms employing more than                estimate that these firms occupied approximately 4.6 mil-
52,000 people received assistance under the LMDC-fund-           lion square feet of office space – five percent of Lower
ed portion of ESDC’s Business Recovery Grant program.            Manhattan’s office market. By helping these companies
Most of this assistance went to small firms; 83 percent of       stay in business and keep paying rent, the BRG program
all BRG recipients had ten or fewer employees. (When             helped to stabilize the Lower Manhattan office market.
funds that Congress allocated directly to ESDC are
included, the BRG program totaled $564 million, and              Just as important in the long run, the Business Recovery
provided assistance to 14,152 businesses.)                       Grant Program helped maintain the infrastructure of small
                                                                 businesses – the retailers, restaurants and providers of
Nearly 58 percent of all LMDC-funded BRG assistance              other neighborhood services that are so essential to main-
went to firms located in the restricted zone. Moreover, the      taining Lower Manhattan’s attractiveness as a place to live,
assistance provided to these firms was substantial – the         work and do business. BRG recipients included 923 retail-
2,118 firms located in this area received an average of          ers, 433 restaurants, and 247 providers of health and social
$55,800 each.                                                    services. The failure of these businesses, which are vital to
                                                                 the fabric of life in Lower Manhattan, would have delayed
Firms that received assistance under the Disproportionate        the area’s recovery.
Loss of Workforce program were typically larger. Ten firms
employing a total of 6,682 people shared a total of $33.0
million in grants. Ten firms also received grants under the          Office-based business that received LMDC-funded
Employment Training Assistance program, and provided                      BRG grants account for 5 percent of all
training for 303 employees.                                                        downtown office space

ESDC’s Business Recovery Grant program helped stabilize
the Lower Manhattan economy by partially replacing rev-          We estimate that in addition to preserving thousands of
enues lost in the wake of the attacks on the World Trade         jobs at the recipient firms, LMDC’s business assistance
Center. These programs helped local businesses keep pay-         programs produced a “multiplier effect” that generated
ing their employees, as well as keep paying rent, utilities      $142.4 million in economic activity at other New York
and other fixed expenses. And as these companies and             City businesses, supporting 994 full-time-equivalent jobs.
their employees spent the money provided by LMDC, the
effects rippled outward to other business districts and          As with the Business Recovery Grant program, LMDC’s
other neighborhoods throughout the City.                         spending on the Disproportionate Loss of Workforce pro-
                                                                 gram and the Employment Training and Assistance
The Business Recovery Grant program had a positive               Program generated an additional impact on the City’s
effect on the market for smaller office spaces. A total of       economy because of the multiplier effect. The three busi-
2,873 firms in office-based industries such as finance,          ness assistance programs combined supported a total of
insurance and business and professional services received        $388.9 million in citywide output and 2,682 jobs. If we
BRG grants funded by LMDC. Together, these firms                 include that portion of the BRG program that was funded
employed a total of 18,377 people. Assuming a ratio of           directly by ESDC, we estimate that these programs gener-
four employees per 1,000 square feet of office space, we can     ated $936.8 million in citywide output and 6,629 jobs.




                                                               18.
            Figure 3
   Business Grant Distribution




           Figure 4
BRG Grant Recipients by Industry




              19.
RETAINING AND ATTRACTING JOBS
Along with helping businesses overcome the immediate         Manhattan today could be as high as 19 percent.
effects of the September 11th attacks, LMDC focused on
the need to maintain Lower Manhattan’s vitality as a         We also evaluated the one-time economic impact of the
major center of business and employment. LMDC’s strat-       spending by the corporations that received these grants.
egy for retaining and attracting jobs includes:              LMDC’s spending on the Job Creation and Retention
• Grants to major employers who retain jobs in (or           Program generates additional economic activity due to the
     bring jobs to) Lower Manhattan;                         multiplier effect. We estimate that the spending of $150.0
• Supporting the restoration and upgrading of the            million will generate a one-time impact of $217.5 million
     area’s utility infrastructure; and                      in citywide output and 1,170 jobs.
• Improving Lower Manhattan’s pedestrian envi-
     ronment.
                                                                        Restoring Lower Manhattan’s utilities
                                                                             has been critical to recovery
JOB CREATION AND RETENTION

ESDC’s Job Creation and Retention Program, funded in
part by LMDC, helps larger firms (those with at least 200    Just as LMDC’s residential grants will have a long-term
employees) that were located below Canal Street on           impact through the annual spending of households that
September 11th and stayed in the area; firms that tem-       would otherwise have left the City, JCRP grants funded by
porarily moved jobs out of Lower Manhattan after             LMDC will have a continuing impact as a result of the
September 11th, and request assistance in order to move      ongoing operations of businesses retained in New York
them back; and firms considering the creation of new jobs    City. Even if for the purpose of this analysis we assume
in Lower Manhattan. Firms must commit to maintaining         that, without JCRP grants, only 20 percent of the 30,230
jobs in New York City for at least seven years.              jobs retained by companies receiving JCRP grants would
                                                             actually have moved out of New York City, this would
                                                             have represented an ongoing loss to the City of $2.6 bil-
       LMDC-funded JCRP Grants: Aided and                    lion and 11,784 full-time-equivalent jobs. 3
        helped create or retain 30 companies,
          30,230 jobs in Lower Manhattan                     Just as ESDC’s Job Creation and Retention Program
                                                             helped larger companies stay and grow in Lower
                                                             Manhattan, the Small Firm Attraction and Retention
Since 2002, LMDC funds have been used to provide aid
                                                             Grant Program has done likewise for companies with
to 30 firms. These grants helped retain and create 30,230
                                                             fewer than 200 employees. LMDC and ESDC allocations
jobs in Lower Manhattan and an additional 4,524 jobs in
                                                             for this program total $155 million. Including the impact
the rest of New York City. (Including funds that Congress
                                                             of funds allocated directly to ESDC, we estimate that
allocated directly to ESDC, the JCRP program totaled
                                                             spending of grant funds by these companies will generate
$320.0 million, and helped 74 companies create or retain
                                                             $230 million in citywide output, and 1,657 jobs. To date,
more than 83,074 jobs – 74,302 of them in Lower
                                                             funds have been awarded to 1,700 companies employing
Manhattan.)
                                                             26,000 people.
Like LMDC-funded Business Recovery Grants, the Job
Creation and Retention Program has helped stabilize the      UTILITY RESTORATION AND
market for commercial office space in Lower Manhattan.       INFRASTRUCTURE IMPROVEMENTS
For instance, the first 22 companies that received JCRP
benefits occupy approximately 5.6 million square feet of     The September 11th attacks on the World Trade Center
office space in Lower Manhattan – more than 6 percent        had a devastating impact on Lower Manhattan’s energy
of the area’s total inventory of commercial office space.    and telecommunications infrastructure. A major Con
Without these tenants, the office vacancy rate in Lower      Edison substation at 7 World Trade Center was destroyed.

                                                             3 This estimate includes the 2,320 jobs that would have left the City, the
                                                             economic output associated with those jobs, and the multiplier effect of
                                                             the lost jobs and output.



                                                            20.
Verizon’s facilities at 140 West Street – the central office        3) Payment for “interference” work – the relocation
through which most Lower Manhattan telephone traffic                   of utilities required not for the companies’ own
was routed – was also severely damaged. Energy and                     purposes, but by public infrastructure improve-
telecommunications outages were a major problem in the                 ments and other Lower Manhattan redevelop-
days after September 11th and only the heroic efforts of               ment projects.
thousands of workers kept the problem from being much               4) Funding for the installation of new “carrier-neu-
worse.                                                                 tral” conduits connecting telecommunications
                                                                       companies’ fiber optic trunk lines to Lower
                                                                       Manhattan’s side streets, for installation of
              Ongoing annual impact of                                 redundant fiber optic connections to critical
           JCRP: $1.0 billion in output and                            public and private-sector facilities in Lower
                     4,522 jobs                                        Manhattan, and for other improvements man-
                                                                       dated by new federal or state regulations.

Reliable energy and telecommunications services are                 As of October 2004, eligible utility companies had filed
essential to Lower Manhattan’s continued attractiveness as          claims for reimbursement under the first of these cate-
a business center – especially for the financial services           gories totaling $407.0 million; and had received $160.3
firms that constitute the heart of the area’s economy. In           million in preliminary payments against those claims.
2002, as planning for redevelopment was getting under               Companies are also submitting requests for reimburse-
way, the Lower Manhattan Telecommunications Users                   ment under the second category, for which approximately
Working Group – consisting of senior executives from                $330.0 million is expected to be available.
such major downtown companies as AIG, Goldman
Sachs, Deutsche Bank and the New York Stock Exchange                For purposes of this analysis, we have treated treat these
– asserted that:                                                    funds as primarily an infusion of federal funds that (like
                                                                    grants to businesses) will ultimately be spent within the
    A state-of-the-art and resilient telecommunications             City – in effect, treating them as a revenue stream financ-
    infrastructure is essential to Lower Manhattan’s vitality
                                                                    ing a one-time increase in company expenses. We also
    in the 21st century and must be a key component of the
                                                                    assume that 40 percent of the total allocation is allocated
    rebuilding process. Such a foundation will allow
    America’s financial center to do what it does best – act as     for energy-related costs and 60 percent for telecommuni-
    the financial engine for ingenuity and economic growth          cation. Based on these assumptions, we estimate that over
    around the world.                                               a period of several years these funds will add a total of $1.1
                                                                    billion in economic output, and generate 3,681 jobs.
In 2002, Congress authorized the use of up to $750.0 mil-
lion in Community Development Block Grant funds for                 In addition to the impact of local spending that the pro-
utility restoration and infrastructure improvements.                gram supports, the Utility Restoration and Infrastructure
LMDC’s board subsequently approved a plan that priori-              Rebuilding program will benefit New York City and
tizes the use of these funds as follows:                            Lower Manhattan in at least two other ways.

1) Reimbursement for costs related to providing                     •   A portion of the funds made available under this
   temporary and emergency energy and telecom-                          program can be used to fund projects that will
   munications services in Lower Manhattan after                        directly improve network reliability, such as
   September 11th that were not recovered from                          redundant fiber optic connections to key facili-
   insurance or other sources.                                          ties in Lower Manhattan.
2) Reimbursement for costs related to permanent                     •   Because they will not have to absorb restoration
   restoration of Lower Manhattan’s energy and                          costs out of their own resources, the companies
   telecommunications infrastructure, and for criti-                    will be better positioned to undertake still other
   cally important improvements to that infrastruc-                     improvements needed to enhance the reliability
   ture.                                                                of Lower Manhattan’s energy and telecommuni-
                                                                        cations infrastructure, and to improve the quali-
                                                                        ty of their services.




                                                              21.
AN IMPROVED
PEDESTRIAN ENVIRONMENT

Perhaps more than in any major business district in the           The project was critical for the ongoing occupancy at the
U.S., the primary means of internal circulation within            World Financial Center. As one real estate executive put it:
Lower Manhattan is walking. The ability of pedestrians to
move around the area quickly and efficiently – and the                 For Merrill Lynch and American Express, this project
                                                                       was incredibly important. After September 11th, com-
quality of pedestrians’ experience of the area – is critically
                                                                       ing across Vesey Street was how most of their employees
important to Lower Manhattan businesses of all sorts.
                                                                       got to work every day – and it just wasn’t a very pleas-
                                                                       ant experience. So this became a real issue for them.
 The Vesey Street Bridge: Critical to World Financial
      Center and Battery Park City’s recovery.                    For companies that will within the next few years be
                                                                  deciding whether to renew their current leases and stay
                                                                  downtown, tangible short-term improvements in day-to-
The Vesey Street Bridge                                           day working conditions are especially critical.
From the earliest days after September 11th, downtown
residents and businesses have recognized the importance           Between April 2004 and September 2004, 1.6 million
of keeping the World Financial Center and Battery Park            square feet of space has been leased at the World Financial
City connected to the rest of Lower Manhattan.                    Center. More than 90 percent of this space was leased
Particularly with the destruction of the World Trade              after the completion of the bridge, with several of the leas-
Center, the World Financial Center complex provides a             es being new rather than renewals.
significant share of the Class A office space in Lower
Manhattan. The destruction of the bridge that had once            Like other capital projects, the connections across West
connected the World Trade Center and Battery Park City            Street can also be evaluated in terms of the impact of con-
via the Winter Garden made it especially challenging for          struction spending. We estimate that LMDC’s allocation
workers and residents to get to Battery Park City.                of $25.0 million for West Street Connections generated
                                                                  $40.1 million and 301 person-years of employment.
The new Vesey Street bridge, which opened in November
2003, has been heavily used. According to a recent pedes-         Streetscape and Security Improvements
trian count 4 by the State Department of Transportation,          In the months following the terrorist attacks, the physical
the number of people crossing West Street at Vesey and            barriers and other provisions required to secure Lower
Liberty during peak commuting hours can be as high as             Manhattan created the impression of an area under siege.
5,350. The bridge is not just a convenience – for people          To overcome this problem, LMDC made a commitment
who live or work in Battery Park City, it is a lifeline.          to funding streetscape improvements in selected areas of
                                                                  Lower Manhattan. While ad hoc measures such as Jersey
4 Pedestrian count on 9/20/2004                                   barriers and parked pickup trucks had provided immedi-
                                                                  ate security in the months after September 11th, they also
                                                                  conveyed the image of an area still operating under emer-
                                                                  gency conditions, rather than one whose recovery was
                                                                  already well under way.




                                                                 22.
LMDC has allocated $10.0 million which, combined with             Broadway); signage for key area landmarks and streets;
private contributions, has financed security improvements         new pedestrian and roadway lighting; and planters. By cre-
in the area surrounding the New York Stock Exchange.              ating a more pedestrian-friendly environment, the
The program includes:                                             Alliance aims to generate more foot traffic along Broadway
• Installation of cobblestone in the pedestrianized               – and thus to increase retail sales.
     zone on Broad Street;
• Bronze sculptures and bollards that double as                   In addition improving the experience of living and work-
     security barriers; and                                       ing in Lower Manhattan, the spending on streetscape
• Vehicular gateways outfitted with secure, reliable              improves generate directly quantifiable economic impact.
     mechanical entry devices.                                    Taking into account the multiplier effect, we estimate that
                                                                  LMDC’s allocation of $14.0 million generated $21.0 mil-
This program is simultaneously improving security and
                                                                  lion and 162 person-years of employment. If elements of
providing a more attractive environment for people who
                                                                  this program funded from sources other than LMDC are
live in, work in or visit the area.
                                                                  included, the impact of all construction spending totaled
                                                                  $45.4 million and 346 jobs.
The value of these improvements goes well beyond their
esthetic effect. Restoring a sense of stability – without sac-
                                                                  Streetscape improvements will also have an ongoing
rificing security – is vital to local companies’ ability to
                                                                  impact on businesses in the area. For example, if as a result
attract and retain talented workers – and ultimately, to
                                                                  of improvements along Broadway, sales at stores occupy-
Lower Manhattan’s ability to retain companies.
                                                                  ing 400,000 square feet of retail space are increased by 5
                                                                  percent, then we can expect an annual increase of about
LMDC has also allocated $4.0 million to support comple-
                                                                  $6.0 million in annual sales. This growth will in turn
tion of a streetscape improvement program sponsored by
                                                                  result in an ongoing increase in annual citywide output of
the Alliance for Downtown New York. The program is
                                                                  $3.9 million, and 46 jobs.
focused primarily along Broadway, from the Battery to
City Hall Park. Elements include specially-designed dis-
tinctive sidewalks with markers denoting the “Canyon of
Heroes” (site of historic events and parades along




                                                            23.
OVERALL IMPACT OF
JOB RETENTION INITIATIVES

As shown in Table 6, overall the LMDC-funded job reten-        When ESDC and other funding sources are included, the
tion and creation initiatives outlined above will generate:    overall effect of the program is a one-time impact of $1.8
• A one-time impact of $1.4 billion in citywide                billion in output and 8,513 jobs; and an ongoing annual
     economic output, and 5,848 jobs, and                      impact of $6.5 billion in output and 28,965 jobs.
• An ongoing impact of $2.6 billion in annual
     citywide output, and 11,784 jobs.




Taking into account both the immediate assistance pro-         ed to direct assistance to businesses. These commitments
vided to firm adversely affected by the September 11th         are summarized below in Table 7.
attacks and incentives for job creation and attraction, a
substantial portion of LMDC’s resources has been allocat-




                                                              24.
REINFORCING LOWER MANHATTAN’S
CULTURAL IDENTITY AND PROMOTING TOURISM
Lower Manhattan was for hundreds of years the primary                mer arts and entertainment festivals. Annual attendance at
gateway for travelers to New York. Today, tourism continues          River-to-River events has totaled 1.2 million.
to play a critical part of the life of the area, with an estimat-
ed 8 million visitors coming to Lower Manhattan each year.
                                                                       River-to-River drew more than 800,000 visitors to
However, with the destruction of the World Trade Center
                                                                                       Lower Manhattan
and the temporary closing of the Statue of Liberty, the tradi-
tional destinations for visitors were no longer available.
                                                                     Perhaps the most striking measure of the Festival’s success
Even apart from these globally-recognized destinations,              is that in 2004, 79 percent of all audience members sur-
Lower Manhattan has a rich cultural history, and a con-              veyed said that they neither lived nor worked downtown –
centration of cultural resources – museums, galleries, per-          and of that group, 87 percent said River-to-River was their
forming arts spaces, public art and others – that few urban          primary reason for coming to Lower Manhattan. Applying
areas can match. Nevertheless, Lower Manhattan was not               these percentages to the festival’s annual attendance of 1.2
fully realizing the value of these assets. Both to attract vis-      million, we can estimate that the Festival is drawing more
itors and to enhance Lower Manhattan’s attractiveness as a           than 800,000 visitors to Lower Manhattan each season.
place to live and work, it was necessary to reinforce Lower
Manhattan’s cultural identity, and to increase awareness of          A survey conducted in 2004 by Audience Research
that identity. Congress recognized this reality when it              Associates found that while in Lower Manhattan, 32 per-
specifically designated tourism as one of the areas in which         cent of all River-to-River visitors dined out; 50 percent
the City and the State were to invest funds allocated to the         bought snacks; and 12 percent shopped in area stores.
recovery effort.                                                     Assuming an average spending of $15, we estimate that
                                                                     the 2004 River-to-River festival generated approximately
                                                                     $12.4 million in visitor spending in Lower Manhattan.
                   Culture and tourism:
            vital to Lower Manhattan’s future                        Tribeca Film Festival
                                                                     The Tribeca Film Festival has similarly become a major
                                                                     attraction for visitors, and an important contributor to the
To meet this need, LMDC created marketing programs                   revitalization of Lower Manhattan. In its first year (2002),
that highlighted the community’s cultural assets, and also           the Festival drew approximately 150,000 people to Tribeca
supported new cultural events. Working in partnership                and other sites in Lower Manhattan. Earlier this year,
with other local institutions and organizations, LMDC                LMDC allocated $3.0 million to help the Festival expand
has allocated a total of $11.9 million to communications             both its programming and its outreach efforts for 2004 and
and tourism initiatives.                                             2005. More than 418,000 people attended the 2004 festi-
                                                                     val. If we assume that, as with the River-to-River festival,
River-to-River Festival                                              79 percent of the visitors do neither work nor live in Lower
During the past three years, LMDC has allocated a total              Manhattan and of these, 87 percent travel Downtown
of $700,000 to the River-to-River Festival. Started in               specifically to attend the Festival, we can estimate that the
2002 with the twin goals of restoring Lower Manhattan’s              Festival attracted 287,000 visitors to Lower Manhattan,
spirits and attracting new visitors to the area, River-to-           and that they generated $4.3 million in spending. LMDC’s
River has rapidly become one of New York’s leading sum               share of this impact totaled $1.7 million.




                                                               25.
Museums of Lower Manhattan Campaign                                            about visitor origin and spending as we did above for the
Several other promotional initiatives funded by LMDC                           Museums of Lower Manhattan campaign and based on
have not as yet been in effect long enough to show meas-                       LMDC’s relative contribution, we estimate that the addi-
urable results. We can, however, estimate the effects that                     tional visitor traffic will generate an additional $33.6 mil-
these initiatives will have if they achieve their intended                     lion in local spending, $16.8 million of which is we can
goals. In 2003, for example, the fifteen museums partici-                      attribute to LMDC’s contribution.
pating in the Lower Manhattan Museums of Lower
Manhattan Campaign, launched in June 2004, drew a
                                                                                         Short-term impact of tourism initiatives:
total of 6.96 million visitors. The campaign’s goal is to
                                                                                                  $76.8 million, 991 jobs
increase this total by 10 percent. The limited data available
shows that this goal is being exceeded for some of the
museums. At The Eldridge Street Project, September                             Splendor of Florence Festival
attendance was 41 percent higher than one year ago and                         LMDC allocated $250,000 to the Splendor of Florence
the Museum of Jewish Heritage had 19 percent more vis-                         Festival in Lower Manhattan during the fall of 2004.
itors in July 2004 than in July of 2003.                                       Splendor of Florence was an eleven-day Festival of artistic,
                                                                               cultural, musical, culinary and educational events that cel-
Assuming that 70 percent of the 696,000 new visitors will be                   ebrated Florence, Italy, as one of the world’s greatest cen-
tourists, 5 percent will be Lower Manhattan residents and 25                   ters of arts and culture since the Renaissance. The effect
percent will live elsewhere in New York City, we can estimate                  of art and culture in economic revitalization is the story of
that the campaign, if successful, would draw approximately                     15th century Florence and it is with this in mind that the
487,200 tourists and 174,000 New York City residents to                        2004 Festival was themed, “the original Renaissance of
Lower Manhattan each year. Using data on visitor spending                      Lower Manhattan.” The Festival had a marketing pro-
published by New York City and Company, we can estimate                        gram targeting the New York City area, and even more
that these 487,200 additional tourists would spend approxi-                    specifically the Downtown area. It attracted an estimated
mately $27.1 million annually in Lower Manhattan.5                             175,000 visitors to Lower Manhattan. Using the same
                                                                               assumptions about visitor origin and spending that we did
Chinatown Tourism and Marketing Program                                        for the River to River Festival and the Tribeca Film
Similarly, LMDC and the September 11th Fund are joint-                         Festival, we estimate that the Festival generated $1.8 mil-
ly funding a $2.0 million Chinatown Tourism and                                lion of spending in Lower Manhattan.
Marketing Program. Administered by NYC & Company
in collaboration with LMDC’s Chinatown Tourism                                 Economic Impact
Advisory Committee, the program is designed to help the                        The new visitor traffic will generate an estimated $50.1
community reverse the precipitous decline in visitor traf-                     million of spending in Lower Manhattan. Taking into
fic that occurred after September 11th. (A study conduct-                      account the multiplier effect, the citywide economic out-
ed for the Asian American Federation found that half of                        put generated by these programs is an estimated $76.8 mil-
the restaurants in Chinatown experienced a 40 percent                          lion, consisting of $16.7 million generated by organizing the
decline in tourist business between the summer of 2001                         events - which includes spending on advertising, printing,
and the summer of 2002.)                                                       etc. - and $60.1 million generated by increased visitor spend-
                                                                               ing at Lower Manhattan businesses by out-of-town visitors.
A Lower Manhattan tourism study conducted by Ernst &                           Program and visitor spending will generate 991 citywide jobs.
Young found that 73 percent of Lower Manhattan visitors                        Table 8 shows the visitor spending in Lower Manhattan and
had heard of Chinatown, and that among those, 65 per-                          the visitor impact on New York City for each of the pro-
cent planned to visit it during their trip. If the campaign                    grams.7 If, as with other programs, we take into account
is able to reach an additional 15 percent of Lower                             spending on these culture and tourism initiatives from
Manhattan visitors6, 789,750 additional people would                           sources other than LMDC, the one-time impact increases to
visit Chinatown each year. Using the same assumptions                          $125.7 million in citywide output and 1,511 jobs.

5 We assumed that tourists will spend 40 percent of their daily spending in
                                                                               7 LMDC also allocated $1.3 million to the Lower Manhattan Information Program
Lower Manhattan.
                                                                               and $1.0 million to the Lower Manhattan Communications Outreach Campaign.
6 The number of visitors to Lower Manhattan in 2003 was 8.1 million (ADNY).
                                                                               Because these programs do not directly generate visitor traffic, they are not includ-
                                                                               ed in Table 7.



                                                                              26.
As with several other programs funded by LMDC, our             The long-run value of these programs is not limited to the
estimate of the ongoing annual impact of those initia-         immediate economic stimulus provided by visitor spend-
tives thus exceeds their one-time initial cost.                ing. Events like River-to-River and the Tribeca Film
                                                               Festival don’t just attract tourists. They are helping to
Like other programs of this type, the cultural and tourism     forge a new identity for Lower Manhattan as a center of
initiatives funded by LMDC will have an impact on              culture and creativity, thus reinforcing its attractiveness as
Lower Manhattan’s visibility as a cultural destination that    an exciting place to live, work and do business.
lasts well beyond the period of initial spending. For pur-     Promotional programs such as the Lower Manhattan
poses of this analysis, we assume that the ongoing increase    Communications Outreach campaign, the Lower
in visitor spending attributable to these programs will        Manhattan Information program, the Museums of Lower
equal 25 percent of the short-term effect – that is, an        Manhattan Campaign and the Chinatown program also
ongoing annual impact of $15.0 million and 225 jobs.           contribute to this process – by making people who already
Taking into account spending from sources other than           live and work in Lower Manhattan more aware of the
LMDC, the ongoing impact increases to $21.9 million in         resources already available to them, and by getting the
annual output and 325 jobs.                                    message out to others as well.




                                                         27.
MAJOR PROJECT PLANNING: LAYING THE
GROUNDWORK FOR FUTURE ECONOMIC GROWTH
Since it’s founding in 2001, the Lower Manhattan               According to a report prepared for LMDC by Appleseed
Development Corporation has played a dual role: provid-        in October 2003, through 2015 the build-out of the
ing immediate assistance to residents, companies and           WTC site plan will cumulatively add as much as $15.4
communities affected by the attacks on the World Trade         billion (in 2004 dollars) to New York City’s overall eco-
Center; and planning for the long-term redevelopment of        nomic output, and will on average generate as many as
Lower Manhattan. Planning is an essential first step in        8,530 full-time equivalent jobs each year.
securing the public and private investments needed to
ensure Lower Manhattan’s future. The long-term payoff          When the build-out is completed and the newly-devel-
from those investments can be enormous.                        oped space is 90 percent occupied, Appleseed estimates
                                                               that the project will create or accommodate 32,000 net
                                                               new jobs with companies and institutions doing business
WORLD TRADE CENTER                                             at the site. Through the “multiplier effect,” moreover, local
REDEVELOPMENT                                                  spending by these companies, their employees and visitors
                                                               to the site will generate 45,000 additional jobs throughout
In collaboration with the Port Authority of New York and       New York City.
New Jersey and the City of New York, LMDC sponsored
the formulation of plans for the redevelopment of the
World Trade Center site. The plans call for creation of the
permanent World Trade Center memorial, and the devel-               A redeveloped World Trade Center site:
opment of 10 million square feet of office space, and space          $15.7 billion in output, 77,000 jobs
for retail, cultural uses, and a hotel.




                                                              28.
IMPROVING LOWER MANHATTAN’S
TRANSPORTATION INFRASTRUCTURE

In the months after the September 11th attacks, LMDC            According to an analysis prepared for LMDC by
recognized that the rebuilding of Lower Manhattan’s             Hamilton, Rabinovitz & Altshuler, this project would per-
transportation infrastructure was one of the most critical      mit Lower Manhattan to achieve its 20-year development
factors affecting the area’s future. A team of agencies that    potential, inducing new direct and indirect office location
included LMDC, the Metropolitan Transportation                  and expansion of 9-13 million square feet. HR&A also
Authority, the Port Authority of New York and New               estimated that new development occurring as a conse-
Jersey, and city and state transportation departments set to    quence of improved access will result in the location of
work on formulating plans for use of funds made available       between 56,000 and 80,000 jobs to the Lower Manhattan
for this purpose by the federal government. As a result of      and Downtown Brooklyn; and an economic output of as
this effort, Governor Pataki in April 2003 announced a          much as $9.0 to $12.0 billion annually in the region gen-
plan for transportation improvements that included:             erated by activity in Lower Manhattan and Brooklyn.

•   The construction of a new PATH terminal at the              Taking into account the overlap between the effect of
    World Trade Center site;                                    World Trade Center redevelopment and major transporta-
•   A new Fulton Street Transit Center, providing               tion improvements, we estimate that if completed as
    easier access to several subway lines and connect-
                                                                planned the two developments would by 2025 generate
    ing the Fulton Street station complex to the
                                                                $16.5 to $18.5 billion in annual economic output, and
    World Trade Center site;
                                                                85,000 to 100,000 jobs.
•   A major redesign and reconstruction of the
    South Ferry subway station;
                                                                It is important to note that while sound long-term plan-
•   Improvements in West Street, including a more
    pedestrian-friendly boulevard providing easier              ning it critical for the long-term process of economic
    passage between the World Trade Center site and             renewal, it also has a more immediate impact on the recov-
    the World Financial Center/Battery Park City.               ery process. By showing that government has a clear vision
                                                                for and commitment to the future, such planning helps
Working with the City, the MTA and the Port Authority,          provide business decision-makers with the predictability
LMDC subsequently financed a study of a potential new           and sense of confidence that they need to invest in Lower
rail link serving Lower Manhattan. This new link will pro-      Manhattan today.
vide a direct connection between the Long Island Rail
Road’s Jamaica Station and Lower Manhattan, as well as a
one-seat ride between John F. Kennedy Airport and Lower
Manhattan.




                                                          29.
CONCLUSION: A COMMUNITY BEING RENEWED
As noted above, the economic devastation wrought in Lower Manhattan by the attacks of September 11th required a
response on many fronts at once. Implicit in this approach has been the conviction that in the long run the totality of
this response would exceed the sum of its individual parts. Thus, while we can in many cases measure the direct impacts
of individual projects and programs funded by LMDC, the real measure of all of these investments is ultimately the
overall success of the process of renewal of which they are a part.

During the next few years, the benefits of LMDC’s investments made to date are likely to be compounded, as the impact
of major investments in developments underway at the World Trade Center site and transportation infrastructure build
on the impacts of investments that came before.

We estimate that by 2025, the major development projects planned by LMDC, coupled with LMDC investments
already completed or underway, would increase economic output in New York City by $19.4 to $21.4 billion
annually, and increase employment by 98,700 to 113,700 jobs.

If we take into account total program spending, including investments by the partner organizations described in
this report, the ongoing impact in 2025 rises to $23.2 to $25.2 billion in annual economic impact, and 116,000
to 131,000 jobs.




                                                           30.
DESIGNED BY DAVID W. ORTEGA

								
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