Tax break approved for World Financial Center retail complex

Posted September 25, 2012 By Nathaniel Herz

The Battery Park City Authority board voted unanimously on Tuesday to approve a sales tax exemption for the reconstruction of the World Financial Center’s shopping promenade into a “hip luxury” retail and dining complex.

“It was almost a no-brainer, given the economics,” said BPCA Chair Dennis Mehiel. “We’re going to get a ton of money, and we’re not writing any checks.”

The deal, requested by World Financial Center owner Brookfield Office Properties, will cost the city and state about $8 million in forgone sales taxes, according to figures presented at the board meeting by BPCA Chief Financial Officer Robert Serpico.

Serpico projected the city and state will see a projected $193 million increase in sales tax receipts over 25 years following the completion of Brookfield’s project.

“All boats rise,” Serpico said. “This would be a win for the community.”

The sales tax exemption — highly unusual for a Manhattan retail venture — passed after the authority approved a $22.3 million rent break requested by Brookfield earlier this year, in connection with the same project.

Photo: Nathaniel Herz

Mehiel wouldn’t say whether the exemption was necessary to lure Brookfield into pulling the trigger on its $250 million investment, calling that question “very subjective.” He also said that the $22.3 million rent break — which passed before Mehiel was installed as chairman — did not factor into his thinking.

“Everything that comes up stands on its own,” Mehiel said. He added that the authority “has said ‘no’ to Brookfield before,” citing a case in which BPCA staff took the developer to arbitration over disputed rent payments.

In addition to the projected rise in city and state sales tax revenues, Serpico cited Brookfield’s claims that its project would result in the creation of 530 construction jobs and 67 new retail jobs.

Serpico also noted that sales tax exemptions had been granted previously for construction-related purchases for other Lower Manhattan developments, including the Goldman Sachs headquarters.

While Brookfield has spent tens of thousands of dollars to lobby the authority, and on campaign contributions to Gov. Andrew Cuomo, who appoints the Authority’s members, Mehiel rejected suggestions that the board’s decision was influenced by politics.

“Nobody from the administration asked me about this, or instructed me what to do,” he said.

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<h1>Tax break approved for World Financial Center retail complex</h1>The Battery Park City Authority board voted unanimously on Tuesday to approve a <a onclick="javascript:pageTracker._trackPageview('/outgoing/www.thenewyorkworld.com/2012/09/24/world-financial-center-luxury-upgrade-poised-for-10-million-tax-break/');" href="http://www.thenewyorkworld.com/2012/09/24/world-financial-center-luxury-upgrade-poised-for-10-million-tax-break/">sales tax exemption</a> for the reconstruction of the World Financial Center’s shopping promenade into a “hip luxury” retail and dining complex.
“It was almost a no-brainer, given the economics,” said BPCA Chair Dennis Mehiel. “We’re going to get a ton of money, and we’re not writing any checks.”
The deal, requested by World Financial Center owner Brookfield Office Properties, will cost the city and state about $8 million in forgone sales taxes, according to figures presented at the board meeting by BPCA Chief Financial Officer Robert Serpico.
Serpico projected the city and state will see a projected $193 million increase in sales tax receipts over 25 years following the completion of Brookfield’s project.
“All boats rise,” Serpico said. “This would be a win for the community.”
The sales tax exemption — highly unusual for a Manhattan retail venture — passed after the authority approved a $22.3 million rent break requested by Brookfield earlier this year, in connection with the same project.
<div id="attachment_7405" style="width: 310px" class="wp-caption alignright"><img aria-describedby="caption-attachment-7405" class="size-medium wp-image-7405" title="WFC Model" src="http://www.thenewyorkworld.com/wp-content/uploads/WFC-Model-300x225.jpg" alt="" width="300" height="225" srcset="thenewyorkworld.org/wp-content/uploads/WFC-Model-300x225.jpg 300w, thenewyorkworld.org/wp-content/uploads/WFC-Model-1024x768.jpg 1024w, thenewyorkworld.org/wp-content/uploads/WFC-Model-400x300.jpg 400w" sizes="(max-width: 300px) 100vw, 300px" />Photo: Nathaniel Herz</div>
Mehiel wouldn’t say whether the exemption was necessary to lure Brookfield into pulling the trigger on its $250 million investment, calling that question “very subjective.” He also said that the $22.3 million rent break — which passed before Mehiel was installed as chairman — did not factor into his thinking.
“Everything that comes up stands on its own,” Mehiel said. He added that the authority “has said ‘no’ to Brookfield before,” citing a case in which BPCA staff <a onclick="javascript:pageTracker._trackPageview('/outgoing/www.downtownexpress.com/de_369/brookfieldbigbucks.html');" href="http://www.downtownexpress.com/de_369/brookfieldbigbucks.html">took the developer to arbitration</a> over disputed rent payments.
In addition to the projected rise in city and state sales tax revenues, Serpico cited Brookfield’s claims that its project would result in the creation of 530 construction jobs and 67 new retail jobs.
Serpico also noted that sales tax exemptions had been granted previously for construction-related purchases for other Lower Manhattan developments, including the Goldman Sachs headquarters.
While Brookfield has spent tens of thousands of dollars to lobby the authority, and on campaign contributions to Gov. Andrew Cuomo, who appoints the Authority’s members, Mehiel rejected suggestions that the board’s decision was influenced by politics.
“Nobody from the administration asked me about this, or instructed me what to do,” he said.

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