Robert Lederman Here:
Let's see...a hundred million each in tax write-offs to the major media
outlets, a new building for those needy folks at the NY Stock Exchange,
minor league baseball stadiums for the Mets and Yankees and proposed major
league stadiums for each at taxpayer expense, huge financial gifts to
recipients like David Rockefeller, Disney and a circle of billionaire real
estate developers who supported him, losing hundreds of lawsuits for
constitutional violations, police abuses etc, etc....it's not hard to see
how a "genius" like America's Mayor could leave even America's wealthiest
city in bancruptcy. It's the "Giuliani Legacy". This has very little to do
with the economic impact of 9/11 and would have happened regardless-RL.
NY TIMES
December 10, 2001
METRO MATTERS
Unpaid Pipers in a City Of Resilience
By JOYCE PURNICK
THERE were pessimists who were despairing and optimists who were
encouraging, which makes perfect sense. Both were talking about New York
City, which delights in eluding typecasting.
The event was a weekend conference of the Citizens Budget Commission, the
civic watchdog and research group that is wont to shake its fiscally prudent
finger at mayors who inevitably stray.
That in fact emerged as the unofficial theme of the event at the IBM
Palisades Conference Center in Rockland County: the stubborn inclination of
mayors to spend in good times, making it tougher in the bad times.
Even under Rudolph W. Giuliani, a Republican who promised fiscal prudence,
the municipal work force expanded to 250,000. 6,600 more than when he took
office; city debt grew to 17 percent of the budget from 5 percent, and
budget surpluses generated by a booming economy were rolled from one year
into the next rather than being set aside for the inevitable rainy day.
Now, Mr. Giuliani leaves Mayor-elect Michael R. Bloomberg an anticipated
budget gap projected to be $3.5 billion to more than $4 billion, more than
any of the last four mayors have had to close in a single year. Economists
blame the recession, exacerbated by Sept. 11, and the administration's
policies. It spent when it had the money.
"It's just the way it is, unless something or someone changes it," said
Eugene J. Keilin, chairman of the commission. "But if we keep doing what
we've been doing, we'll ultimately have to pay the piper."
The pattern is the same going way back, the big crunch coming in the
mid-1970's, with the fiscal crisis that banished the kind of egregious
fiscal irresponsibility that brought the city to near-bankruptcy. But with
the return of fiscal stability also came generous spending whenever the
economy permitted.
No mayor has yet gotten elusive productivity savings from the municipal
unions, or restructured property taxes or undertaken any other fundamental
budget reforms favored by fiscal experts.
Mayors have their own priorities: Edward I. Koch jump-started the rebirth of
the Bronx by building housing for the poor. David N. Dinkins, facing a crime
wave, began expanding the police force. Mr. Giuliani spent on safety,
education and tax cuts.
"It's called democracy: elections," said Alan G. Hevesi, the city
comptroller. "It's an imperative of governing and decision- making, knowing
you have to fix schools, subways, keep the city safe. It's not a question of
bad faith but of a mindset. The mindset is short term." Especially now, with
term limits. Why deal with long-term debt if it's not going to be your problem?
For optimism, the conference turned to history.
And Kenneth T. Jackson, president of the New-York Historical Society, noted
that New York City has always reinvented itself, even as many other cities
deteriorated, unable to adjust to the rise of suburbia, the decline in
manufacturing, the competition of cheap labor and other strains.
NEW YORK has distinct strengths, said Mr. Jackson, a history professor at
Columbia University and editor in chief of the "Encyclopedia of New York
City." Contrary to its general reputation, the city is comparatively honest
and safe, he said, citing its relative freedom from large-scale corruption,
and the ability of mayors to find a "balance between freedom and order." The
city also delivers basic services efficiently, he said, and has enough good
private, parochial and elite public schools to keep the middle class and the
affluent from fleeing to the suburbs.
And, he said, it elects mayors every now and then who convey "a sense of
leadership and enthusiasm," creating an atmosphere that draws and retains
people and businesses. Mr. Jackson noted that a half-century ago, the city
seemed unstoppable. Everything looked great. But the general impression was
wrong. Big trouble loomed, from the decline of manufacturing and the port to
racial strife and competition from the Sunbelt.
Today, things look dire. Or maybe not. Mr. Jackson cited a 1934 quotation
from Charles E. Merriam, then a professor at the University of Chicago: "The
trouble with Lot's wife was that she looked backward and saw Sodom and
Gomorrah," he told the United States Conference of Mayors. "If she had
looked forward, she would have seen that heaven is also pictured as a city."
Judging from a weekend in the Palisades, if heaven in New York is
productivity enhancements, the city is in trouble. If it's defined as
resilience, the place could make it through yet one more time.
NY TIMES
December 10, 2001
Ripples of Sept. 11 Widen in Retailing
By EDWARD WYATT
In West Eighth Street in Greenwich Village, shoe salesmen stand forlornly on
the sidewalk in front of Leather&Shoes.com, smoking cigarettes and staring
blankly into the distance, wondering where all the customers have gone.
Down the block, Raja Chaani, the manager of India Imports, and two of his
employees sit on stools in a sprawling space chock-full of leather jackets,
silk scarves and Indian curios but devoid of customers.
Across the street, at Man Plus, Sonny Shahani and three other salesmen spend
their time rearranging sweaters and calculating how much their commissions
have fallen. And at House of Nubian, no one but a few Internet shoppers is
buying Negro League jackets and hats, or buttons with pictures of black
leaders like Malcolm X and Haile Selassie.
While it was expected that small businesses near the site of the World Trade
Center would suffer from the terrorist attack on Sept. 11, which displaced
100,000 potential customers from office buildings in the area and thousands
more from their homes, wider economic damage from the attack is still
rippling outward from ground zero.
The national economy, of course, was already slowing before Sept. 11. But
the attack sent shudders through small businesses, not only in New York City
but also across the nation. Some economic forecasters say they believe a
wave of business failures in New York and elsewhere could come soon after
the first of the year, as retailers and other entrepreneurs succumb to the
continuing lack of new business in what is traditionally their busiest season.
"I've been on this street for 15 years, and it's never been this bad," said
Kawal Bhatia, whose family owns Leather&Shoes.com, a shoe and leather goods
store at 22 West Eighth Street which, despite its name, does not have a Web
site. "In past years, no matter how bad it was the rest of the year, at
least you knew you would cover all your losses with the holiday shoppers."
But on a recent Friday, he said, "I did $25 worth of business."
Last week, Mr. Bhatia put up a new sign: "Store Closing."
Small businesses, including many retail establishments, account for two of
every five jobs in New York City and roughly half of all jobs statewide, so
the drought among small-business owners presages economic pain that is
likely to spread far beyond Lower Manhattan. And while numerous grant and
loan programs have sprung up to help small businesses recover from the
disaster, business owners have complained, in a growing chorus, that the
grants are too small to stem their losses and that loan agencies are not
approving loans.
On Eighth Street between Fifth Avenue and Avenue of the Americas, for
example, roughly two miles north of ground zero, businesses that depend on
people who travel into the city to shop have been devastated. The block, the
professed shoe district of Manhattan, has for decades served as a crucible
for small businesses, a place where shoe and leather goods shops have mixed
with funky clothing emporiums serving an eclectic mix of college students,
tourists and New Yorkers in search of bargains. But tourists have stopped
coming, and retail sales not just in the Village but across the city have
been suffering.
Economists say it is too early to tell just how many small businesses are
likely to end up closing or in Bankruptcy Court, but they say that the signs
are not good.
"I think there is a strong likelihood that come the first quarter, small
businesses that are holding on by the seat of their pants may not be able to
hold on anymore without some outside assistance," said Ian E. Novos, senior
director for economic consulting service of KPMG.
A report assessing the economic impact of Sept. 11 that was prepared for the
New York City Partnership, by KPMG and SRI International, another consulting
firm, predicted that for the next two years, small businesses' sales would
continue to fall short of what was expected before the trade center attack.
Employment among small businesses will continue to fall through the first
quarter of next year, the report said.
During the recession of the early 1990's, in a downturn that was short-
lived by historical standards, business failures in New York State peaked at
more than 6,000 companies per year, according to Dun & Bradstreet. The
failures involved less than 1 percent of the small businesses operating in
the state. In 1997, the most recent year for which data is available, there
were roughly 1.2 million small businesses operating in New York State,
according to state statistics. (Federal data on small businesses, using
different measurement criteria, put the number at about half that.)
The 1990's recession lacked some of the ingredients of today's problems
most important a cataclysmic event that sent jobs streaming away from Lower
Manhattan, immediately closed off spigots of corporate spending and sent
consumers into a kind of anti-spending shock.
Since the disaster, the United States Small Business Administration has
approved only about one in three applications for disaster loans. Those
loans have provided $164 million to more than 2,000 businesses so far, but
the approval rate is well below the rates of 50 percent to 64 percent that
have followed other major disasters over the past decade.
Hector V. Barreto, the administrator of the S.B.A., told the House Committee
on Small Business on Thursday that the loan approval statistics were a
result of what was a very different disaster. But he also agreed to review
all loan applications that had been rejected in New York so far, to see if
the agency's loan standards, which often rely on cash flow and the value of
tangible property, had been applied too rigidly.
Unlike earthquakes, hurricanes and floods, which inflict property damage
mostly on homes and homeowners, the World Trade Center attack did most of
its property damage in a small area around ground zero. Most of the loans
requested and made have been for economic injury to businesses in a far
wider geographic area, stretching over several counties near New York City.
Economic disaster loans to businesses account for three-quarters of the
disaster loans approved so far, compared with 20 percent after events like
the flooding of the Red River of the North, in North Dakota in 1997, and
Tropical Storm Allison in Texas and Louisiana earlier this year. Economic
injury loans require more documentation of losses and of a borrower's
ability to repay them than property damage loans do.
A bill that would ease eligibility rules for disaster loans as well as
create a grant program to go with the loan program was recently sent to the
full House of Representatives by the House Committee on Small Business.
Representative Nydia M. Velazquez, whose district includes parts of
Brooklyn, Manhattan and Queens and who is the ranking Democrat on that
committee, said the current loan program needed to be revised as the bill
would require because the existing loan program "is not suitable for the new
reality of this disaster."
Some businesses that have been turned down for loans say they cannot fathom
whom the loan program is supposed to help, if not them. Carla Behrle, who
designs, manufactures and sells custom-made leather clothing from a shop on
Franklin Street in TriBeCa, said she was told by S.B.A. officials that her
application would be rejected because her business did not have enough cash
flow to make the loan payments of $143 a month.
"Some people spend more than that on cigarettes," said Ms. Behrle
(pronounced BURR-lee), who does not smoke. She said the agency did not seem
to take into account her plans for the money, which included relocating her
business, which had revenues of about $125,000 last year, and shifting her
focus to wholesale sales, eliminating her retail store.
"I spent hours and hours filling out all this paperwork," she said. "If I
had known what I know now, I would have put my energies elsewhere."
Other entrepreneurs complain that the city and state efforts to restore the
economy are tailored to the needs of large corporations rather than to small
businesses. They note that when Gov. George E. Pataki and Mayor Rudolph W.
Giuliani appointed members of the Lower Manhattan Redevelopment Corporation
last month, corporate and political interests were well represented, but no
representatives of small business from downtown Manhattan were included.
Asked what he would say to people who operate small downtown businesses that
are ailing, John C. Whitehead, the newly appointed chairman of the group,
said: "I don't know what we say to them, but we want to keep them and we
don't want them to be discouraged. I think there is assistance available for
them."
Carl Weisbrod, president of the Downtown Alliance, which represents
businesses in the financial district and around the trade center site, said
the redevelopment agency's "primary mission is going to be repairing the
infrastructure" and creating a physical environment that will draw customers
back to small businesses downtown.
Whether small businesses downtown can wait for those improvements, which
could easily take years, is uncertain. On West Eighth Street, merchants up
and down the block who are not covering their expenses say their landlords
have so far refused to give them a break on their rents.
At Mofa Shoes, Moses, the manager, who would not give his last name, spoke
woefully of the outlook. "This used to be the shoe capital of the world," he
said. "We'd get customers who came to Eighth Street from Italy, Brazil,
Spain. Now, well, you see. The street is empty."
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