City Point Tax-Exempt Bond Financing

Testimony posted September 10, 2009

Testimony to the New York City Capital Resource Corporation
on $20 million stimulus bond financing forCity Point retail complex

September 10, 2009

Thank you for this opportunity to provide testimony today. The Pratt Center is a university-based non-profit organization that works for a more just, equitable, and sustainable city for all New Yorkers by helping communities to plan for and realize their future. 
 
New York City is fortunate to be receiving tax-exempt bond financing under the American Recovery and Reinvestment Act for the vital purpose of restarting stalled development projects. The issue is whether the City is driving a hard enough bargain and sufficiently advancing public objectives given its investment in providing this source of financing. The financing will enable the developer, Albee Development LLC, to complete the first phase of the City Point shopping and housing complex, consisting of up to 50,000 square feet of retail space. The new retail will be a valuable contribution to the Fulton Street Mall, already Brooklyn’s top shopping destination. Commitments by the city to promote workforce training and first source hiring of community residents for jobs at City Point will also offer meaningful benefits.
 
In choosing Albee Development LLC to be a recipient of the bonds’ benefits, however, the New York City Capital Resource Corporation and other public authorities involved with City Point must recognize the need to make this project work as part of a vibrant and diverse mix of retailers in a shopping district that hundreds of thousands of Brooklyn residents depend on for a broad range of inexpensive and specialty “comparison” goods, easily accessible by public transportation. City Point is slated to be built on the city-owned site of the former Albee Square Mall, whose demolition resulted in the displacement of some 50 small businesses and more than 700 jobs, leaving a void at the heard of the Fulton Street shopping district.  The city actually set the stage for this displacement back in 2004 when it rezoned the Fulton Street Mall area to enable large-scale development such as City Point without also requiring neighborhood scale retailing.
 
Giving independent businesses an opportunity to thrive in the city’s high-traffic shopping districts is a vital public objective. It retains revenue in communities; provides vehicles for entrepreneurship and economic independence; and maintains the diversity and uniqueness that makes New York a desirable place to live and visit. In exchange for taxpayers’ support to make this project possible, the Capital Resource Corporation must make sure that Fulton Street continues to be a place where independent retailers can thrive. It should:
 

• set aside 10 percent of retail floor space at City Point for independent local merchants, at below-market rents
• give businesses displaced from Albee Square Mall right of first refusal for such space
• commit to a community planning process to identify consumers’ shopping needs and preferences

We understand that City Point will need to generate revenue sufficient to cover debt service on the bonds, and that issuers value the expectation of long-term tenancy and assured cash flow that major national retail tenants provide. But a modest set-aside for independent retail will not undermine such efforts. On the contrary, by enhancing City Point’s uniqueness and excitement as a one-of-a-kind destination, small merchants will add enormous value to the project and to downtown Brooklyn.
 
NOTE: This testimony was prepared by the Pratt Center for Community Development. It does not necessarily reflect the official position of Pratt Institute.