Wednesday, October 29, 2014

JPMorgan Chase Drops Plan to Build 2 West Side Towers



The possibility that JPMorgan Chase would build a two-towered, $6.5 billion headquarters on the Far West Side of Manhattan streaked across the skyline in recent weeks, only to die quietly on Tuesday.


Jamie Dimon, chairman of Chase, called Mayor Bill de Blasio and Gov. Andrew M. Cuomo on Tuesday to say that the country’s largest bank had decided to stay put on the East Side.

The bank had created a sensation by exploring a proposal to build a 62-story skyscraper and a second 40-story tower for 16,000 employees on adjoining parcels on the north side of 33rd Street, between 10th and 11th Avenues.

But the proposed building project — one of the largest in New York City history for a single tenant — required the resolution of a number of thorny issues, including the size of a subsidy package for Chase and the purchase of the land from Related Companies.
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In the course of negotiations, the bank suggested that thousands of midlevel jobs could leave the city if the deal foundered. The mayor, in turn, publicly scoffed at the idea of handing over $1 billion in tax breaks and cash to Chase, on top of an existing $600 million in property tax breaks.

“This is an outcome that validates our approach, and our belief that these deals often come down to factors that have nothing to do with taxpayer subsidies,” Alicia Glen, deputy mayor for economic development, said in a statement on Tuesday. “We’re glad that JPMorgan has decided to maintain its buildings and its work force right where they are for the foreseeable future.”

Ultimately, Chase was unable to strike a deal with Related for the two parcels, known as 50 and 55 Hudson Yards. Related set an Oct. 15 deadline during weeks of negotiations. Rather than wait, Related struck a deal to sell a major stake in 55 Hudson Yards to a Japanese company.

Related suggested that the bank build one tower and occupy half of a second skyscraper that Related is building nearby for Time Warner.

But Chase began reviewing all of its alternatives, including a move downtown. In the end, the bank decided it would remain at the two buildings it owns in Midtown, at 270 Park Avenue and 383 Madison Avenue. Chase also has thousands of employees at the Metrotech complex in Brooklyn.

One executive involved in the talks provided an alternative explanation: He said the bank’s board decided that it would be unwise to move to new towers in light of increased regulatory scrutiny in Washington since the 2008 recession.

Like many financial institutions, Chase has been increasingly cost-conscious, moving technical and administrative employees to Brooklyn, Jersey City and elsewhere.

The bank, one of the city’s largest private employers, has also obtained a total of $324 million in tax breaks from New Jersey, as well as over $100 million from New York to move to Metrotech.

In the latest round of negotiations, Chase had talked to city and state officials about a “wish list” of benefits totaling, according to one account, over $1 billion. Chase said the city would come out ahead, despite any incentives it might provide.

Critics of corporate subsidies worried that the city might be returning to an era of retention deals, which had largely disappeared under Mr. de Blasio’s predecessor, Mayor Michael R. Bloomberg. The Committee for Better Banks, which includes labor unions and some liberal groups, was about to issue a report denouncing subsidies for Chase when the deal collapsed.

“New York has had an amazing run of job growth over the past decade,” said Jonathan Bowles, director of the nonprofit Center for an Urban Future. “I don’t see the need to turn back the clock and start another wave of big companies clamoring for tax breaks.”

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