Archive | About New York

Opinion columns written by Sydney Schanberg about people and institutions in New York City.

Tax Abatements Down by the Riverside

Hundred of millions of dollars were awarded unnecessarily to developers

By Sydney H. Schanberg 

Originally published in Newsday, June 13, 1986

Six years ago, when all the heavyweight builders, architects, real estate lawyers, financiers and public relations men were fighting each other for the right to develop a chunk of prime East River waterfront property known as the “Billion-Dollar Gold Coast” one of the competing lawyers, Charles Moerdler, a former city buildings commissioner, told a reporter: “We’re talking here of potentially the most meaningful dollar investment in the City of New York in many a year. That’s why there’s so much competition.”

One would not have thought with so many biggies painting to be picked by the city to develop the juicy tract, that the city had to put any sweeteners in the pot. Why offer tax incentives when the tongues are already hanging out? In fact, the same newspaper story that recorded the Moerdler comment also said of the $500-million project that “no city or state money is expected to be involved.”

Newspaper archives, it’s been noted before, are always good for a laugh. The private project will now receive tens of millions of dollars in city tax abatements.

Awarded in 1980 to a group of bidders who called their design River Walk, it is still going through the city’s permit process but is slated to go into construction late next year.

How it came to receive this major tax forgiveness is an instructive lesson in the fine-print skills of the Koch administration.

The state statute governing the tax gift is known as 421-a — short for Section 421-a of the Real Property Tax Law. It was enacted in 1971 to stimulate the building of apartments on economically unattractive sites in New York City where housing would otherwise not be built; sites defined in the statute as “vacant, predominantly vacant, or underutilized.” (The developer pays no taxes during construction and then only partial taxes for 10 years afterward.)

Over the years, the program became a giveaway. Hundreds of millions of dollars were awarded unnecessarily to developers who were building luxury projects and would have carries them out anyway, without the tax concessions. Almost all the projects were done in the better neighborhoods of Manhattan.

No one imagines in 1971 that the Trump Tower, on “underutilized” Fifth Avenue, would qualify for these tax gifts, but it got them– $40 million to $50 million worth.

These distortions of the law’s original intent led to a crescendo of protest and pressures against the Koch administration, which finally agreed, after years of foot-dragging, to put limitations of 421-a.

The mayor acknowledged that much of Manhattan had become so attractive and lucrative for developers that tax indictments were no longer needed. So he agreed that from 96th Street southward to 14th Street, and also in parts of Lower Manhattan, 421-a was dead. (He did push through certain geographic exceptions, however — such as the the Times Square redevelopment area, Union Square and the Lower East Side. The critics of 421-a had wanted more of Manhattan covered by the ban, with no exceptions, but this was the best they could negotiate.)

The next step was enactment of the restrictive language — first through enabling legislation in Albany and then in a detailed, implementing statute in the City Council. The new rules when into effect last Nov. 29; projects in the proscribed areas that had not broken ground for their foundations by that cutoff date could not receive 421-a abatements.

Which brings us to River Walk, a project that will run from 16th to 24th Streets along the East River and therefore would seem to fall inside the 96th-to-14th-Streets area of denial.

But then we are told by city officials to look closer at the council’s implementing legislation. River Walk will be built mostly on a concrete platform, supported by pilings, that will extend 500 feet into the river. And the river, if you read carefully, qualifies for 421-a goodies.

Some very clever Koch administration types inserted language that defined the limits of the ban as “the bulkhead line” on both the Hudson River and the East River. And “the bulkhead line” means the water’s edge. So anything built over the water becomes automatically eligible for 421-a.

Nothing was said publicly at the time about this loophole. There was no open discussion. The 421-a critics simply weren’t aware of it, and many of them — like me — have just learned about it.

What it comes down to is that at the very moment when the mayor was conceding that real estate tax inducements could no longer be justified in a large portion of Manhattan because it had become so desirable, he was, virtually by subterfuge, keeping the tax gifts alive for the most desirable tracts inside that portion: the waterfront.

River Walk is the first over-the-water project to benefit from this ruse. But the Koch administration has given a high priority to waterfront development, so more these tax gifts are certain to follow.

River Walk, for reasons beyond the tax abatement, is vigorously opposed by the residents of the neighborhoods around it, who say it is too huge and will overwhelm the moderate-income, low-rise community. They are asking that it be drastically reduced and reshaped.

The project consists of six acres on land and 24 acres to be constructed over water. Its structures will include five residential towers — ranging from 25 to 45 stories — with 1,888 apartments, all of them to be sold or rented at luxury rates. Also in the plans are a 245-room hotel, 2,075 parking places, and office building, retail space and two marinas.

Officials at the city’s Public Development Corp., which late last year took over responsibility for waterfront development from the Department of Ports and Terminals, say the 421-a “bulkhead” language was written before their time by they insist there will be no windfall for the builders of River Walk or any other over-the-water projects.

These officials say they will closely scrutinize the project’s financial plan before setting the final annual rent of the developer’s land-lease with the city.

What they’re suggesting is that if the 421-a tax gift raises the developer’s profits to excessive levels, they’ll raise his rent. We look forward to reading the fine print.


The Killer-Idea Menace

By Sydney H. Schanberg

Originally published in The New York Times, June 12, 1982

Is our brain fiber so eroded by Perrier water and our spine so softened by beanbag chairs that we can no longer do battle with ideas from an alien galaxy? Can we rise anymore to a challenge? Is this the Big Apple – or only a rotten nectarine?

These knotty questions arise because the anti-Red brigade in the State and Justice Departments has blocked over 300 foreigners from coming to the United Nations disarmament session on the grounds that they are Soviet dupes with alien ideas, bent on capturing our hearts and minds.

I say let them in. We can handle them. Does Lawrence Eagleburger, the State Department official who seems to worry most about these aliens and their little red books, really think they would be any match for Mayor Koch, Donald Trump, the Financial Control Board, Vito Battista, Rosemary Gunning and The Wall Street Journal? Do they stand a chance against George Steinbrenner, gypsy cabs without springs, the West Side IRT and deli waiters whose insults would wither Lenin himself?

Anyway, these intruders have long since been tamed into submission by our jungle. They’ve been coming here for years without hindrance from Eagleburger, and all their invidious sowing of anti-American ideas hasn’t made the slightest dent in the Laffer Curve.

Hundreds of these now-proscribed people — such as members of the Japanese group, Gensuikyo — came to the first United Nations disarmament session in 1978; and all they left behind were some sandals discarded for Guccis and their welcome contributions to the sales tax.

Now I do realize that all Communists are not benign, that this country has adversaries and that we must be vigilant and militarily prepared. But in my experience, that very real problem has virtually nothing to do with people hawking ideas. It has to do, rather, with dictatorships seeking to amass world power and dominate others. Hitler, as far as I know, was not a member of the World Peace Council or its purported affiliate, Gensuikyo, which have got the Eagleburger aerie so stirred up.

”They are undesirable,” says Kenneth Adelman, our No. 2 delegate at the U.N. ”We have absolutely no legal obligation to let Tommy Bulgaria or anyone else from Soviet-front groups come here, participate in demonstrations, get on air time and do the Soviet Government’s work for it.”

I don’t know Tommy Bulgaria, but my contacts with Communists — in my reporting tours overseas – suggest that it is not subversion through ideas that we should fear. It is paralysis through boredom.

At their worst, these Communists were droning ideologues, all of whom should have been on retainer for the National Association of Insomniacs. At their devious best, they were masters at honing their rhetoric into a weapon akin to water-drip torture.

I recall the arrival in April 1975 of the victorious Chinese-backed Khmer Rouge in Phnom Penh, where they were nervously awaited by five Russians left behind in the Soviet Embassy with the sole mission of making friendly contact with their new Cambodian ”comrades.” The Mao-oriented Khmer Rouge were having none of it. They tore down the Soviet flag, stomped on Brezhnev’s picture, fired a rocket into the building and then, in the ultimate assault, forced the Russians to stay up all night and engage in a debate on Marxism-Leninism.

By morning, the Russian will had been sapped. Defeated and glazed of eye, they packed up their canned black bread and sour cream and drove, humiliated, to the French Embassy, where all the other foreigners had taken sanctuary.

New Yorkers are tougher than those Russians. The denizens of Elaine’s or Ruelles stay up all night discussing drivel far more mind-numbing than Hegelian dialectic and emerge into the morning sunlight without a wrinkle in their beautiful-people personas.

And beyond Elaine’s for a moment, perhaps the strongest evidence of our country’s advantage over the Soviet Union is that this conference, with its marches and open-air rallies, could never be held in Moscow, where fear of outside ideas results in their suppression. Our openness is our greatest strength. It’s a pity that the sky-is-falling bureaucrats in Washington are too insecure to understand this.

In their paranoia, they dug deep into their cold-war bins to dust off the hoary and hysterical McCarran Act of 1952, which sought to close our doors and ears to ideas other than our own.

It’s a good thing the statute applies only to aliens, because in addition to ”subversives,” it also excludes ”chronic alcoholics” and those suffering from ”moral turpitude.” Can you imagine, under those standards, how many members of Congress returning from junkets could be barred re-entry to our shores? I say that for better or worse, we should remain tolerant and continue to let our Congressmen into the country — along with members of the World Peace Council, tedious and undesirable as some of them may be.


The Dark Side of the ‘Lucky Guy’

On June 9, Broadway’s 67th annual Tony awards will be announced and celebrated. One of the lead actor nominees is Tom Hanks, for “Lucky Guy,” a tale of the life of the late Mike McAlary, a tabloid columnist who became known in New York as a hard-charging crime and police reporter who got to major police and crime stories before his newspaper competitors. He was bold and flashy and won a Pulitzer prize in 1997. He died in 1998 from colon cancer.

But in 1994, he made a mockery of journalism by writing three columns about a woman who was raped in Brooklyn’s Prospect Park. He got some bad information from police sources and rushed into print saying the woman was a “hoaxer” who was not raped or attacked in any way but made up the story to draw attention to her concerns about the treatments of gays and lesbians. When the police medical report confirmed she had been raped, finding semen inside her body and on her clothes, McAlary refused to accept the findings. What they found, he said in one of his three columns, was “at best, saliva.” Mc Alary never sought to interview the woman and he never apologized to her.  That was heinous journalism. The woman sued him for libel.

The woman’s attorney, Martin Garbus, went to see the play and wrote a piece worth reading for The New York Times entitled The Damage Done by a ‘Lucky Guy.

I wrote three columns for Newsday in 1994 and 95 about the facts of the case, the unlucky victim, and the trial that exposed the dark side of tabloid journalism as practiced by Broadway’s “Lucky Guy”:

Tangled Webs Woven with Personal Ties

Fighting Her Accusers and the ‘Demons’

A Novel Take on Responsible Reporting


My Memories of Rupert and the Murdoch Methods

By Sydney H. Schanberg

I’ve never had a conversation with Rupert Murdoch but our paths did cross a couple of times in the late 1970’s and early 1980’s when I was the Metropolitan Editor, and then an Op-Ed columnist, at The New York Times, writing about the New York scene. Like most people, my views have been shaped by my personal experiences, and my experiences with Murdoch were instructive.

Murdoch arrived in New York in 1977 with a deliberate splash, purchasing the strongly liberal but financially slipping New York Post. Along with a bargain-basement $31 million, he gave the paper’s long-time owner, Dolly Schiff, a fervent promise to “maintain its present policies and traditions.” Few in the journalism community believed his pledge, and he confirmed their expectations by quickly skewing the Post to hard-core conservatism both on its editorial pages and in its news coverage. Apolitical reporters were not wanted. The news pages also became sensationalized and trashy.

To any journalist in New York – or any regular newspaper reader for that matter – it was clear that Murdoch was a rough-riding business pirate intent on expanding his empire, one who would say or do almost anything to get his way. His rightist political ideology was real, but he generally made it secondary to his primary crusade – his search for profit, power and the most elusive goal of all, respectability. He was not satanic or even a demon; he was merely a human, modern-day robber baron.

Only a year after his takeover of the Post, a city-wide strike by the pressmen’s union forced the closure of the city’s major papers – The Times, the Daily News and the Post. Murdoch, though he was a member of the Publishers Association, decided to break precedent and provide financing and distribution for a “strike paper” — one of three that sprung up to satisfy the city’s newspaper readers after the strike began. Called The Daily Metro, it operated out of office space on the East Side. Several Times copy editors, reporters and news assistants, to pay their bills, joined Murdoch’s jerry-built strike paper. On paper, the owner of the company was listed as Frederick Iseman, who was unknown to me though he was described in a Time magazine article at the time as a pre-strike, 25-year-old assistant editor at The Times.

As the Times’ Metropolitan editor, I was a management employee and therefore required to come to the office every day and go through ritual routines, such as editors’ meetings, though there was no paper to put out. It was the worst passage in my journalistic life. One afternoon, after several weeks of these ritual workdays, I decided to take a walk in the summer sunshine and visit the Times staffers at the Murdoch-financed paper. It was a cheerful reunion; all of us were lonely and eager to get back to real newspapering. I spent about an hour schmoozing with these colleagues. I introduced myself to Iseman and explained that this was merely a social visit. There seemed to be no friction.

Early the next morning, I received an angry call at home from Abe Rosenthal, the Times’ executive editor. He wanted to know why I had gone off the reservation to visit “the enemy.” He was referring not to Murdoch but to the striking Times employees working at his makeshift paper. I said I didn’t consider them “the enemy.” He then told me that he had found out about my visit from Walter Mattson, the Chief Operating Officer of the Times, who had received a nasty call from Murdoch himself who claimed that I had told all the Times employees at his shop that Rosenthal considered the strike a betrayal and didn’t want any Times employees working for Murdoch. This was utter rubbish; Murdoch was just flexing his muscles in New York and using intimidation tactics, something he was well-known for. I told Abe that no such conversation had taken place. I also told him that Murdoch had frequently demonstrated in the past, as he put together the pieces of his media operation, that he was a person who lied easily. Abe and I spoke loudly to each other for several minutes before our conversation ended.

When I got to the Times building later that morning, I went to see Walter Mattson. I had been at The Times for twenty years and was pretty annoyed at having been accused of some kind of disloyalty. I asked Walter why, since he had to have heard that Murdoch regularly played loose with the truth, he hadn’t called me first to check on on the credibility of Murdoch’s story before passing it on unquestioned. Most of the loud talk in this conversation was mine. Walter is a real gentleman and mostly just listened.

Several weeks later, two months into the strike, Murdoch abruptly pulled out of the Publishers Association agreement and announced he was resuming publication. He made separate deals with the pressmen and all the other newspaper unions. This was in the first week of October. The Times and the Daily News were caught unawares and quickly resumed negotiations with the unions. It was a month before they came to terms and resumed publishing – a month when Murdoch’s Post was on the news stands every day. It would appear that Murdoch blatantly used the strike for financial advantage and to establish his trademark in New York while the city’s other papers were shut down.

Rarely has a man made false promises and told lies so effortlessly. Now Murdoch, as he prepares to take over the Wall Street Journal, is promising to preserve that paper’s superior level of journalism, maintain its integrity and keep ideology out of the newsroom. We never knew he was such a joke-teller.

There is so much to remember about Rupert. He was a very busy bee. When the Australian-born magnate arrived in New York, he set about wooing – and showing off his macho to — the city’s politicians, real estate developers, bankers, Wall Street mandarins and various other mavens of the establishment. He threw breakfast events in the ballroom of one of the city’s larger hotels. All the mavens showed up – unusual turnouts for an establishment that prides itself on being second to none.

He also gave generously to political campaigns. Soon he had persuaded Congress to change the anti-trust law that prevented a single owner to hold a newspaper and a television station in the same market area. And so the Fox television network was born. Rupert had gotten his way and he was on his way.

In 1985, he wangled special permission from Washington to skip certain time and residency requirements, jumped the line and became an American citizen. One of his motives was to circumvent the rules limiting foreign ownership. He has also copied our home- grown moguls in other ways. For the past four years, according to recent news reports, he has paid Lilliputian-sized U.S. taxes. In the latest two of those years, the reports said, he paid no taxes at all. Citizen Murdoch is apparently following the Leona Helmsley rule: only little people pay taxes.

Further details of his history have been extensively detailed of late in the nation’s press – the result of his effort to take over the many-faceted Dow Jones media company and its flagship paper, The Wall Street Journal. Rupert’s offer was a surprisingly high $5 billion, obviously meant as a pre-emptive bid to fend off any other possible suitors. The Journal is a much-respected paper that covers the business world across the globe with distinctively high-quality journalism. Most elders in the journalism community have expressed fears that Rupert would take the Journal’s quality downward, as he had with so many of the other newspapers he has acquired. Not surprisingly, in his negotiations with the Dow Jones board of directors, he has promised to maintain the paper’s quality. Rupert’s promises, as he has taught us, have a very short life span. He promised Dolly Schiff when he bought the Post, He promised the London Sunday Times when he took over there. He promised many others. The results tell the story. Rupert is a street-fighter, he doesn’t observe any Geneva Conventions, he makes his own rules as he swallows each media unit.

From the start, most people believed that by waving $5 billion under the many noses of the extended Bancroft family, who have maintained the credibility of Dow Jones and the Journal for over a century, he would again get his way. And he did. After weeks of debate and agonizing, exactly at his deadline, July 31, enough of the Bancrofts succumbed and cast their shares for his offer.

What happens to the Journal now? Only one thing is certain. A man in his late 70s does not suddenly get a soul transplant. He is an amasser of power and profit. His tools are charm, money, ruthlessness and intimidation.

My other personal memory of Rupert has to do with all these qualities. Sometimes he doesn’t even have to lift a finger, since his track record precedes him. This was one of those times.

I had moved from the Metropolitan Editor’s chair to The Times’ Op-Ed page, introducing a new opinion column titled “New York.” And after watching Rupert’s comings and goings for about a year, I wrote a column  about his power-gathering. The headline was: “The Tasmanian Devil.” (Obviously it was not meant literally; he is carnivorous, but only in a figurative sense.)

The next morning, I learned from Max Frankel, then the editor of the opinion page and later the paper’s executive editor, that the publisher, Arthur (“Punch”) Sulzberger Sr., had called Max the night before, after getting his hand-delivered copy of the early edition, to complain about the tone of my piece. He wanted it removed from later editions. Max said he talked him out of this, arguing that its absence in later editions would only draw excessive notice to the column.

Instead, the publisher called a late-afternoon conference in his digs on the 14th floor. In a polite fashion, I was being called on the executive carpet. In addition to the publisher, Sydney Gruson, Punch’s right-hand man, was there, as was Max. Drinks were poured and Punch explained his stance. He felt that other publishers were our colleagues and therefore not proper material for critical columns. I posited that newspapers were major opinion shapers and therefore centers of power and that if my column was going to examine the establishment, media chiefs should not be left off the list. Punch then got right to his point. “Sydney,” he said of Murdoch, “I have to do business with him.” I understood him completely and said no more.

As I left the meeting, though, I thought to myself: Murdoch is the guy who, during the 1978 strike, thumbed his nose at the Publishers Association and resumed publication of the Post while the other papers were still dark. This was a man who went around slurring The Times, calling its journalism “liberal propaganda.” Yes, Punch had to do business with him, knowing that this is a man whose word has little worth.

The reporters and editors of the Wall Street Journal [which Murdoch was purchasing] have reason to be worried.

First published on Schanberg Reports, July 22, 2007


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