Governor George E. Pataki and New York Mayor Michael R. Bloomberg on July 29th, announced that President George W. Bush has approved their request to redirect up to $2 billion in Liberty Zone tax benefits toward other key components of the rebuilding effort in Lower Manhattan. The new funds generated could be used to build a new rail link from Long Island and JFK airport into Lower Manhattan, increasing the global competitiveness of New York while helping hundreds of thousands commuters on Long Island and boosting the long-term job creation efforts in the City.
"Today I spoke with the White House, and President Bush has once again delivered for New York and secured the path to Lower Manhattan's post-September 11th resurgence with his support of our proposal to redirect and more fully utilize federal Liberty Zone tax benefits," Governor Pataki said. "All New Yorkers and Americans can be proud of how the President has led our nation in the aftermath of the September 11th attacks and of the steady leadership he has shown for New York. I also want to commend Mayor Bloomberg for his leadership in this effort to continue the revitalization of Lower Manhattan. Together, we will work to redirect these federal resources toward the establishment of a new rail link between Lower Manhattan and Long Island and JFK, which will go a long way toward reinvigorating the downtown economy. By creating this new rail link, we will provide dramatically improved access to Lower Manhattan and re-attract the tens of thousands of jobs that were lost after September 11th. President Bush's support is a tremendous boost for the rail link project. Now it is up to Congress and our State's Congressional delegation to ensure this proposal becomes law. I look forward to working with them to make the rail link a reality."
This action followed President Bush's endorsement in February to extend the Liberty Bonds program, which is set to expire this year. This program provides $8 billion in tax-free bonds to finance both commercial and residential projects in New York City, with the priority being Lower Manhattan. The extension of the Liberty Bonds program, which is now pending in Congress, is critical for the reconstruction of the World Trade Center site.
In the months following the attacks of September 11th, President Bush and Congress approved a $20 billion aid package to New York, including over $5 billion in tax incentives to spur redevelopment in Lower Manhattan. The City devised this proposal in late 2003 to find alternative ways that the unused tax credits could be spent and won support from the private sector. Following a letter from Governor Pataki on June 28th and after discussions between the Bush Administration, State and City officials and key business leaders, the President agreed to refine the initial estimates of these tax incentives' benefits and will allow New York to "cash in" any under- utilized portions of the aid package, which amount to about $2 billion. The Federal Office of Management and Budget is expected to announce in its Mid Session Review the Administration's support of the reallocation.
The Governor stated in his June letter that any re-allocated benefits from the tax package should be dedicated to the building of a rail link to Long Island and JFK Airport from Lower Manhattan. The new rail line would provide downtown with dramatically improved access to one of the region's most important labor pools and the region's premier international gateway.
In a recent letter to the President, a number of senior business executives representing 18 downtown firms noted that this rail link will create 56,000 jobs in lower Manhattan and downtown Brooklyn and produce more than $6 billion in economic output annually. Easier access to the continually growing Long Island labor pool will make lower Manhattan a more attractive business location for years to come, and a one-seat ride to JFK will encourage the national and international business transactions that have made Wall Street the financial capital of the world. This rail link will also provide an invaluable service to the millions of tourists expected to visit the World Trade Center memorial upon its completion.
The $2 billion possibly generated by this reallocation, in addition to $560 million put forward by the Port Authority of New York and New Jersey and an expected $400 million contribution from the Metropolitan Transportation Authority, would represent a significant down payment towards the project's completion, which is expected to cost a total of $6 billion.