If history is a guide and the economic downturn a substantial one, a third and final Bloomberg term could be a time when some projects unravel, and others are unable to advance with money tight in both the private and public sectors.
Such was the fate for the Coliseum site at Columbus Circle in the early 1990s. One of the largest public sector developments at the time, the site was awarded to developer Mort Zuckerman, who later tried to lower the price after the city fell into recession. The deal then collapsed, and it wasn’t for another four years that a new developer, the Related Companies, was designated.
“The truth is that most mayors don’t finish everything they started,” said Fran Reiter, a deputy mayor for economic development in the Giuliani administration. “If you don’t move quickly enough, the economy suddenly turns down.”
What another Bloomberg term would mean for approved developments such as the West Side rail yards and Atlantic Yards isn’t clear, but both developments require substantial investments where financing remains tricky. With Atlantic Yards, developer Forest City Ratner has yet to secure financing or to close on the nearly two-year-old deal, and has asked the city for a new infusion of subsidy.
As for development projects still seeking approval or those that need additional funding, the road could indeed be a rocky one, as city revenues over the next four years would take a major hit from a wounded financial sector.
“People would rather cut some long-term projects,” said John Tepper Marlin, former chief economist at the city comptroller’s office, “than cut regular workers, like police and fire and teachers.”
This could be especially pronounced in a third Bloomberg term as fixed portions of the city budget—such as debt payments and pension obligations—are slated to rise substantially in the coming years, leaving relatively less money to be stretched over payrolls for city workers, let alone major new development projects.
Fred Siegel, a professor at Cooper Union and frequent critic of the Bloomberg administration, pointed the finger at Mr. Bloomberg for letting spending swell in recent years, particularly on contracts with unions.
“The thing that people have missed is, Bloomberg has dramatically increased the city’s overhead through these labor contracts,” he said. “The budget shrinks and they keep growing.”
Generally, business leaders and fiscal experts credit Mr. Bloomberg with exercising fiscal discipline and express confidence in his ability to guide the city in a recession. Still, the amount of city debt accrued in his administration suggests that that, too, could compound budget problems in a third term. The total amount of city debt and obligations is slated to rise from $59 billion this year to more than $73 billion by 2011, according to city figures, and, should tax revenues fall, debt payments would take up a significantly larger portion of the budget. That, again, leaves less money for the big projects.
Still, the Bloomberg administration has indicated that it wants to further add to its load of development initiatives in a third term, and a spokesman for Deputy Mayor Lieber, Andrew Brent, said in a statement that the city cannot halt investment in areas such as housing and parks in a financial downturn.
“In the past, New York City has recoiled during downturns and not put itself in the right position to fully leverage the subsequent rebound and maximize job creation,” Mr. Brent said. “The steps we take and investments we make in the coming years will have lasting implications on New York City’s economy.”
As for where the money will come from to take such steps, many observers find it difficult to see beyond the financial market’s recent gyrations.
“I think one of the reasons that the mayor wants another term is he wants to leave a good record—he thinks he needs four more years,” said Mr. Tepper Marlin, the former city comptroller economist. “But the last four may be much harder than the other eight.”