26 December 2001
Source:
http://www.nylovesbiz.com/wtc/HUD-spending-plan.pdf
(129KB)
[11 pages. Announced in newspapers December 26, 2001.]
World Trade Center Disaster
Action Plan for New York Business Recovery and Economic
Revitalization
Objective
The attack on the World Trade Center had a substantial, negative impact on the New York City economy. Although the attack was directed at the World Trade Center in lower Manhattan, its economic impacts were broader, strongly affecting industries as disparate as financial services, travel and tourism and retail.
Ensuring economic recovery in New York City will require concerted actions
by all levels of government and the private sector. The task will involve
several steps:
National Objective
The activities contained in this Action Plan have' been designed to meet community development needs having particular urgency because existing conditions pose a serious and immediate threat to the health or welfare of the City of New York where other financial resources are not available to meet such needs.
Economic Impacts of the World Trade Center Disaster
In the three months since the attack, the economic devastation has continued
to snowball outward from lower Manhattan, causing damage to other businesses
in nearly every sector of the economy and every part of the City.
Overall, the State Division of Budget estimates the State may face direct and indirect revenue losses as high as $9 billion in the next 18 months; the City may face revenue losses of about $3 billion in the same period. These revenue losses represent only the taxable percentage of the much greater total loss that is borne by the businesses and families of the City and State.
Action Plan for Business Recovery and Economic Revitalization
As Governor Pataki's designated lead agency for coordinating business recovery, Empire State Development (ESD) has developed the following Action Plan for the $700 million appropriated to New York State through HUD for economic recovery and revitalization. ESD has cooperated with the City of New York and its designated lead agency, the Economic Development Corporation (EDC), in designing the programmatic and administrative aspects of the plan. As the above section demonstrates, the magnitude of economic damage, loss and need, far exceeds this appropriation. To respond appropriately where damage and loss so greatly exceed resources, ESD has incorporated three guiding principles in the proposal:
1. Target assistance with greatest impact for overall economic recovery, job creation, retention and stabilization2. Retain program flexibility to deliver assistance in the most timely and effective manner possible to achieve economic revitalization and job creation/retention goals
3. Provide administrative coordination to integrate the various federal, state, city, community and private business assistance efforts, reducing the likelihood of duplication and enhancing the value of combined resources
Assistance offered with the appropriated funds will be targeted to four types of businesses directly affected by or responding to the disaster:
1. Businesses located in lower Manhattan at the time of the disaster that have remained within lower Manhattan.2. Businesses located in lower Manhattan at the time of the disaster that have temporarily relocated elsewhere because of the disaster.
3. New York City businesses that suffered significant economic dislocation because a substantial portion of their major customers were businesses in lower Manhattan.
4. Businesses seeking to locate new operations and create new jobs in lower Manhattan. Assistance will enhance the cost-competitiveness of lower Manhattan location decisions, but will not be used to pirate employment from other states.
ESD has identified the following areas of business assistance as key components
of a comprehensive recovery and economic revitalization approach.
ESD proposes the following allocation of CDBG funds among the components of the economic recovery and revitalization Action Plan:
| NYS Action Plan Categories | TOTALS |
|
| Small Business Assistance | ||
|
$15,000,000 |
|
|
$5,000,000 |
|
|
$25,000,000 |
|
|
$241,000,000 |
|
|
$85,000,000 |
|
| Total: Small Business | $371,000,000 |
|
| Retention and Attraction Assistance | ||
|
$285,000,000 |
|
| Total: Retention and Attraction | $285,000,000 |
|
| Business Information | ||
|
$5,000,000 |
|
| Total: Business Information | $5,000,000 |
|
| Infrastructure Rebuilding | ||
|
$25,000,000 |
|
| Total: Infrastructure | $25,000,000* |
|
| Administration | $14,000,000* |
|
| TOTAL FUND | $700,000,000 |
*HUD authorizes the use of up to 10% ($70,000,000) of the award for planning and administration. ESD plans to allocate up to $39,000,000 for this purpose, and use the remainder for programs.
Because exact demand for proposed programs is uncertain, we anticipate that it may be necessary to re-allocate funds among and within the above categories as needed to respond most effectively to the goals of economic revitalization, job retention and creation in New York City.
Small Business Assistance
Businesses in New York City suffered both physical damage to property and economic injury from lost business. Physical damage was limited to the directly impacted area of lower Manhattan including tenants of the World Trade and World Financial Centers, as well as buildings in the blocks immediately surrounding the Centers, which, while still structurally sound, suffered extensive damage to interior property. In buildings where just the windows were blown out, entire ventilation and computer systems have been ruined by the dust.
Lower Manhattan businesses suffered economic injury as a result of at least one week of business interruption and lost revenue while the area was closed to all traffic and pedestrian access was limited. Portions of this area remained closed for even longer, and some pockets have still not had utilities and access fully restored. Beyond lower Manhattan, the economic damage from the attacks has reached businesses all across the City, as noted above, and continues to multiply, as each injured business impacts several more that supplied or depended upon it.
To maximize job retention, and to create conditions necessary for future job creation and economic expansion, government must ameliorate damages suffered by businesses, and provide capital to help tide them over until more normal economic patterns return. Thus, existing Federal programs, such as those offered by the Small Business Administration, as well as programs offered by the City and State have been designated to help all businesses maintain viability and ensure job retention and creation.
The Small Business Administration offers low cost loans for physical damage and economic injury. Because of the significant economic impact of the attack, the Administration extended the eligible zone for economic injury well beyond the boundaries of New York City. To expedite the anticipated assistance to small business recovery that the SBA loans would provide, ESD partnered with EDC to capitalize a loan loss reserve fund. The fund enables private sector banks and community-based lenders to make short-term bridge loans available to businesses while they await SBA approval. ESD and EDC each committed $25 million to capitalize this fund. Additionally, the New York City Economic Development Corporation (EDC) has also offered a small business grant program tied to award of SBA loans.
Unfortunately, many small businesses fear that the economic impacts of the disaster are so grave that they cannot risk further debt, without some assurance of recovery in their neighborhood and industry. As of the week ending December 7, 2001, only 30 percent of the businesses requesting SBA loans had submitted completed applications, and of these, only 40 percent had been approved. The 1,934 approved applications represent a very small portion of affected businesses. In part, this is because the design of existing SBA assistance can impose repayment burdens and collateral requirements on assisted firms and owners that are not realistic, given current business activity levels. Additionally, because SBA is unable to lend to financial service firms, which make up a substantial portion of area businesses, there is a need to provide additional assistance beyond that currently available.
Because of the negative impact of the disaster on business working capital,
small businesses, in particular, need grants as well as loans for working
capital in order to recover. ESD believes that providing viable small businesses
with sufficient cash to continue or resume operations is an essential first
step to stabilizing employment and rebuilding a vital business core in lower
Manhattan. Thus, ESD has budgeted $371 million of the anticipated CDBG grant
for assistance to small businesses. Funding would be used for the following
activities, some of which have already been implemented. As is noted above,
cost estimates are preliminary, and subject to change.
Bridge Loan Program -- $15,000,000 (already making loans). ESD and EDC are providing funding for loan guarantees for banks and other community-based lenders offering bridge loans to businesses applying for SBA economic injury or physical disaster loans.
1. This program assures that injured businesses can get access to capital quickly, while waiting for SBA approval.2. Seven banks are participating in the bridge loan program, including Banco Popular, The Bank of New York, JP Morgan Chase Bank, Citibank, N.A., Community Capital Bank, Fleet, and HSBC Bank USA.
3. Seven community-based lenders are currently participating: Regional Economic Development Assistance Corporation; Washington Heights & Inwood Development Corporation; Nonprofit Finance Fund; SEEDCO; the Fund for the City of New York; ACCION; and Renaissance Economic Development Corporation.
4. Lenders set their own terms, offering very low interest rates, often waiving transaction fees and deferring interest payments for up to one year.
5. As of December 7th, the bridge loan program had approved 450 applications for approximately $18.5 million.
6. ESD anticipates that ultimate demand for the guarantee portion of this program will be no more than $15,000,000. A portion of prior State and City expenditures subsequent to 9 /11 /01 will be reimbursed from CDBG funds.
7. Objective - Retain 1500 jobs at assisted businesses.
Lower Manhattan Grant Program -- $5,000,000 (already making awards). This program offers grants to small, non-retail businesses located in the restricted area of lower Manhattan, capped at $10,000, and grants to other non-retail businesses located south of Houston Street tied to application and approval of SBA and Bridge loans.
1. Grants are calculated as a percentage of SBA loan.2. This grant program allocates $5 million, and anticipates making approximately 1,000 awards averaging $5,000 each.
3. Objective - Retain 2,000 jobs at assisted businesses.
4. A portion of prior expenditures subsequent to 9/11/01 will be reimbursed from CDBG.
WTC Retail Recovery Grant Program -- $25,000,000 (already making awards). The program currently offers three days lost business revenue, capped at $10,000, to retail and personal service firms with fewer than 500 employees located in lower Manhattan (south of Houston Street) on September 11, and continuing in business in New York.
1 . Eligibility includes business activity that falls under Standard Industrial Classification Codes 52-59 or 72 (retail and personal services).2. Companies must show a business lease that was in effect on September 11 in lower Manhattan, as well as a new business lease if relocated, that confirms the on-going viability of the enterprise.
3. The application deadline for this program closed on December 6.
4. We anticipate making approximately 3,000 awards averaging $5,000 each, for a current program commitment of $15 million.
5. ESD anticipates increasing the maximum grant available through this program to $100,000. However, retail firms in damaged or destroyed buildings employing less than 100 would be subject to an award cap of $200,000.
6. Grants from other sources would be deducted from grants provided through this program.
7. ESD anticipates total program cost will be approximately $31,000,000.
8. We are allocating $25 million in this Action Plan for the Retail Recovery Grant program, with additional funding to be provided by future federal grants.
9. Objective - Retention of 21,700 jobs at assisted businesses (total program).
10. A portion of prior expenditures subsequent to 9/11 /01 will be reimbursed from CDBG funds.
Non-Retail Recovery Grant Program $241,000,000. The program would provide working capital in order to increase the viability of non-retail small businesses that were located in lower Manhattan (south of Houston Street) on September 11.
1. Eligibility would be open to any business with fewer than 500 employees not eligible for the Retail Grant Program that provides evidence of a business lease in lower Manhattan on September 11th and a new lease, if relocated, that confirms continuing business in NYC.2. The program would provide grants in the amount of three days lost revenue, capped at $100,000. However, grants of up to $200,000 would be available to firms employing less than 100 in damaged or destroyed buildings.
3. Grants from other sources would be deducted from grants provided through this program.
4. Approximately 13,000 small businesses may be eligible.
5. We anticipate making 12,500 awards through this program, at an estimated cost of $323,000,000.
6. We are allocating $241,000,000 in this Action Plan for the program. We anticipate meeting additional funding requirements with future federal grants.
7. Objective: Retention of 130,000 jobs at assisted businesses (total program).
Business Recovery Loan Fund -- $85,000,000. Through the program, funding would be provided for loans and loan guarantees to make low-cost financing available through ESD and EDC or private lenders, and may also capitalize micro-loan funds offered by not-for-profit community organizations.
1. Both loan vehicles would serve impacted businesses within New York City that are riot eligible for SBA credit by providing financing assistance for damage recovery and working capital needs.2. Small businesses that cannot meet SBA credit requirements, but which have some likelihood of survival if financial assistance is provided would be eligible.
2. Also eligible would be businesses of all sizes (including not-for-profit and non-religious charitable organizations) that fall outside SBA guidelines.
3. The increased availability of loans would meet the credit needs of firms that currently lack access to suitable credit, thereby increasing their viability.
4. Capital provided to not-for-profit community organizations will remain in the community available for ongoing micro-loan programs to sustain small business recovery.
5. Uncalled loan guarantees will be used for infrastructure and rebuilding/development of the devastated lower Manhattan area.
6. Repaid loans would be returned to the lower Manhattan redevelopment effort through additional loans and grants to small business for investments in workspace and business development.
7. Likely cost of loans and loan guarantees to underwrite SBA excluded lending, and to support not-for-profit loan funds, is estimated at $150 million.
8. We are allocating $85 million in this Action Plan for the Business Recovery Loan Fund. We anticipate meeting additional funding requirements with future federal grants.
9. Objective - retain 15,000 jobs at assisted businesses (total program).
Business Retention and Attraction
ESD estimates that 1,025 firms, employing more than 75,000 workers, were displaced by destruction or extensive damage to their workplace. Providing these firms with sufficient relocation assistance to assure that they resume operations in New York City is essential to the comprehensive revitalization effort. Many of these firms are in the financial, insurance and real estate (FIRE) sectors, which have particularly high indirect impacts upon related employment. That is, every one FIRE direct job supports more than two additional jobs in related businesses that provide goods and services to them.
ESD's primary goal is retention of businesses and their employment in the lower Manhattan area. Unfortunately, the revitalization of the City cannot be accomplished solely by assisting existing lower Manhattan businesses. Some of these businesses will not survive their economic injuries; others will not return. Additionally, we need to ensure that New York City businesses that were outside lower Manhattan but whose viability was substantially affected by the disaster win recover from the economic effects of the attack and remain in New York City.
Lower Manhattan once employed more than 627,681 workers, and served as the financial center for the City, the State, the nation, and the world. To rebuild this economic engine we will need to retain and create new jobs in lower Manhattan, protect other New York City jobs threatened by the economic effects of the attack, and to stimulate and support the reconstruction efforts to come. ESD/LMRC/EDC will offer a combination of loans and grants to stimulate new business commitments.
Job Retention and Creation Grant and Loan Program $285,000,000. The program will offer grants, loan guarantees and low cost loans to assist firms displaced from their workspace for at least one month as well as other affected firms, and firms willing to create new jobs in the downtown area.
The program will provide assistance to businesses in the following situations:
1. Businesses located in lower Manhattan at the time of the disaster that have remained within lower Manhattan.2. Businesses located in lower Manhattan at the time of the disaster that have temporarily relocated elsewhere because of the disaster.
3. New York City businesses that suffered significant economic dislocation because substantial portions of their major customers were businesses in lower Manhattan.
4. Businesses seeking to locate new operations and create new jobs in lower Manhattan Assistance will enhance the cost-competitiveness of lower Manhattan location decisions, but will not be used to pirate employment from other states.
In order to achieve these objectives:
1. Decisions as to whether to provide assistance would be evaluated on an individual case basis, based upon an assessment of need.2. Grants and loans would be structured to provide increasing assistance to firms making larger workforce commitments, in order to retain the full, dislocated workforce in New York City.
3. Additional assistance would be offered to firms that relocate in lower Manhattan and contribute to the rebuilding of the business community there.
4. Assisted companies would be required to commit to maintain jobs in New York City for a minimum of five years.
5. Assistance would be offered to all firms in damaged/destroyed buildings that need assistance for relocation within New York City.
6. Assistance would be provided to other affected firms employing 100 or more needing assistance in relocating within New York City and to firms creating new jobs in the City.
7. This program might assist firms employing about 85,000 workers. Assuring the stabilization of a core of high-skilled professional jobs is central to our revitalization plan and will have an indirect benefit on as many as 150,000 additional jobs that support the FIRE sectors.
8. We estimate the program cost to be $425 million.
9. We are allocating $285 million in this Action Plan for the job Retention and Creation Grant and Loan program. We anticipate meeting additional program financial requirements with a future federal grant.
10. Objective - retain 59,000 jobs at assisted businesses (total program).
Business Information
In order to ensure the effectiveness of the recovery effort, it is necessary
to promote the availability of assistance programs funded through the Federal
appropriation. Throughout the disaster recovery process to date, increasing
awareness of available assistance, and how it may be accessed has been a
substantial challenge. By providing adequate funding for program marketing,
customer confusion can be minimized, and program utilization increased.
Infrastructure Rebuilding
The actions listed above are essential short term activities, needed to stabilize New York City's economy. Equally essential, however, is redevelopment of the more than 30 million square feet of prime commercial office space that was lost, along with critical transportation and communications infrastructure. Without reconstruction of the area damaged and destroyed by the attack, lower Manhattan and New York City will be unable to provide employment opportunities essential to economic recovery. In addition, because the attack made access to the City substantially more difficult, without action to restore essential infrastructure, it will be not be possible to maintain existing employment, let alone restore jobs that have been lost as a result of the attack.
In order to begin the process of rebuilding the area damaged by the attack, Governor Pataki has established an ESD subsidiary -- the Lower Manhattan Redevelopment Corporation -- a joint State-City redevelopment corporation, with significant development powers to enable reconstruction of the damaged area to advance.
Lower Manhattan Redevelopment Corp. will oversee transportation and
infrastructure improvements, construction and development of the areas affected
by the attacks, and the attraction and retention of business throughout the
area. In addition to working with ESD and EDC to achieve the economic
revitalization goals of job retention and creation detailed above, the Lower
Manhattan Redevelopment Corp. (LMRC) will manage redevelopment of the destroyed
World Trade/Financial Center complex including memorial, public and commercial
spaces. LMRC will also coordinate development of transportation and
communications infrastructure needed to complete the revitalization of Lower
Manhattan as the world financial center and business hub.
Administration
Perhaps the most critical component of a comprehensive revitalization effort is the need for coordinated administrative management of recovery funds and services between the City and the State, and extending outward to include all other federal, community, private and not-for-profit organizations offering funds and assistance for business recovery.
For this reason, Governor Pataki and Mayor Giuliani established the Lower Manhattan Redevelopment Corporation (LMRC) as an ESD subsidiary that will implement the redevelopment effort, a partnership that has been confirmed by Mayor-elect Bloomberg. ESD will receive federal disaster funds for the State. With the creation of the Lower Manhattan Redevelopment Corporation, New York State and New York City have established a coordinated vehicle for the City's recovery that can administer funds and assure a well-coordinated response to business needs.
LMRC will be the future vehicle for reconstruction of the attack area and will work with ESD and EDC to provide essential services to affected businesses. From the first week of the attack and ensuing business crisis, ESD and EDC have committed their staff resources at the highest possible levels. ESD and EDC immediately established -- and continue to staff -- two walk-in assistance centers that brought together representatives from all relevant state agencies along with FEMA and SBA counselors. We also established -- and continue to staff -- business assistance hotlines that have logged over 20,000 calls in the past three months. Upon announcement of the Retail Recovery Grant Program, a temporary walk-in assistance center was established in lower Manhattan to make the grant application process as accessible as possible to small business owners, providing counselors who could help complete applications on-site and in several languages.
All of the businesses that have contacted ESD and EDC through the walk-in or hotline services have been assigned to case management staff, who maintain on-going contact with each business client until they have received all the assistance possible to resume successful operation. To assist case managers, we continue to compile and update a directory of all available business assistance from every federal, state, city, community, and private organization involved in World Trade Center disaster recovery.
This enormous workload has been handled to date by ESD and EDC staff. The establishment of LMRC will add additional administrative capacity, but, even so, the proposed funding structures above add substantial new administrative burdens that will require contracted administrative services and support that will be coordinated with existing staff efforts.
As Governor Pataki's designated lead agency for business recovery and economic revitalization, ESD is uniquely positioned to coordinate the multitude of business assistance programs and provide more centralized access to assistance information and coordinated delivery. With the establishment of LMRC, we have an even more effective structure to coordinate state and city efforts. The benefit to the business community is obvious. Coordination will benefit the assisting agencies as well, greatly reducing the likelihood that one business receives multiple forms of uncoordinated assistance, beyond any demonstrated need, while others go under-served for lack of funds. Coordination will also provide the opportunity to fink resources to further maximize their benefits.
To maximize the efficacy of the proposed programs, the City and State win support private sector efforts to provide evaluative and business advisory services. This will help target assistance to viable enterprises, and assist business owners to utilize scarce public resources wisely. Volunteer efforts from the corporate and banking sectors are expected.
ESD will contract for administrative services as needed to develop an integrated
data base management system, ensure coordinated delivery of the proposed
business services, and reconstruction of the area affected by the attack.
This will enable an efficient exchange of information among assistance providers
about program offerings and award recipients, and offer businesses a more
centralized and coordinated approach to seeking assistance.
Action Plan Amendments
Adding or deleting an activity or changing the planned beneficiaries of an activity will constitute a substantial change. In the event of a substantial change, the State will prepare an amendment to the approved Action Plan which will be subject to the same citizen participation process required for the initial Action Plan.
Anti-Displacement and Relocation Assistance Plan
The activities contained in this Action Plan do not contemplate displacement. However, should the potential for displacement occur, the State will undertake the following steps and will abide by the requirements of 49 CFR Part 24 and 24 CFR Part 570.496a(c) and HUD Handbook 1378.
1. Maintain current data on the occupancy of residential units targeted for CDBG assistance -- none currently planned.2. Review all activities prior to implementation to determine the effect, if any, on occupied residential properties.
3. Include consideration of alternate solutions when it appears an assisted project will cause displacement, if implemented.
4. Require private individuals and businesses to consider other alternatives to displacement causing activities, if they are requesting CDBG assistance.