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View Full Version : The Truth Behind The Twin Towers


lakeway11
Sep 12th, 2003, 02:43 PM
Part of a story that Brian C. Anderson provides below taken from the November, 2001 issue of City Journal is not known to many few Americans--let alone Islamic-style terrorists, which makes for some interesting irony:

It's cruelly ironic that the terrorists who attacked New York on September 11 targeted the World Trade Center as a symbol of American capitalism. For, from the moment it opened its doors in the early 1970s, the center, owned and operated by the publicly funded Port Authority of New York and New Jersey, was really a grandiose monument to the ills of state capitalism, where government substitutes its bureaucratic and politically motivated thinking for the wisdom of the free market's invisible hand. Indeed, the WTC offers a case study in why government should not be in the business of developing and managing commercial property. As New York state and city officials move toward setting up a new public entity to oversee the rebuilding of lower Manhattan, the center's history provides a cautionary tale for everyone involved – starting with Governor George Pataki. . . .
The idea for the World Trade Center first took form in the late 1950s, as a group of well-connected businessmen – led by Governor Rockefeller's brother David, CEO of Chase Manhattan Bank – sought some governmental means of pumping economic life into a lower Manhattan that had been in steady decline since the Depression. A government-created and government-run state-of-the-art office complex, they felt, would attract tenants from the world of international trade to replace the financial firms that had left lower Manhattan, and thus it would spur additional economic development throughout the neighborhood and give a boost to the area's struggling ports. The complex would also boost downtown development at a time when the Rockefeller family was making a big financial bet on the area with the construction of Chase Plaza.

Enlisting Governor Rockefeller's help, the group turned to the Port Authority to own, develop, and manage the property. Three reasons made the bi-state agency attractive: it was bursting with money and had the ability to float bonds; it already owned some of the land in the neighborhood; and the governor controlled half of its board. The authority was enthusiastic from the outset. Its powerful director, Austin Tobin, wanted to expand the agency's reach beyond its traditional, profitable bailiwick of managing the area's ports, airports, bridges, and tunnels. Here was the perfect opportunity: the Port Authority could now get into the real-estate business.

Virtually every important consideration in developing the World Trade Center had nothing to do with business and everything to do with politics. Costs, which the public would ultimately have to pay, mounted rapidly. To get New Jersey's backing for the project, for example, the Port Authority agreed to take over the financially strapped Hudson tubes that brought many New Jersey rail commuters into Manhattan (today, it's called the Port Authority Trans-Hudson, or PATH, train). The World Trade Center development thus extended the agency's state-capitalist reach beyond real estate into mass transit. The final cost of the twin towers, as usually happens with publicly financed projects, swelled far beyond initial estimates. Supporters of the development had low-balled those estimates to win public support.

Since the World Trade Center originated as government's idea of what lower Manhattan needed, rather than as what the market really called for, it's no surprise that it misfired commercially. Tobin yearned to build the world's tallest building, whether the market needed two 110-story behemoths or not, and his twin towers proved a perfect embodiment of the rationalist bureaucratic mind in their icy, featureless, and symmetrical inhumanity that, like Governor Rockefeller's Albany Mall, seemed designed to make the individual seem a powerless nonentity, the state an omnipotent colossus. When finished, the towers seemed to drain more life out of downtown than they added. When the trade center's initial 10 million square feet of office space first hit the market in the early 1970s, the result was such a glut of office space that lower Manhattan real-estate values sank at a time when the city was economically struggling and could least afford it.

Rather than attracting new firms to New York, as its planners thought it would, it drew tenants from other lower Manhattan offices, driving up vacancy rates throughout the area. With the towers still unfilled, New York State moved nearly all its Gotham offices into them, becoming the center's biggest tenant. Similarly, the Port Authority moved many of its own offices there.

Such deal-making, with the public footing the bill, guarantees inefficiency, since there's no free market in place that – by rewarding good work and disciplining bad – would pressure administrators to hire the right people for the right jobs and make sure they worked hard. . . .
Rather than trying to sell the World Trade Center, Governor Carey's less fiscally responsible successor, Mario Cuomo, decided to use it as a cash machine. In the 1990s, he got the Port Authority, using its own budget (which is separate from the state budget and includes, of course, New Jersey funds), to pay New York State a premium for having moved its offices out of the twin towers, and then he utilized the money – about $200 million – to plug gaping holes in the state's operating budget. The onetime boost in revenues was typical of the chicanery Cuomo employed during the early 1990s to balance the state budget temporarily rather than to slash state spending in tandem with declining revenues. . . .

Yet, even though New York's 1990s economic boom had by then nearly filled the twin towers with tenants, making it the best time imaginable to sell the complex, the Port Authority bureaucracy still wouldn't give up the goose that laid the golden eggs and get out of the state-capitalist business for good. Instead of selling the trade center outright, the authority reasoned that it could make more money by leasing the center, since under continued Port Authority ownership, its exemption from property taxes and other government perks would still be attached, making it more valuable.

Larry Silverstein would only have to pay the city $25 million yearly in an in-lieu-of-taxes agreement, about $75 million less than what the property taxes would actually be. In addition, the towers could continue to tap low-cost taxpayer-subsidized electricity from the New York Power Authority, saving Silverstein millions a year over what he would pay if he had to buy electricity from Con Ed at market rates. The Port Authority also agreed to use public funds to pay any property taxes in excess of $25 million that Silverstein might incur in the future if New York City ever succeeded in putting the trade center on the property-tax rolls.

gentenaire
Sep 12th, 2003, 02:53 PM
The final cost of the twin towers, as usually happens with publicly financed projects, swelled far beyond initial estimates.

As usually happens with ALL projects, no matter how they're financed!