Feds say Downtown is a bad deal at any price

Daniel L. Squadron

May 22, 2009

By Julie Shapiro

Lower Manhattan leaders who were already angry about the Federal Deposit Insurance Corporation’s plan to leave the Financial District turned furious when they recently learned that F.D.I.C. specifically excluded the neighborhood from its search for new office space.

“The idea that we would let a government agency turn its back on Lower Manhattan in this way is terrible,” State Sen. Daniel Squadron told Downtown Express. “Lower Manhattan is a great place to do business, to work, to live, to make your life. It’s time for the F.D.I.C. to get with the program.”

The F.D.I.C. announced plans late last year to move from its 20 Exchange Pl. headquarters in early 2010, and Squadron and other elected officials spoke out against the decision then. But Squadron and others were even more incensed to learn that the F.D.I.C. looked for new offices only in Midtown and Midtown South.

Squadron, U.S. Rep. Jerrold Nadler and Assembly Speaker Sheldon Silver sent a letter to the F.D.I.C. chairperson last week urging the independent federal agency to reopen its search to include Lower Manhattan. The Downtown Alliance, which runs a business improvement district, has also objected to the move.

“All we’re saying is at least give Lower Manhattan a shot,” Squadron said. He pointed out that office rents in the Financial District are cheaper than in Midtown and said the F.D.I.C. should not rule out a less expensive neighborhood in favor of a more expensive one.

David Barr, spokesperson for F.D.I.C. said rents in Midtown have dropped during the downturn although he did not know how that compared to Lower Manhattan. Real estate firms put the rent difference at about $25 higher per square foot in Midtown, which would mean the F.D.I.C. would pay $2.5 million more a year for a 100,000 square foot space.

The F.D.I.C. wants to move its offices so workers are closer to Penn Station and Grand Central.

“That’ll just help our employees have an easier commute, if there is such a thing in New York City,” Barr said from his Washington D.C. office.

Squadron’s office pointed out that Lower Manhattan is rich in transit options as well, including many subway lines, the PATH trains, three bridges, two tunnels and several ferry stops.

The F.D.I.C. has already closed its bid process for new office space in Midtown and Midtown South and is reviewing the proposals, Barr said. He expects the F.D.I.C. to seek approval soon to sign a lease.

The agency was founded by Congress during the Depression to insure people’s bank accounts. Its board is appointed by the president, but its budget comes from premiums paid by banks.

The F.D.I.C. had the option to renew its current lease at 20 Exchange Pl. for another five years but decided not to do so because the owner is converting the building to residential units, Barr said. The building is now 80 percent residential, he said.

Barr declined to address Squadron’s criticisms and the sharply worded letter.

“We’re going to respond to them directly and not through the media,” Barr said. He would not give a timeline for the response.

The letter from Squadron, Nadler and Silver concluded that F.D.I.C.’s move “would also send the wrong message about the health of our country’s financial industry, centered in Lower Manhattan, whose recovery is vital to the future of New York and the nation as a whole.”