Pressure building on city incentives

Pressure is building on the city to up the ante on incentives for major corporations to stay in New York City.

For the last 18 months, as New York's economy improved, the city successfully shrunk the value of incentives dangled in front of large companies threatening to relocate. But the city may have to reverse itself.

The midtown office market is recovering more quickly than those in Westchester County and Connecticut, and choices in the suburbs are becoming more plentiful and less expensive. As tenants such as Swiss Bank Corp. and Equitable Cos. consider relocations, competing effectively promises to be a more costly proposition for the city.

That's particularly true if its strategy includes spurring the development of new midtown skyscrapers to provide tenants with more options.

Giuliani administration officials agree that the competitive dynamics between the city and suburbs are changing, but they say this will not necessarily translate into more city incentives for individual businesses. "It would not be correct to assume they would automatically be greater," says Deputy Mayor John Dyson. "It would not be correct to assume anything."

Nevertheless, the administration clearly has embarked on a policy of encouraging new development to create the large blocks of space that have become increasingly more scarce in midtown. Mr. Dyson notes that he "shed a lot of blood" in his vain effort to salvage the proposed office building development at the Coliseum site.

Moreover, in the last session of the state Legislature, the administration tried to extend a tax break now available to midtown and downtown renovation projects to new developments of "smart" buildings designed for large financial services firms. That measure failed, but administration officials plan to renew the effort when the Legislature reconvenes.

Mayor Giuliani's eagerness to spark development underscores a significant,...