Subsidy for the Stock Exchange

New York City’s economy is diverse, but no industry comes close to the financial business in its importance to the welfare of the city. The New York Stock Exchange, which has been on Wall Street for more than 200 years, is both the symbolic and actual center of that business. Now the exchange says it needs to expand its trading floor to make its operations more international and to remain competitive.

The question that faces the Giuliani and Pataki administrations is whether a financial-aid package intended to keep the exchange in lower Manhattan is corporate welfare on a grand scale or a necessary investment to preserve the city’s tax base. Keeping the exchange in its traditional location will require the largest subsidy package in city history, but the investment is justifiable, for the loss of the tax revenues generated by the exchange and related businesses would be devastating.

The plan calls for the city and state to buy the block across Broad Street from the exchange’s current facility — between Broad and William Streets and between Wall Street and Exchange Place. The historic facade of the J. P. Morgan building at 23 Wall Street would be preserved as the buildings on the block were torn down.

In their place would rise a large office tower, with the bottom floors containing the new trading area, and associated computer operations, while the upper floors would be rented out to corporate customers. The rent from the exchange and the payments in lieu of taxes from the developer of the office tower are expected to offset the $250 million to $300 million cost of acquiring the land.

The city and state would pay up to $450 million to build the new trading area, with the exchange paying several hundred million dollars to outfit it. There would be $160 million in tax concessions.

Such a generous package may seem excessive. But a decision by the exchange to leave lower Manhattan would damage the city’s economy, and the exchange has threatened to move to New Jersey if a deal is not reached by Thursday.

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