Special Report: Billions in WTC Aid Tangled in Red Tape

Special Report: Billions in WTC Aid Tangled in Red Tape
Sunday July 07 07:20 AM EDT
By GREG GITTRICH

Only a few months ago, White House Budget Director Mitch Daniels accused New York lawmakers of playing a "money-grubbing game" when they fussed that $20 billion in federal aid wasn't coming fast enough.

His words didn't go over very well. He apologized, and a few weeks later the city got the money President Bush promised — and a little more. Now, nearly 10 months after a pair of hijacked passenger jets exploded into the twin towers, the real money grubbing is getting underway.

Twenty-one billion, four hundred million dollars is more than a mouthful. It's nearly half the city's annual budget.

But it's not enough to satisfy everyone — no matter how the pot of cash is divvied up. The clear winners, thus far, are corporate giants and real estate developers.

Thousands of small companies, mom-and-pop businesses, school kids and children traumatized by Sept. 11 and in need of mental health services are getting the worst of it.

"In the next year or two there is enough money to go around, but there might not be enough in the long run," said Sen. Chuck Schumer (D-N.Y.), who led the effort to get the federal aid. "We may have to go back and ask for more."

Politicking and pandering for the cash has been relentless, and the money trail includes some hard-to-miss disparities.

For example, about $500 million is being funneled in grants to 145 big corporations that promise not to quit downtown.

By comparison, thousands of families struggling to pay their rent and mortgage have received less than $75 million from the Federal Emergency Management Agency.

Seven out of 10 applications have been rejected because federal officials were until last week interpreting aid guidelines strictly. Many of those turned away live downtown but not close enough to Ground Zero to get meaningful help from other programs.

"Everyone says that, 'Hey, New York got the money, what's the problem?' The problem is the bureaucrats got the money and the people who need help aren't getting it," said Rep. Carolyn Maloney (D-Manhattan).

Congress has not handed over the entire $21.4 billion. Although it has vowed to do so, the city cannot spend the money wherever it pleases.

The dollars have been allocated in set amounts for specific purposes. In many cases, Congress must sign off on any bid to use the money differently.

"This was an unprecedented disaster and the laws that were in place to handle floods and earthquakes and other disasters have not been fully applicable," said Sen. Hillary Clinton (D-N.Y.). "I'm trying to get those laws changed. There are a lot of needs that haven't been addressed yet."

When the agency came to town, many people envisioned it as a caregiver — a kind of governmental Red Cross. But FEMA is basically a bean counter that makes sure federal funds don't get wasted.

FEMA money can be used for funeral, medical, housing and other assistance to individuals directly affected by the attacks. It also can reimburse the city and state for uninsured emergency, rescue, recovery and rebuilding costs. It cannot pay for improvements.

FEMA has agreed to pay for professional writers to script eulogies for firefighters funerals. It will shell out $2 million to hire a public relations firm to get the good word out about lower Manhattan, and will pick up the tab to clean asbestos from apartments below Canal St.

The agency also has authorized giving New York Waterway nearly $2 million a month. The private ferry company got the money to increase service across the Hudson River — even though its paid ridership has doubled since the PATH station at the World Trade Center was destroyed Sept. 11.

At the same time, FEMA has balked at giving the city's schools $103 million to make up for lost instruction time. It also won't sign off on $40 million to pay for mental health services for traumatized kids.

Federal funding rules also have prevented FEMA from reimbursing the city for $1.2 billion it lost in tax revenues.

Last month, Deputy Mayor Daniel Doctoroff pushed to get back some of the cash. He wrote a letter to FEMA telling the agency, "New York City's most immediate need is $650 million to compensate for lost revenues."

The White House is looking at ways to bend the regulations and FEMA is still reviewing the items. On Friday, FEMA expanded eligibility for rental and mortgage assistance.

Much of the FEMA money and the aid outside its control will be used to rebuild the Trade Center site.

The city has spent just over $1 billion to clear Ground Zero and pay for police and fire department overtime. The Port Authority estimates it will cost $544 million to build a temporary PATH station, although insurance could pick up some of the tab.

There's also $1.8 billion for a downtown transit hub, $750 million to fix utilities and $242 million to repair streets, to name a few things.

If there's not enough money, as many expect, Schumer says he has an agreement with the White House that allows the city to transfer federal aid from where it was initially allocated to areas where it's needed.

The city Independent Budget Office, however, contends such transfers could take "a decade or more" — which is why Larry Silverstein, who holds a 99-year lease on the twin towers site, becomes a very big player.

Silverstein says he wants to rebuild and he's fighting with his insurance companies about whether the attacks were one event or two. He'll end up with something between $3.5 billion and $6.7 billion in insurance money.

The outcome promises to factor heavily into how much public money needs to go into rebuilding, how many other private developers are brought in and what prices the new space will rent for.

"If he doesn't win, then we're talking about a whole different kettle of fish," Paul Crotty, a board member for the Lower Manhattan Development Corp., said last week.

An additional $5 billion of the federal aid consists of tax credits designed to lure business back near Ground Zero. The stimulus package includes an employee tax credit and also authorizes the state and city to issue up to $8 million in Liberty bonds.

The tax-exempt bonds will allow real estate developers to borrow money at a cheaper rate. "It is really the kind of incentive that an investor may need to go back into a risky environment," said Timothy Welch, an executive managing director at Cushman & Wakefield, a top real estate brokerage service.

But Welch said it remains to be seen whether the benefits will be passed along to tenants. There is similar skepticism around a $300 million federal aid program designed to entice people to live near Ground Zero.

Those who live closest to the disaster can get up to $14,500 in cash incentives. The Lower Manhattan Development Corp., which is overseeing the grants, has included wording in the program to prevent landlords from hiking rents to steal the benefit away from tenants.

But with 90% of the apartments downtown already occupied, some observers predict the law of supply and demand will overpower such promises.

City and state economic development officials also are using some of the federal aid not controlled by FEMA to cover the handouts to big corporations.

Twenty companies with more than 200 employees have cashed in. The companies must commit to staying downtown for seven years.

"The big company program is designed to stabilize the neighborhood," said Andrew Alper, president of the city Economic Development Corp.

Nearly $70 million has been awarded and the program is striving to retain or create 80,000 jobs. It will pay an average of $6,250 for each job.

Similar programs for companies with fewer than 200 workers offer top payouts of between $3,500 and $5,000 per job.

The state and city's decision to give American Express the biggest grant to date has done little to quiet critics.

"You have to question their strategy when they hand over $25 million to a company that has publicly pledged to stay in New York," said Bettina Damiani, of Good Jobs New York, a government watchdog run by the Fiscal Policy Institute.

Economic development officials counter by noting small business have received $224 million — more money than big companies so far. They also say if small companies applied and were found eligible for all grants and tax credits, they'd get up to $14,000 per employee. But in practice, that hasn't happened. Small business aid has been extremely spotty.

A study by From the Ground Up, a nonprofit organization focused on helping small businesses, found companies dislocated from the Trade Center have received an average of 10 days of lost revenues.

"How's a small business going to survive on that?" said Kevin Curnin, an attorney with Stroock & Stroock & Lavan, who advises From the Ground Up.

Charles Gargano, chairman of the Empire State Development Corp., acknowledged some small businesses were overlooked initially. But he said changes have been made. "Many of these people didn't know about the programs," he said. "We're closing the cracks."

"Our goal is to get the money out," Alper said. "The application is quite easy and we'll take people through it."

Meyer Feig, who runs an association of struggling former Trade Center tenants, applied for several grants and got $46,000. But his information technology company, Intera Corp., lost $600,000.

"The businesses that were impacted the most have been receiving the least help relative to their losses," he said. "No one has come forward to help us."

Billions in WTC Aid Tangled in Red Tape - Translation - The people in charge of 'Administering' it are still trying to figure out how much of it they can steal without getting caught.

“The agency also has authorized giving New York Waterway nearly $2 million a month. The private ferry company got the money to increase service across the Hudson River — even though its paid ridership has doubled since the PATH station at the World Trade Center was destroyed Sept. 11. “

What is this all about? “One” ferry company has been given 2 million a month approximately $15 to 20 Million so far, for what? Ridership is up by default so what the money going to? Someone is laughing all the way to the bank?

This is what gets me angry, it's alwasy the little guy who gets it in the neck. Let's start talking about Corporate responsibility. Lets also talk about Congressional and State Responsibility.

"I actually live 2 blocks from Gound Zero. The incentive program to live downtown doesn't seem to be going well. There is little information on the specific requirements to qualify for the rent grants and landlords are not informing new tenants on the requirements. They are out renting apartments at rates that will not allow new tenants to qualify for the aid knowing full well that the tenants expect to receive it. Thus people are paying inflated prices with the expectation that they will receive a $500/month credit. It's a total windfall for the landlords. Eventually I am sure there will be a class action lawsuit of some kind."

What is Bloomberg or the City doing about this? This is outrageous!

FEMA has agreed to pay for professional writers to script eulogies for firefighters funerals.

How much you wanna bet these were read by politicians?

I hope Congress doesn't give NYC authority to dispense the money without their OK. Giving NYC sole authority over the funds would only guarantee they'd run out of it sooner rather than later and that they'd quickly be back for more.

FEMA has agreed to pay for professional writers to script eulogies for firefighters funerals. How much you wanna bet these were read by politicians?

You know, I was just scratching my head, thinking why in the world this would be necessary. After all, I think anybody from the FDNY would be capable of giving a heartfelt eulogy for one of their brothers. And your suggestion is the only thing that makes sense as to why professional writers would be hired!

I read an interesting article about Silverstein and his contention that it was two separate incidents and the insurance companies saying it was one.In that article it said Silverstein leased tha land from the owners who were,I believe,one of the Rockefeller Trusts.Can anyone confirm who owns the land the World Trade Center was built on?

Can anyone confirm who owns the land the World Trade Center was built on?

I thought it was the NY Port Authority. I could be very wrong...

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