Daily Archives: July 2, 2017

Why is Aetna subsidized? | Cross River Real Estate

Hartford-based insurer Aetna will receive roughly $34 million in city and state subsidies to move its headquarters to a luxury boutique office building being erected in the trendy Meatpacking District, the de Blasio and Cuomo administrations announced in separate press releases Thursday.

Aetna will take 145,000 square feet at 61 Ninth Ave., the entirety of the building’s office space. The high-end commercial property is being developed by a partnership between Aurora Capital Associates and Vornado Realty Trust, a $17.6 billion public real estate company that is one of the city’s biggest and richest landlords.

Aetna will recieve $24 million of “performance-based tax credits” over 10 years, according to a statement from Gov. Andrew Cuomo’s office. The administration said Aetna will add 250 “senior” positions to the new headquarters and invest $84 million in the space.

Mayor Bill de Blasio’s office announced that Aetna will receive $9.6 million in financial assistance from the city’s Economic Development Corp. The subsidy will come in the form of a $4.25 million break on sales taxes for materials purchased for the site, $3.8 million in property-tax relief and $1.5 million of other sales-tax benefits and other breaks, according to the city.

Aurora and Vornado have been developing the Rafael Vinoly-designed 61 Ninth Ave. with the aim of fetching soaring rents in a neighborhood that has become a pricey and exclusive enclave for high-end tech firms, hedge funds and other deep-pocketed tenants.

Some fiscal watchdogs took a dim view of a multibillion-dollar insurance company being showered with millions of subsidy dollars so it can pay robust rents in a hot neighborhood to a landlord also worth billions.

“The city’s economy is the strongest that it’s been for generations,” said James Parrott, an economist and longtime critic of subsidy policy. “Tax breaks only serve to make New York City real estate more costly. Why would you want to do that?”

The city, in its press release announcing the deal, stated that Aetna’s move would generate $146 million in economic benefits to the city. A spokesman for the Economic Development Corp. couldn’t immediately describe in detail how it calculated that.

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http://www.crainsnewyork.com/article/20170629/REAL_ESTATE/170629850/huge-insurer-gets-34-million-in-subsidies-to-pay-high-rents-in-hot#utm_medium=email&utm_source=cnyb-realestate&utm_campaign=cnyb-realestate-20170629