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The Last Days of New York

Along the western part of the route which the expressway was to have taken were several blocks of abandoned loft buildings, handsome, spacious structures, many of them a century old, with powerful façades of stone or iron. Soon artists driven southward by the redevelopment of Greenwich Village moved into these lofts, at first in violation of the city’s housing codes. Since the area was south of Houston Street, they named it SoHo. They opened galleries, restaurants, and bookstores, and they accomplished without having intended to what decades of urban renewal had failed to do. They restored a neighborhood and became its taxpayers. Though SoHo’s residents are mainly middle class and the area is anything but the industrial neighborhood that it once was, its revival suggests that the spontaneous generation which once characterized New York’s growth remains a possibility.

It was the abandonment of the expressway that led to SoHo’s revival and to the continuing vitality of the Italian and Chinese neighborhoods nearby, with their crowds of tourists, their innumerable shops and restaurants, their live poultry markets, their small manufacturing plants, and their surplus electronics and secondhand machinery dealers.

In the area to the south, however, which is now dominated by the two huge towers of the World Trade Center, the outcome was different. Here there were no traditional residential groups to oppose the vast renewal schemes that were proposed for the area in the early 1950s. Though some 550,000 people worked in the government offices, the financial center, and the wholesale markets south of Canal Street, almost no one lived there. The hundreds of small merchants, the radio and electronics dealers, the produce wholesalers who occupied the ancient Washington Market—New York’s equivalent to Les Halles—were easily overpowered by the downtown bankers and their companions at the Port Authority, the joint agency of New York and New Jersey which administers the bridges and tunnels that link the two states and whose access to the bond market through the tolls that it collects is practically limitless.

Here the same combination of forces—the Rockefeller bank, the Authority itself, the construction unions—that had been defeated earlier, now prevailed. The Authority’s plan was to build a trade center which would become the world’s largest office building, two towers of a hundred stories each. Inevitably it would replace the small commercial and manufacturing establishments that had traditionally occupied the area.

In the early 1960s the local businessmen sued the Port Authority, arguing, among other things, that since the vacancy rate in the city’s office buildings was already at 9 percent, there was no need for the Authority’s new towers. In 1966 the appellate court ruled against the merchants and by the end of that year some 400 commercial tenants left the area. The following summer the Authority opened bids for $100 million worth of construction. Most of these contracts and those that were to follow went to suppliers from outside the city—to Otis Elevator, Borg Warner, Pacific Car and Foundry, and so on. By December the estimated cost of the project had risen to $575 million. It would eventually go far higher, but the banks that handled the Authority’s bonds were happy to supply the money, given the security provided by the taxing power that the Authority had over the city’s commuters who used its tunnels and bridges.

The designation of the new buildings as a trade center was disingenuous. Under its charter the Port Authority is supposed to maintain the Hudson River crossings and promote the interests of the Port. It is not supposed to use its borrowing power to erect office towers. However by calling its new buildings a World Trade Center it could declare them a port facility. Had the Authority invested instead in mass transit it would not only have diluted the income from its bridge and tunnel tolls, it would have offended the banks that marketed its bonds. The banks had no interest in commuter railroads no matter how they might benefit the region and its taxpayers, and thus, in the long run, benefit the banks themselves. David Rockefeller and his Chase Bank were especially eager to have a neighboring office tower to accompany their new downtown headquarters. Typically the banks were wrong. The Trade Center would find it hard to attract tenants to its lifeless and remote area. Inevitably the taxpayers would pick up the bill for their mistake.

Meanwhile the vacancy rate in Manhattan’s existing office buildings had increased still further. As a precaution the Authority arranged to lease 1.9 million square feet of space in the new buildings to the State of New York. The state accepted the arrangement without seeking lower bids elsewhere. Thus the taxpayers were asked to pay twice for the Trade Center, once with their bridge and tunnel tolls and again with their state taxes. Since interest on the Authority’s bonds was tax exempt, and thus in effect subsidized by the public, the taxpayers were asked to make a third contribution to the project. And since the Trade Center does not pay normal real estate tax but makes what it calls “negotiated payments in lieu of taxes,” the taxpayers make yet a fourth contribution. How they were to benefit from the Trade Center was unclear.

The Trade Center was completed in 1972 and except for those floors occupied by the state much of it stands vacant. The New York Times reported that one of the foremen on the project earned $76,000 in overtime pay during the final year of construction. The area south of Canal Street has lost 50,000 jobs since 1968. Except for rush hour and at lunch time, a lunar quiet dominates the Trade Center and the streets around it.

Twenty years ago the area where the Trade Center now stands adjoined the old Washington Market, a chaotic jumble of stalls and ancient buildings which housed the city’s produce market. In 1959, as plans for the Trade Center were being completed, the city’s commissioner of markets announced that the Washington Market, which had served the city for more than a century, was now obsolete and would have to be vacated. The merchants who occupied it were told that they were being moved to a remote neck of land in the southeast Bronx called Hunts Point. The United States Department of Agriculture declared that the new market would save consumers $18 million a year and that it would be built at the geographical center of the city—a center that happened to be miles away from the actual centers where the restaurant keepers and grocers who patronized the produce market had their businesses. Meanwhile the city announced that it had received a federal grant to plan the old Washington Market area as a new complex of office buildings, warehouses, and factories.

By 1961 plans for the new Hunts Point Market were far advanced. So was its estimated cost which had risen from $22 million to $30 million. By the end of the year the Board of Estimate approved a plan to redevelop the old market area at a cost of $100 million and it condemned the existing buildings in which the merchants were still attempting to do business. A few months later the Board abandoned its original plan and approved a new one that would cost $150 million. Except for the demolition of the old buildings, nothing came of either plan. By 1965 the area was devastated, a few stubborn merchants still clinging to their stalls amid the wreckage.

The new Hunts Point Market opened in 1967 with about 150 merchants. It stands behind its grim security fence, a great gray hulk surrounded by the rubble left over from its construction. Since the city has ordered that no merchants can do business outside the boundaries of the market, the adjoining streets promise to remain dilapidated indefinitely. A year after the market was completed the city accepted a new proposal for the old Washington Market area. It was to cost $190 million and would include a community college, middle-income and luxury housing, and an industrial complex. Nothing came of it.

The merchants at the new complex now complain that it takes an extra day for fresh produce to reach consumers, that the new market is too expensive, and that doing business there is less convenient than it was in the old market. “Cheaper?” a radish merchant told a reporter. “It’s more dear. Downtown you had a customer for everything. You could get rid of it all there. Here you got to keep it till next morning. We should have what they waste here in a year.” A greens merchant agreed. It costs twice as much at the new market, he said. “Here you back a couple of trucks against the platform and the customers can’t get in.” Edgar Fabber, the city’s commissioner of Ports and Terminals, said of the new market, “I think it’s the best investment the city has made in the last twenty years.”

In fact the investment was unnecessary. Fifty years ago Americans ate 414 pounds of fresh produce a year. By 1971 they were eating only 239 pounds. In the last ten years deliveries of fresh produce have fallen by a fifth nationally. In New York City they have fallen by a third. The old Washington Market, for all its antiquity, could have accommodated this reduced volume as it slowly expired of obsolescence. Meanwhile it would have sustained the hundreds of downtown businesses that clustered around it, benefiting from the traffic that the market generated and serving its countless incidental requirements.

The abandonment of the Lower Manhattan Expressway and the regeneration of SoHo; the construction of the World Trade Center and the eerie necrosis of lower Manhattan; the failure of the myriad projects undertaken under the Federal Housing and Urban Development Act of 1966 to restore the city’s neighborhoods or to create new ones—these events hardly suggest that the current moratorium on capital spending will, in itself, assure the city’s future. The city’s problems are by now so complex that there may be no solution to them at all. Between 1965 and 1973 the city’s expenditures were increasing at a compound annual rate of 13.1 percent while its tax receipts were increasing at a rate of only 6.8 percent. By 1975 the city had used $1.5 billion in capital funds to meet its current expenses, while it was also incurring $4.5 billion in short term debt, an increase of 700 percent over 1967. For the fiscal year 1975-1976 the city has budgeted $1.784 billion for debt service, more than two and a half times what it spends as its share of direct welfare payments.

The construction complex was not in itself responsible for this disaster nor is New York the only city facing such problems. Yet the Trade Center and projects like it have probably hastened and intensified a decline that might, in other circumstances, have been less precipitous. Certainly the near bankruptcy of the various state construction agencies—particularly the Urban Development Corporation, whose impending collapse last year first alerted the bankers to the shakiness of the city and state generally—could have been avoided had the politicians been more cautious in their commitments to useless new building projects.

In retrospect it now seems clear that what the city needed during the past twenty years were not new office towers and highways, or even urban renewal and slum clearance programs; much less its surfeit of hospitals and such pompous and extravagant confections as the Urban Development Corporation’s Welfare Island middle-income housing project—what the politicians call at their ribbon-cutting ceremonies commitments to the city’s future. What the city needed instead were commitments to its difficult present and to what could be preserved from its vital past: for example, the abolition of rent control and the provision of rent subsidies to needy tenants, steps that would spare the landlords the impossible choice of subsidizing their tenants out of their own pockets or abandoning their buildings. The political objections to such additional public expenditures are obvious. But the cost to taxpayers would be far less than the cost of lost properties and the more egregious waste involved in supporting such agencies as UDC with public funds.

The few neighborhoods that survived or came back to life during the city’s decline—parts of the West 70s and 80s, SoHo, Bedford Stuyvesant, Park Slope—were the ones that more or less restored themselves, often house by house, block by block, usually with relatively small loans from local banks and state-financed mortgage guarantees, occasionally with foundation grants; or neighborhoods like Corona and the West Village that resisted the developers, often through years of litigation and public protest.

The industries that typically flourish here and may survive the city’s difficulties are similarly resistant to external discipline, self-governing, impulsive, polyglot, mysterious: the diamond market, the fashion and cosmetic trades, the restaurants, the investment banks themselves, the publishers, the port. New technologies, cheap labor, the myriad inconveniences of the city are not likely to make them abandon New York’s tolerant and complex environment. That so many corporate headquarters have left could have been predicted. New York is less amenable than most other places to corporate rationality, cost effectiveness, and the people who value such things, especially if they don’t need what the city can offer by way of specialized services and supplies, middlemen, craftsmen, or people with a talent for anticipating fashion.

New York will probably continue to lose its manufacturing jobs and with them the revenues to balance its budget. The city’s last two breweries are closing their plants and discharging some 1,100 workers. One of them is moving to Pennsylvania, the other is going to New Jersey where water, sewage, and electricity will cost the company $1.6 million less. Since the real cost of these utilities can hardly be much less twenty miles away in New Jersey than in Brooklyn, the brewer’s gain and the city’s loss actually amount to the value of the indirect taxes included in these utility charges. Where the city once exported goods, it now exports jobs—to Indiana and Tennessee where it makes the books that are published here; to rural New Jersey (where Women’s Wear Daily and this paper are now printed); to California where the television shows that New York produces are filmed, including “Kojak,” the series about a New York City detective; to garment plants in all parts of the world.

In the unaccustomed space provided by the decline of the building trades, new kinds of work may turn up here spontaneously, growing out of crevices in the city’s surface as they did in the past; but they are unlikely to replace many of the jobs or much of the income that the city is losing. The more likely prospect is for a continuing decline in industrial work, a reduced tax base, and higher rates for those who remain. Auditors assigned by the federal treasury to examine the city’s accounts have projected revenue losses of $571 million over the next three years. To meet its needs for 1976 alone the city must raise an additional $400 million. To balance its budget by 1978 it must cut its expenses by $1.6 billion over the three-year period, according to these auditors.

The misery that this implies for the city’s dependent poor is unimaginable. The Wall Street Journal complains from time to time that New York’s problems result from its excessive compassion for these people; but if New York’s poor were to depend upon the personal good will of their fellow citizens, they would probably starve here as readily as elsewhere. What the city pays its poor, it pays to keep them out of sight and under control. On a per capita basis it doesn’t pay much; less, for example, than Detroit, Chicago, and Philadelphia; more than Baltimore, Los Angeles, and Houston, adjusted in all cases for local variations in city, county, state, and federal contributions. Unlike most other cities New York pays about 30 percent of its welfare costs out of its own revenues, a matter of just over a billion dollars for 1976, which includes direct welfare payments as well as the cost of related social services.

Los Angeles, Chicago, Philadelphia, and many other cities handle welfare more easily; they derive their local welfare shares from a county-wide tax base. For years politicians and editorial writers have talked about extending New York’s archaic boundaries to include the suburbs within its taxing area. But the suburbs, which are afflicted by many of the city’s own problems, are less likely now than ever to agree to such a scheme.

Still more dim at the moment are the proposals for a national welfare system, for example a negative income tax or a guaranteed wage. Such proposals assume that welfare migrations are a national problem, not a local one. A federal assumption of welfare costs would, in itself, balance the budgets of New York and many other impoverished cities. A uniform federal welfare standard would also encourage the remigration of the unemployable urban poor to regions where they might live more cheaply. But these are likely to be the same regions which encouraged their departure to the cities in the first place. Their political opposition to a uniform national welfare standard can be depended upon.

When Daniel P. Moynihan, as Nixon’s first domestic affairs adviser, proposed a national welfare program he was attacked by conservatives who thought the scheme would give the poor too much, while many liberals thought it would give them too little. Nixon himself, whose support for the proposal was never strong, finally abandoned it. Moynihan was soon replaced by John Ehrlichman. Who would now revive his Family Assistance Plan? The constituencies that might benefit from it seem weaker then they were when Moynihan first proposed his plan. Its opponents are stronger. The prevailing wisdom is that New York and the other old Eastern cities are finished anyway. The country’s future has shifted westward, to the sunbelt. As New York once carelessly discarded its own marginal neighborhoods, so America may have decided that New York itself can now be junked.

Meanwhile, the poor seem to suffer more or less passively. Their mayhem affects mainly themselves. For all the terror they are said to inspire, the tourist trade flourishes, perhaps for the same reason that it does in Pompeii, but more likely because New York, for all its misery, remains uniquely exhilarating. The restaurants are busy. Hotel rooms are scarce. Cabarets and theaters thrive. Eight new musicals are scheduled to open by spring. Ballet is everywhere. Three and a quarter million visitors came here last year. Wistful champions of the city’s well-being contemplate the hordes of tourists and urge that casino gambling be legalized here. Las Vegas showed a profit of a billion dollars last year. New York, they say, can do still better.

In the short run the city’s financial problems are unthinkable. How the city will cut its expenses by $1.6 billion by 1978 remains the mayor’s secret. Like his fellow citizens he probably expects that something will turn up.

Meanwhile, with the defection of the banks and other traditional markets for its securities, New York now depends upon its public employees’ pension funds to buy its dubious bonds. It is a desperate solution, for the undercapitalized pension funds depend in turn upon the city’s annual contribution of $1.25 billion for their own solvency. It is a case of two brave old marathon dancers, each holding the other up, with long days and nights of shuffling still to go.

The prospect is dark, but cities don’t die easily, much less a city like New York. A Japanese jeweler has just signed the most expensive commercial lease in the city’s history for his new shop on Fifth Avenue. The builders report a strong market for luxury housing and are planning a few new buildings. The ghettos are for the moment “quiet,” at least for those who don’t go there. The Port Authority wants to build a new convention center at the bottom of Manhattan to stimulate its moribund Trade Center and justify its construction of a new hotel in that desolate area. Since the hotels, theaters, and restaurants are in midtown and transportation between the two places is almost impossible except by the dilapidated and dangerous West Side subway, the Authority’s proposal is more than normally batty. It may also be illegal, since the Authority’s charter makes no provision for building a convention center. That even The New York Times has found the wit to oppose the Authority’s plan and urges a midtown site for the convention center instead offers another grain of hope. Who knows? We may survive. It’s hard to imagine how, but it’s harder to imagine that we won’t.

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