Government, NY Times Join Forces to Evict Business Owners

By Jeff McKay | July 7, 2008 | 8:20 PM EDT

( - A New York State government agency is forcing a group of business owners to leave their property by condemning it. That clears the way for a new skyscraper to go up - an office building that will house the New York Times.

Critics complain city taxpayers will foot part of the bill.

In a deal struck by the Empire State Development Corporation, a group of Midtown Manhattan buildings - just a block from Times Square - will be torn down. The land will then be leased to the New York Times, which plans to build a million-plus square foot office tower that will also include leased commercial space.

Some say the deal gives the land to the New York Times for "pennies on the dollar."

In a New York Times story dated October 25, 2001, the New York Times called the now-condemned block, "a shabby blend of sex shops, prostitution, loitering, and drug dealing." The report was entitled, "Blight to Some is Home to Others."

But others disagree. "In reality, the ESD (Empire State Development) is condemning an entire block of thriving small businesses along 8th Avenue between 40th and 41st Streets so that the Times can erect a new building," said Manhattan Libertarian Party spokesman Jim Lesczynski.

"This will be at the expense of property owners, tenants and taxpayers. This New York Times plan is simply a case of the government helping the politically powerful at the expense of the less fortunate," according to Lesczynski.

Property owners were informed by letter that their buildings would be condemned and that they would have to move. They were also notified that since the state was taking over the condemned property, those who currently leased space in the buildings would have to pay their rent to the state, leaving some building owners paying both a mortgage and rent.

A check on one of the buildings in question, a 16-story structure owned by Sidney Orbach and his family, shows that two of his 16 floors are currently leased by fashion designer Donna Karan and one of those floors is used as a gallery and showroom.

Orbach's building had a 100-percent occupancy rate before the state condemned the property. He claims that over the years, he's had to turn away companies and individuals who wanted leases in his building.

Property owners are also outraged that they had no say in what is happening to their businesses. They feel they are pawns, pitted against a government machine that plays favorites.

"I was never asked if I wanted to sell," said Orbach.

Orbach said a lot half the size of the one the New York Times wants - and located in the same area - recently sold for approximately $180 per square foot. The deal the newspaper struck is expected to cost it only $60 per square foot, well below market value for Midtown Manhattan and the Times Square district.

Current real estate market values of office and commercial space in the area range from $100 to $40 per square foot.

"The UDC is offering this deal to the Times at 10 to 15 cents on the dollar," said Orbach. "The deal has nothing to do with dilapidated buildings or urban renewal. This has everything to do with the government and the powerful New York Times."

"Corporate welfare and eminent domain abuses like that practiced by The New York Times threatens the rights and welfare of all New Yorkers," said Libertarian gubernatorial candidate Scott Jeffrey.

A spokesman for the New York Times declined to comment, citing the ongoing legal matter.

According to court records, the state and city signed a deal with the Times and Forest City Ratner Companies, which included a 99-year lease totaling $85.6 million-well below market value, according to experts. The deal also includes $26 million in tax cuts for the Times.

In addition, if a court sets the condemnation price higher than $85.6 million, the developers would have to come up with the extra money. However, the Times and Forest City will be able to deduct the extra cost, meaning taxpayers will cover all costs above $85.6 million.

Forest City Ratner Companies is headed by Bruce Ratner, a well-known fundraiser for both former Mayor Rudy Giuliani and former President Bill Clinton.

It was Ratner who earlier this year spearheaded a campaign to produce a "politically correct" statue, replacing two of the three white firefighters captured in a world-famous photo of the flag raising at Ground Zero with a more diverse grouping. The move outraged both firefighters and the public and was later scrapped.

The Empire State Development describes itself as "dedicated to creating jobs and encouraging economic prosperity by strengthening and supporting New York State businesses." Charles Gargano, who was appointed to this post by Gov. George Pataki, heads this state office.

The tax breaks and anticipated subsidies to be granted to the New York Times are expected to cost taxpayers nearly $100 million.

In 1994, the city of New York gave the Times a $29 million tax break to build a new printing plant in Queens, rather than relocate to New Jersey.

The proposed plans for the New York Times skyscraper includes 52 floors and well over 1.3 million square feet of space, of which only 900,000 square feet will be used by the Times. The rest of the space - mostly the skyscraper's upper floors - will be leased.

This, in turn, will make the Times the landlord of over 400,000 square feet of prime real estate.

"It's so abusive -- the tactics they are using. They are pressuring tenants to move out," Orbach stated. "When I came to America, I could never believe that this could happen here. To me, this is very reminiscent of Nazi Germany."