Annals of Port Authority Incompetence, Goldman Sachs Edition

Is there one single aspect of the World Trade Center rebuilding project that the Port Authority of New York and New Jersey hasn’t managed to utterly bollocks up? The latest news: New York State, 50% shareholder in PANYNJ, looks like it’s going to have to pay Goldman Sachs $320 million because there’s no way that construction work is going to be able to get done on time.

Goldman insisted on the penalties because it’s building a new headquarters next door, and it didn’t want to move in to a building site. It’s now in negotiations with the state:

“From our discussions with Goldman Sachs,” said Avi Schick, president of the Empire State Development Corporation, “it is clear that the bank is more focused on ensuring an appropriate workplace environment for its employees than on collecting penalties from the city or the state.”

Goldman’s big mistake here, of course, was believing that just because rational economic actors respond to incentives, New York State would as well. Ha!

Goldman itself is extremely good at responding to incentives. Its continued presence in Lower Manhattan is crucial for the future of the district as a financial center, and it managed to squeeze $1.65 billion in tax-free Liberty Bonds out of George Pataki after essentially holding him to ransom and threatening to move to Midtown or – worse – New Jersey. That was enough to keep Goldman downtown, although senior management still had misgivings about moving to the Vesey Street site, which is not only quite far from the subway but also right next door to the never-ending saga that is the reconstruction of the WTC. And as anybody who works at Merrill Lynch will tell you, since 9/11 that side of West Street has not been the most pleasant or accessible place to work.

Now, Goldman is entitled to a few hundred million dollars – which is nice, but not really what they wanted. What they wanted was to move into a world-class headquarters building surrounded by world-class infrastructure, and that looks very much like it’s not going to happen on time, if it’s going to happen at all. (That ferry from the end of Vesey Street over towards the Goldman building in Jersey City? I’ll believe it when I see it.)

For the hundredth time, I’m sure that Mike Bloomberg and Dan Doctoroff are rolling their eyes and regretting that the city never managed to swap the land under LaGuardia and JFK airports for the WTC site. The PANYNJ really has no business running this gig, as it has proven time and time again. It’s even managed to make New York City look like a paragon of efficiency and dynamism. But then again, that’s pretty much what everybody knew would happen: all those low expectations are being met in full.

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