John C. Liu
The City’s Economic Development Corporation is famous for doling out corporate welfare without making sure that the companies that get those tax breaks and subsidies produce jobs.
Our latest discovery, however, shows just how wasteful and disgraceful that agency’s actions can be.
My Audit Bureau uncovered a secret deal that the EDC made in 1998 with the Marriott Marquis Hotel that could cost our taxpayers at least $345 million. In fact, it may be the worst deal since Manhattan was sold for $24.
Because of this bad deal, in four years the Marriott Marquis can purchase the land it sits on from the City — one of the hottest pieces of New York City real estate — for a fire-sale price of $20 million. That’s ten cents on the dollar compared to the land’s value of $200 million today.
City Hall must do whatever it takes to tear up this contract and renegotiate it so that taxpayers don’t get fleeced for millions of dollars.
The Marriott Marquis hotel rakes in more money than any of the company’s hotels around the world, but our so-called Economic Development Corporation and City Hall signed away any share of that revenue. It boggles the mind how terrible this deal was for New York City.
We need to get back as much of this lost money as we can. We want City Hall and the EDC to correct the incredible, terrible lease that was given to the Marriott Marquis.
Fortunately, our Audit Bureau also uncovered that Marriott has failed to keep records according to the terms of its lease. The hotel’s lease requires that it hold onto at least six years of records, but Marriott has not done that. That’s a breach of contract.
We’re calling on the City to use this breach of contract to reopen the lease and do whatever it takes to renegotiate it so that we can hopefully limit the damage that has already been done here. We don’t have much time. In less than four years, this land in the heart of the Theater District will belong to Marriott for a song.
Our City faces billions in deficits in coming years. City Hall needs to reexamine this agreement and do whatever it can to recoup some of the $345 million that taxpayers have lost to this boondoggle.
John C. Liu is New York City Comptroller.
Read the Comptroller’s financial audit: Audit Report on the Compliance of the Marriott Marquis with Its City Lease Agreement (February 11, 2013).