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A Fascinating Story of Institutional Failure and Systemic Problems
in How the City of New York Does Business

A Response to the Audit of  the Times Square Marriott Marquis

by Paul Hanson
February, 2013

The recently published audit by the office of Comptroller John C. Liu (“Liu targets city's Marriott Marquis lease”) contains a fascinating story of institutional failure and systemic problems in how the City of New York does business, but should be seen for what it really is: an attempt by a politician with higher ambitions to buttress his support on the left and feign the cry of “victim” on behalf of the public.
Based on an interpretation of agreements signed between the Empire State Development Corporation and the hotel in 1982 and 1998, the audit reads like an attempt to drag Marriott through the mud and shake down its flagship Times Square hotel for a massive sum – which the report itself admits is largely uncollectible, the statute of limitations having expired over seven years ago. It is also a shot across the bow of any hotel that thinks it – or more accurately, whose employees think they – have the right not to be compelled to join a union, as the Marriott Marquis has long been known as a non-union standout in an industry with a strong organized-labor presence. The renowned political “ground game” of the New York City Hotel Trades Council would be a major asset to any mayoral effort, and by releasing such an audit at this formative point in the campaign, it seems that Comptroller Liu is doing his version of Christine Quinn’s attention-grabbing New York magazine cover photo.
Nowhere in the audit is there any mention of the underlying problem, which is the thicket of quasi-governmental entities that have become an integral part of doing business anywhere in New York State. These entities, including the Empire State Development Corporation and the scores of Industrial Development Agencies and similar authorities statewide, dispense special privileges and exemptions (most notably, from property taxes) that invite abuse of the public interest. Their state-granted power, and the practice of cutting deals such as PILOTs and leases - those mentioned in the audit being a perfect example - destroys even the possibility of there being a level playing field upon which businesses can compete.
As long as this continues, losses such as those alleged by the Comptroller’s report will be borne by the people of the city and state of New York, rather than by shareholders and businesses who have risked their capital in the marketplace.

Paul T. Hanson

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