Dan Steinberg

City Lets MetLife Off the Hook

The board of the city's Industrial Development Agency approved a deal on Tuesday that lets Metropolitan Life Insurance escape its 2001 subsidy agreement with the city, in which the company received $27 million of incentives for relocating 1,700 jobs to Long Island City (MetLife plans on moving them back to Manhattan). The deal was made without any public process, which was both a strategic blunder and a violation of the public trust.

The IDA defended the move because it requires MetLife to pay a $5 million fine and keep a percentage of the Queens facility occupied through 2014. But the IDA press release didn't mention that MetLife would have owed the city about $24 million for breaking the terms of the original deal due to its strong clawback provision (money-back guarantee).

To be sure, strengthening commercial centers in the outer boroughs is a commendable policy objective and keeping MetLife workers in Long Island City is important for that reason. But the overall settlement was not favorable for the city, especially because it sets a precedent that commercial subsidy deals are not set in stone. On the heels of Mayor Bloomberg's forceful statements that incentives are not required to keep Merrill Lynch and other footloose firms in the city, the MetLife deal sends a mixed message to the business community and opens the door to more subsidy abuse.

The IDA chose not to notify the public or hold a hearing before its board voted on the MetLife deal, despite the fact that the IDA hearing docket routinely includes modifications to subsidy agreements from previous administrations (usually when approving that unused tax breaks be extended to new locations--for example Bear Stearns, AIG, Hearst, CBS, the list goes on). Even though a hearing was not required by law in the case of MetLife, this was a failure to uphold the principle of transparency and a strategic mistake that left the city with less negotiating leverage.

What's worse is that the city chose to conceal that MetLife was breaking its commitments just as the company was ignoring pleas from Council Members, housing advocates, and tenants to ensure its sale of Stuyvestant Town and Peter Cooper Village will not jeopardize the affordability of the complex. The $5.4 billion sale certainly makes the city's leniency toward MetLife that much harder to swallow.

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Posted at 9:26 AM, Nov 16, 2006 in Government Accountability
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