The Economic Development Corp. has not only provided a wealth of job opportunities for New Yorkers but also given banks plenty to do.

The agency has kept marquee tenants like Conde Nast publishing company, the New York Mercantile Exchange, Marriott Corp., and Bear, Stearns & Co. in New York City by offering them tax incentives to stay and create job opportunities.

So far, the city has granted 33 tax abatements worth a total of $600 million.

The corporate retention program has been well received by bankers because it has generated sizable real estate construction projects that they are eager to finance, although similar projects stung them with losses just a few years ago.

Reports recently emerged that Reuters and the Rudin Organization, a New York developer, were in talks with the Economic Development Corp. to build an 844,000-square-foot project at Times Square. The $340 million project would be on property controlled by Prudential Insurance Co.

Prudential's Capital Group is said to be making a $250 million construction loan to finance the project.

A spokeswoman for the project said no agreement has been signed between Prudential and Reuters, though things are "moving in that direction." Arrangements for the loan are "even more preliminary," she added.

Earlier this year Bank of New York Co. led a $340 million loan to finance construction of 4 Times Square, a 1.6 million-square-foot office space being developed by Douglas Durst. Conde Nast publishing company got a $10.75 million tax incentive from the development agency to move into the building.

"I think that the support of the tax abatement programs, such as provided by the EDC, are very important to commercial real estate construction in New York," said Robert J. Mueller, chief credit officer at Bank of New York.

"Generally speaking, the rents that commercial office space commands in New York are somewhat below what it needs to be for a new building to be economic," Mr. Mueller said. "Without those abatements in midtown and downtown, the rents would not be high enough to justify the cost of new construction."

James Fitzgerald, a senior vice president at Credit Lyonnais, agreed. "I think that the structure is creative and usually is designed to help foster the new developments in a way that makes good economic sense," he said.

Credit Lyonnais recently co-led with Hypo Bank a $68 million loan to back the construction of an entertainment complex at Times Square. The developer, Forest City Ratner, broke ground on the $120 million project just a few weeks ago.

Banks are eagerly lending to the real estate industry because margins on those loans are fatter than on other commercial and industrial loans.

Banks made $76.4 billion of construction and land development loans in 1996, an 11.2% increase from the year before, when they lent $68.7 million, according to Sheshunoff Information Services, an Austin, Tex., affiliate of American Banker. Still, that's only half as much as in the late 1980s, the peak of the last cycle.

Though lenders are hardly gun-shy, market participants concede that the growth of securitization and the trend of developers' contributing significant equity to projects will prevent the sorts of mistakes that dogged the last cycle.

"This generation of bankers lived through a difficult economic time and saw so many of the loans in the 1980s go bad," said broker Mary Anne Tighe, an executive managing director at Insignia/ESG. "The collective memory of people who would normally be active" is "still too vivid."

As a result, bankers are "still extremely careful and cautious," Ms. Tighe said.

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