Mayor David N. Dinkins of New York City announced yesterday that Bear, Stearns & Co., a major New York-based securities firm that serves as one of the city's senior bond underwriters, has decided not to move 1,500 of its employees out of the Big Apple.
Fearing the move would cost the city $200 million in lost tax revenues, squeezing an already battered local economy, city officials assembled a package worth $44.6 million to entice the firm to stay.
The firm, which had been eyeing locations outside the city, has agreed to move 1,500 employees in early 1992 from three Manhattan locations to the Metrotech Center in downtown Brooklyn, a $1 billion commercial, academic, and high technology office complex. The firm signed a lease for 13 years.
Consequently, the firm's thumb-s up to the city earned it a package of incentives never before offered by city officials. The goodies include tax-abatements, a $500 per-relocating employee tax credit over 12 years, a reductin on energy costs, and a yet to be approved plan in which the city will provide electricity to Bear Stearns's 245 Park Avenue headquarters. Of the total package of incentives, over $17 million was granted at the discretion of Mayor Dinkins in the negotiations.
City officials said that Bear Stearns' employees generate about $1.4 billion in annual revenues to the city's economy in addition to the $65 million in annual direct taxes paid to the city and the state.
About 1,800 employees of the firm will remain in three other Manhattan locations. The firm, once a co-manager in the city's bond syndicate, graduated to a class of five senior managers in June 1990 through a selection process initiated by Mayor Dinkins and city Comptroller Elizabeth Holtzman.
"I commend Bear Stearns for its decision to keep these 1,500 employees in New York City, and I am extremely pleased and proud to welcome them to downtown Brooklyn," Mayor Dinkins said at a press conference in City Hall. "Their decision once again validates the city's commitment to the development of business districts in all boroughs of New York."
Another player involved in keeping the firm in the city was Sally B. Hernandez-Pinero, deputy mayor for finance and economic development. Ms. Hernandez-Pinero said, "Bear Stearns has made a commitment to our city that not only means jobs and revenues for our citizens and the city's coffers, but, in addition, it demonstrates one of the ways that our city will continue to compete successfully in the region, in our nation, and internationally."
The city is still dangling carrots in front of two other securities firms and bond co-managers: Smith Barney, Harris Upham & Co. and Morgan Stanley & Co. A city official said there was no word yet on the progress of the negotiations.
In 1988, when Merrill Lynch & Co. announced it would move 2,000 employees to New Jersey, a chagrined Mayor Edward I. Koch booted the firm down to co-manager from senior manager of city bonds. The firm was reappointed to senior manager in May 1990.