Q&A
Discussion of increasing city lease payments despite shrinking workforce and lower market rents
1:50:42
·
4 min
Council Member Restler questions the 20% increase in city lease payments over the last five years, despite a shrinking workforce, increased remote work, and lower market rents. Commissioner Molina attempts to explain the reasons for this increase.
- Restler notes that city lease payments have grown from $1.2 billion in FY 2020 to about $1.5 billion in FY 2024
- Molina explains that many real estate deals take 2-3 years to process, so current increases reflect decisions made in previous administrations
- Molina also cites the migrant crisis as a factor requiring additional space
- Restler expresses concern about the decision-making process, particularly regarding the 14 Wall Street lease
- The discussion ends with Restler reiterating his concerns about ethical issues and calling for a comprehensive review of Deputy Commissioner Hamilton's real estate transactions
Lincoln Restler
1:50:42
I appreciate that.
1:50:43
It's just unusual that we have seen So many parts of DCAS shrinks significantly during these 3 years, and yet deputy Mister Hamilton has had the approval to dramatically increase both the active and budgeted head count of his unit.
1:51:00
By 33%.
1:51:01
I don't think there is a I'm not sure there is another I think any other deputy commissioner in the city of New York would love to have experienced a headcount increase during this this administration when the city has shrunk so significantly.
1:51:15
To see such a massive increase under deputy commissioner Hamilton speaks to support from city hall, support from OMB, that he and his team are receiving, that others across the breadth and entirety of the administration quite simply are not.
1:51:28
I'm just gonna ask one more question, and then we're gonna try again on the we'll see how how how we do on this video.
1:51:36
Since FY 2020, over the last 5 years, we've seen Citi lease payments grow by about 20%.
1:51:43
From 1,200,000,000 in FY 2020 to about 1,500,000,000 in FY 24.
1:51:49
And as I mentioned and as as customer brewers mentioned and others, the city workforce shrunk dramatically during that time period.
1:51:57
Remote work policies are being implemented further reducing our need and demand for space.
1:52:02
I know you're working on some initiatives to advance those goals and make things work better and more cost effectively.
1:52:09
But In addition to those changes, asking rents for office spaces are down about 10% over these 5 years.
1:52:18
So shrinking workforce, increased use reliance on remote work, office space rents are down citywide, Why has our lease portfolio continued to expand so much during this time, especially under Deputy Commissioner Hamilton's leadership?
Louis Molina
1:52:34
So I think it's important to point out that a lot of the majority of the Israel Estate deals are 2 to 3 years in a process.
1:52:42
And what you're seeing now is not only the effects of those 2 or 3 years of lease deals that were in a pipeline that crossed over 2 administrations, a migraine crisis that that required the city to find space, to house over 200,000 individuals that have come through our city and manage that issue.
1:53:03
And in one hand, you're you're casting as negative aspersions on the situation regarding leasing.
1:53:13
But when we found an over $31,000,000 savings in the 14 Wall Street versus 250 Broadway, Europe said that we got a lower price of offer that saved the city tax is over $31,000,000.
1:53:25
Like, I I don't understand that.
Lincoln Restler
1:53:27
Well, I'm always happy when we say taxpayer dollars.
1:53:29
I'm confused about the process that unfolded in this case.
1:53:32
I'm happy to to to go back through this with you one more time.
1:53:35
It sounds like you'd like to.
1:53:36
So best and final offer was selected for a different building.
1:53:40
Deputy Commissioner Hamilton unilaterally chose to go in a different direction to support a building, the owner of whom the owner of which is given generously to the mayor.
1:53:49
No return offer no return in the negotiations was made back to 250 Broadway to see if they could compete with the new price.
1:53:56
My understanding is the numbers that you've shared are not accurate in terms of the cost the 250 Broadway was prepared to take on to renovate the space, to make it inhabitable, for DIFTA.
1:54:06
I'm not convinced that the cost savings are as significant as you're laying out.
1:54:10
I'm even more concerned about that process.
1:54:12
And the fact that deputy commissioner Hamilton had such wide latitude and discretion to be able to send these lease agreements and license agreements wherever he thought made the most sense.
1:54:20
And clearly, where city hall thinks makes the most sense.
1:54:23
And despite all of these open questions, all of these concerns, your lack of awareness about the very generous donations that the building owner at Fourteen Wall has made to this administration, you're unwilling to pull the the application back to revisit it, to research it, you're unwilling to, frankly, do a comprehensive review of all of deputy commissioner Hamilton's real estate transactions that raise very significant ethical concerns.
1:54:46
So that's my concern.
