$100 Billion Needed to Rebuild NYC’s Economy, Official Says

New York City’s economy will need more than $100 billion over the next two years to recover from the World Trade Center attacks, according to a preliminary study released Thursday by City Comptroller Alan Hevesi.

The estimate, which significantly exceeds earlier projections, comes on the heels of news that New York’s municipal government alone is likely to face a $4-billion budget deficit later this year. And it confirms a growing perception that the nation’s largest city is facing an “economic calamity,” Hevesi said.

So far, President Bush and congressional leaders have earmarked a little more than $20 billion for combined recovery costs in New York City, the Washington, D.C., area, where the Pentagon was attacked, and in southwestern Pennsylvania, where one of four planes hijacked Sept. 11 crashed.

“Clearly, this is not enough for New York City,” Hevesi said. “What the president and Congress have committed is just a down payment on what it will take to ensure that the terrorists don’t succeed in destroying not just the two towers but also America’s and the world’s financial capital.”

Hevesi said $45 billion would be needed to cover the costs of buildings and lives lost in the terrorist attack, with the remainder for lost production during the next two years.

Among the costs, replacing the World Trade Center plus smaller buildings nearby will total $12 million. Another $9.4 billion will be needed to repair infrastructure, including badly damaged subways, telephone, electrical and other utility systems, plus an additional $2.4 billion to restore New Jersey’s damaged commuter trains.

While it is impossible to put a dollar value on the lives lost, the report projected a loss of $11 billion in lifetime earnings from the average income of New Yorkers who died in the World Trade Center attacks.

Hevesi estimated that it would cost $14 billion to physically clean up and stabilize the World Trade Center site, and another $3 billion to treat the severe trauma and other mental illnesses caused by the attack.

In calculating lost production of goods and services, Hevesi said city businesses--including Wall Street firms, hotels, theaters and restaurants--would lose $21 billion in the next fiscal year alone.

The city stands to lose 115,000 jobs in retail and wholesale trade sectors, the securities and service industries, plus airlines, restaurants and hotels, Hevesi said. But the true long-term impact, he added, will depend on how quickly the national and local economies recover.

“There is not enough space in Manhattan for all of the firms displaced from the World Trade Center,” he said. “Some are moving out of the city. Some may return when there is new space, while others may not. The impact on the city’s economy [next year] could range from $3 billion to $18 billion.”

Overall, the study estimates that $37 billion could be paid out by insurers for a variety of life, business and property claims.

The report deepened the gloom at City Hall, where budget officials revealed earlier this week that the World Trade Center attack would balloon an already projected $2-billion deficit to $4 billion. The shortfall will be caused by shrinking tax revenues, dramatically increased police and fire overtime, huge costs to replace damaged fire equipment, plus the local share of cleaning up the crash site, a task now estimated to last a full year.