City and state officials are negotiating with JPMorgan Chase over a potential deal in which the nation’s largest bank would build a vast $6.5 billion corporate campus with two high-rise towers in the new commercial district on the Far West Side of Manhattan.
The talks, which involve one of the largest real estate complexes for a single company in New York City history and a large package of incentives for Chase, have reached a feverish state after nearly falling apart this week.
The negotiations are so delicate that few people are willing to discuss them publicly for fear of alienating one side or another.
But a deal with the bank poses political risks for both the state and the city. Chase had initially sought, by one account, more than $1 billion in concessions from the city and the state while it continues to pare its payroll in the city. According to executives and officials, Chase wants to build the two towers — whose total space would be the equivalent of about two Empire State Buildings — at Hudson Yards on the north side of 33rd Street, between 10th and 11th Avenues. They would become home to 16,000 employees.
.....The bank, however, has insisted that the benefits from the proposed deal would outweigh the value of any concessions or subsidies, especially since Chase would have to buy development rights from the city and make certain annual payments in order to erect the towers.
The bank’s “wish list” of concessions, however, has shrunk significantly in recent days. And the talks have picked up momentum, although a deal is far from assured. State officials are creating a counteroffer.
“There’s no way that the city would entertain a demand for a billion dollars in additional incentives at Hudson Yards,” said Alicia Glen, the deputy mayor for economic development. “We have always been willing to engage with them in a dialogue about how we could be helpful in making a move more feasible.”
.....But Chase must also come to terms with Related, which owns the two sites where the bank hopes to build. The bank wants to buy the property but it does not necessarily want Related to build its new headquarters. Related recently suggested that Chase build one of the towers and occupy half of the Time Warner building, a plan that the bank is likely to reject.
Chase first approached city and state officials in June with the idea of building on the West Side property. Under the proposal, Chase would build a 62-story tower and a 40-story tower, for a total of nearly four million square feet.
“We don’t have a deal yet,” Related’s chairman, Stephen M. Ross, said on Thursday. “I don’t know if we can make one. A lot depends upon the city and the state.”
As is often the case in these kinds of deals, the bank drew up a lengthy list of possible concessions. Chase wanted to cut the mortgage recording tax, the transfer tax and sales taxes on construction materials. It also sought job-training grants, low-cost power from the state, an underground passageway between the two buildings that would require alterations to the newly built No. 7 subway station and financial help with reinforcing the foundation.
....The Bloomberg administration issued $3 billion in bonds to pay for parks, a new tree-lined boulevard and an extension of the No. 7 subway line from Times Square to the spot where Chase wants to build the new towers.
Officials at the time had assured skeptics that development fees and payments in lieu of taxes from new towers would cover the debt payments. But development has been slower than anticipated, prompting the city to take more than $130 million from the city budget to make the annual debt payments.