The Liberty Development Corp. board yesterday approved $1.65 billion of tax-exempt Liberty bond financing for Goldman, Sachs Headquarters LLC in a move that will help the firm build a $2 billion headquarters in New York City.

Yesterday’s action cemented city and New York state officials’ resolve to keep Goldman in Lower Manhattan, where the firm had planned to build a 40-story office tower across the street from the World Trade Center site. City and state officials consider Goldman’s planned headquarters to be an integral component of rebuilding and revitalizing the area devastated by the Sept. 11, 2001, attacks.

Goldman officials this spring articulated security and logistics concerns and suspended work at the site. The possibility of losing Goldman as an anchor to the battered neighborhood spurred state and city officials to work feverishly to persuade the firm to stay.

Last summer, the Liberty Development Corp. acknowledged Goldman’s application for $1 billion of Liberty bonds to finance its headquarters. The corporation, an affiliate of the state-controlled Empire State Development Corp., sweetened the pot yesterday by approving an additional $650 million along with the original $1 billion.

Goldman, Sachs & Co. — the investment banking arm of the global company — is expected to price its own deal in September or October, ESDC officials said. The company will market the $1.65 billion of uninsured bonds in at least two series. They will be backed by Goldman’s guarantee to the Liberty Development Corp., not by project revenue.

Goldman had $95.13 billion of consolidated long-term corporate debt outstanding as of May 27, according to second-quarter results posted on the firm’s Web site. The Goldman Sachs Group Inc., parent company of Goldman, Sachs & Co., reported net earnings of $865 million for the second quarter.

Fitch Ratings rates the parent company’s debt AA-minus. Moody’s Investors Service rates the debt Aa3. Standard & Poor’s rates it A-plus.

Goldman spokeswoman Andrea Raphael declined to comment on yesterday’s Liberty Development Corp. action. Goldman does not yet have a lease with the site owner, the Battery Park City Authority. However, the board meets today and is expected to act on the lease, an authority spokesman said. A spokeswoman for Gov. George E. Pataki said officials expect to have an announcement about the project within the next few days.

If the $1.65 billion of bonds are sold as expected, Goldman will become the biggest beneficiary to date of the $8 billion Liberty bond program that Congress approved in 2002 to spur the redevelopment of Lower Manhattan after the destruction of the World Trade Center.

Of the total amount, $1.6 billion was earmarked for residential use and $6.4 billion was authorized for commercial use. About $3 billion of the commercial allotment is left, and city and state officials recently declared the remaining amount will be used in Lower Manhattan and not directed to other New York City projects, as the legislation allowed.

Board members of the Liberty Development Corp. approved the $1.65 billion yesterday with little discussion. One member asked why the amount of the bonds had been increased by $650 million. Jonathan Beyer, senior counsel of the Empire State Development Corp., responded the amount was offered after Goldman walked away from discussions with the city and state about the proposed headquarters site.

The 800-foot building would include 1.9 million square feet of office space and would consolidate most of the firm’s roughly 8,100 New York employees, currently spread among eight downtown locations, into one space.

One fiscal watchdog questioned whether Goldman deserved such a sweet deal, especially since the firm already paid taxes in Lower Manhattan.

“There needs to be due diligence on the on the economic benefit of allocating triple-tax exempt bonds for Goldman Sachs,” said Bettina Damiani, project director of Good Jobs New York, a nonprofit organization that promotes accountability in the allocation of government subsidies.

Also yesterday, the board of the ESDC approved a $25 million grant for Goldman under the World Trade Center Job Creation Retention Program, which grants federal funds to companies with more than 200 employees who commit to Lower Manhattan. The board also approved $16 million for Morgan Stanley, which recently announced it would move 2,300 employees downtown.

Last week, deputy mayor Daniel L. Doctoroff said any transaction that benefits Goldman will be justified by the headquarters’ economic impact, although he did not provide supporting statistics.

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