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New York Diamond Tower

Gary Barnett, a former Belgian diamond trader, plans to construct a 725,000-square foot, $433.5 million New York Diamond Tower on West 47th Street, including modern office space, underground parking, a maximum-security vault and a museum. The developer promises that his tower will restore the district as a world center for the diamond trade. The developer promises 520 to 1,320 new jobs. Based on those jobs the City’s Economic Development Corporation has proposed a $37.5 million subsidy package over 10 years for the project, which consists of payments in lieu of City property taxes, exemption from City and State sales and use taxes, and exemption from City and State mortgage recording taxes.

Landlords and tenants on 47th Street have mobilized against the proposed tax incentives, hiring lobbyists and publicists to go against those employed by the developer at a city Industrial Development Agency hearing. Opponents of the plan argue that the city's proposed subsidy would push the tower’s rents below market rates, serving only to poach tenants from other buildings in the Diamond District and that it is illogical for the city to give incentives to commercial construction in Midtown, where the commercial real estate market is booming, with low vacancy rates and high rents. City officials say the tax incentive offered to Mr. Barnett is less than what he had initially sought and is tied to the number of jobs the building creates. They say adding discounted, concentrated, and modern space to the district would boost the stagnant diamond industry, which is on the verge of hemorrhaging jobs to other cities and countries. Further they argue that the incentives are required to keep the new tower, expected to cost more than $400 million, affordable to diamond industry tenants.

The city's Industrial Development Agency approved the subsidies on November 14th, 2006. To actually receive the breaks, the developer must lease at least 65 percent of the new building with diamond- and jewelry-related occupants and at least 20 percent with businesses that are new to or expanding in the city.