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NY attack may cost $105B
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October 4, 2001: 5:29 p.m. ET
Clean-up expense, lost economic activity included in official estimate
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NEW YORK (CNNfn) - The attack on the World Trade Center will cost New York City as much as $105 billion over the next two years, the city comptroller's office said Thursday, in the first official estimate of the costs from the Sept. 11 attack.
The cost of the Sept. 11 attacks, in which terrorists slammed two commercial jets into the trade center's 110-story twin towers, destroying the complex and leaving more than 6,000 people missing or dead, includes $45 billion for the value of the buildings destroyed and loss of taxes derived from the victims.
It also includes $45 billion-to-$60 billion for on-going costs, including lost economic activity during the next two fiscal years, Comptroller Alan Hevesi said in the report.
In addition to the World Trade Center, terrorists slammed another plane into the Pentagon near Washington, D.C., killing hundreds. A fourth hijacked plane crashed in a Pennsylvania field after passengers evidently overtook the hijackers.
The loss of the complex will erase $1.3 billion from the city tax rolls in fiscal 2002 and 2003.
The report estimates $21 billion in lost business activity for the city in fiscal 2002, which ends June 30. Wall Street firms are projected to have lost $7.5 billion in economic activity stemming from the closure of the New York Stock Exchange, Nasdaq and American Stock Exchange for four days.
New York hotels, restaurants and theaters lost an estimated $2 billion.
Retailers and wholesalers lost $1.7 billion and insurance firms lost $1.3 billion, the report said.
Insurance is likely to cover only about a third of the total cost, about $37 billion. Additionally, New York could lose 115,300 jobs this year, though that could be partially offset by new jobs created for clean-up, repair, construction and security, the report said.
On Wednesday, the city raised $1 billion through the sale of bonds to meet the clean-up costs, a small fraction of what's needed.
President Bush has already pledged $20 billion in federal recovery aid for New York, Washington, D.C., and Pennsylvania, but just how much New York will receive remains unclear. Bush has also said he will seek further aid for those areas.
The report said it was also not clear how much aid could come from New York State. A spokesman for State Comptroller Carl McCall, whose office will be responsible for paying out any federal aid, said it remains unclear exactly how much aid will come into the city.
The private sector could also play a major role in the city's recovery.
"We're going to have to restore our business community. We're a very vibrant people. We're the strongest, smartest people in the world and we will rebuild that infrastructure that was lost," Hevesi told CNNfn's Street Sweep Thursday. (WAV 447KB) (AIFF 447KB)
A spokesman for New York Gov. George Pataki was not immediately available, but the governor has estimated that the economic impact to the entire state from the loss of taxes and other revenue derived from the victims to be $1 billion-to-$3 billion during the next 18 months.
"You cannot reduce to dollars and cents the losses New Yorkers have suffered from the vicious World Trade Center attack, just as there is no way to put a dollar value on the heroism and determination of our response," Hevesi said in a statement. "But to obtain the resources we will need to rebuild and create a better and stronger New York City, we must try to understand in dollar terms, what the attack cost our economy."
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Cleaning up the World Trade Center attack and a recovery could cost New York $105B (CNN/FILE) | |
Hevesi also said the federal and state governments already have "proven that they are committed to helping us."
"What this study makes clear is that what the President and Congress have committed so far 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."
Included in the cost is the price of rebuilding the World Trade Center as smaller buildings, estimated at $6.7 billion. Repairing and restoring other damaged buildings will cost about $5.3 billion.
Replacing and repairing infrastructure will cost about $9.4 billion, including $4 billion for subways, $3 billion for telephone, electric, and other utility systems, and $2.4 billion in losses for the Port Authority, including the PATH train, which transported New Jersey residents to and from the World Trade Center each day.
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...what the President and Congress have committed so far 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
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Alan Hevesi
New York City Comptroller |
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The value of furniture, fixtures, employee property, computer systems, vehicles, inventory in stores and other lost property is estimated at $12 billion. Securities firms alone wracked up $3.2 billion in technology losses.
Considering the average of how much the 5,600 victims might have earned over the course of their working lives, the city economy lost $11 billion, the report said.
The city is initially paying for clearing the area where the towers collapsed, nearly half a million tons of steel, concrete and debris.
Hevesi has agreed to register four emergency contracts worth $1 billion for cleanup with an additional $6 billion earmarked for stabilization and remediation.
The city anticipates another $7 billion in police, fire and sanitation overtime costs and replacing destroyed city vehicles, road rebuilding and burial costs.
Treating those injured and suffering the long-term trauma of the attack could cost $3 billion.
In light of the costs, Hevesi made several recommendations, including:
Expediting payment of disaster grants and loans to businesses
Providing tax incentives and utility cost breaks to businesses
Expediting microlending activities for small businesses
Establishing a state/city authority to rebuild the Trade Center quickly
Establishing a security commission led by the police commissioner
Though the cost is staggering, some economists believe the flood of economic aid expected, coupled with recent interest rate cuts and other fiscal stimuli such as tax cuts and breaks, means any recession the United States falls into is likely to be a short one.
Click here for CNN.com's in-depth report – America's New War"
"There's already a lot of stimulus in the pipeline, and there's more to come. So there appears to be an ever-growing amount of fiscal stimulus, which means any recession will be fairly shallow," Wayne Ayers, chief economist at FleetBoston Financial, said.
Others note one the cost of rebuilding New York does not take into account the potential effects that concern over future terrorist attacks, particularly following a U.S. military retaliation, could have on the city.
"I think the more serious long run issue for the community is the psychological effect," said Lawrence White, an economics professor with the New York University Stern School of Business. "Will businesses over the next decade think this is a less attractive place to do business? Will individuals think this is a less attractive place to live? To visit? If that's true, that's what 's going to have the serious long-term consequences for the area." 
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