JP Morgan Chase (NYSE:JPM), U.S’s largest bank, will build a huge corporate campus with twin-towers at a cost of $6.5 billion in Manhattan’s far west side. Negotiations with the city and state officials are underway for a better incentive package for Chase since this would be the largest real estate project for any firm in the history of New York City. In June, the bank came up with the plan to build twin-towers, 60-story and 40-story, with space equal to two Empire State Buildings at Hudson Yards on the north of 33^rd street between 10th and 11th Avenues for its 16,000 employees.

However, the city and state face political risks as far as this deal is concerned as Chase wants over $1 billion in concessions while slicing its payroll in NYC. Governor Andrew M. Cuomo would most likely be under a lot of pressure from his critics if he allows substantial subsidies and incentives for being too willing to entertain corporate and real estate firms for financial assistance during re-election campaign.  While for Democrat Mayor Bill de Blasio, an opponent of corporate subsides, favoring the project would be quite tough and resisting it would put him under criticism for indifference towards city’s biggest employers.

JP Morgan Chase (NYSE:JPM), even after reducing its Concession Wish list, has maintained that the benefits due to the deal would be far greater than the value of subsidies or concessions. State officials, rejecting any possibility of $1 billion incentives at Hudson Yards, are formulating a more feasible offer even though the agreement is still uncertain.

NYC’s innovative builder, Related Companies is constructing two office towers for Time Warner and Coach at the adjacent railyards as part of its $15 billion development plan. It also possesses both the sites where Chase wants to construct towers. So the bank has to strike a deal with Related to purchase the sites without the condition that Related would construct Chase’s twin-tower headquarters.

Among the bank’s long list of concession is reduction in the mortgage recording tax, transfer tax and sales taxes on construction material. It also includes concessions like seeking job-training grants, subsidized power, financial assistance and an underground corridor interconnecting both buildings which is likely to incorporate additional changes in the newly built No 7 subway station.

In order to develop parks, new boulevard and extension of No 7 subway line to Hudson Yards, Bloomberg administration issued $3 billion bonds. They were hopeful that debt payments would be made through development fees and taxes from new towers but due to slow development, the city has to annually pay more than $130 million from its budget. Supporters of Chase (NYSE:JPM) proposal claim that city would no more be incurring debt payments if the bank’s construction is approved.

Currently, JP Morgan Chase (NYSE:JPM) headquarters is in two buildings at Park Avenue and Madison Avenue which can be sold at a premium cost. It has 20,000 corporate employees in the city excluding employees in 758 branches. JP Morgan Chase (NYSE:JPM) has been planning to move its technical and operational employees to lower-cost locations elsewhere in order to reduce its cost in New York.

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