New York state’s chief economic development agency will make up to $100 million in loans available for diamond and gem companies that want to buy space in the new International Gem Tower.

Empire State Development announced the availability of the Job Development Authority (JDA) loans at a press conference held Thursday at the agency’s Manhattan offices. During the press conference both Empire State Development Chairman Dennis Mullen and Gary Barnett, president of tower developer Extell Development Co., said the tower would help the New York diamond and gem industry–comprised of many small business owners occupying dilapidated office space scattered throughout the Diamond District–remain competitive with other centers worldwide.

The tower’s amenities will include high-tech security, a private health and fitness club and restaurants.

“All the other diamond trading centers have new buildings,” Barnett said, while noting that the JDA loans were key in a time when it is difficult for small-business owners to obtain loans. The agency projects that the tower construction and the ability of firms to own space inside will preserve and create up to 3,000 jobs. Of those jobs, the agency projects that 30 percent of the positions would stem from jewelry industry tenants who relocate to the tower and expand or new companies moving into the Diamond District from elsewhere. The remainder of the jobs would be added in other sectors, such as construction and service jobs, among others.

But not everybody is on board with cash-strapped New York state making $100 million in loans available to the gem and jewelry industry.

In an article published Thursday morning in The New York Times, “Gem Tower Tenants Could Receive Low-Interest Loans,” the director of Good Jobs New York, an advocacy group that tracks government subsidies, blasted the state for giving “subsidies” to an industry that is so well-established. In the article, the director said catering to the real estate and diamond industries seems “tone-deaf” to the needs of average New Yorkers.

Asked about these criticisms on Thursday, Raizy Haas, senior vice president of property management and development with Extell, said it was a misconception that the loans made available to tower tenants are low-interest loans. They are traditional loans with “typical” interest rates, she said.

“These are not subsidies,” Haas said. “There’s no favoritism. There’s no preferential treatment.”

The 34-story International Gem Tower is under construction on West 47th Street between Fifth and Sixth Avenues in the Diamond District. At the tower’s official launch in May 2009, attended by New York City Mayor Michael Bloomberg, the completion date given for the tower was mid-2011.

On Thursday, Haas said the projected finish date for the project is now the end of 2012. She said about 140,000 square feet of the 748,000 square feet available in the facility is under contract.

Companies that have signed on to purchase space in the tower include security firm Malca-Amit, Diamond Trading Co. sightholders A. Dalumi Diamonds, Sahar Atid Diamonds and Yerushalmi Bros. Diamonds, and the Gemological Institute of America, which will occupy an entire floor.

Earlier this month, the U.S. Department of Commerce approved the tower as a foreign trade zone, meaning business tenants will be able to import foreign merchandise without customs entry or the payment of U.S. duties until the goods are sold. The state estimates that more than 90 percent of the diamonds that enter the United States go through New York City, and that most go through the Diamond District.

When asked if the completion date and the amount of space purchased were in line with the project’s projected goals, Haas said, “for the most part.”

Mullen added that given the current economic challenges, the gem tower project is closer to being on schedule than most of the projects in the state.

Source: National Jeweler Network