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The Cost of Hudson Yards Redevelopment Project – The New School SCEPA

(SCHWARTS CENTER ON ECONOMIC POLICY ANALYSIS) July 26, 2021

SCEPA’s working paper on the costs of the city’s Hudson Yards project was featured in the New York Times, New York 1Gothamist, New York Magazine’s Intelligencer, CityLab, the Guardian, and a New York Post editorial, among others. The article below was featured in Urban Matters, a publication of the Center for New York City Affairs

Amazon bailed on its HQ2 plans in Long Island City when residents started questioning the project’s billions of dollars in taxpayer subsidies. Unfortunately, we didn’t ask the same questions concerning Hudson Yards, now set for a March 15 “grand opening.” Why? Probably because we were told the project wouldn’t cost us anything.

In 2005, Mayor Michael Bloomberg assured city residents we could build infrastructure needed to redevelop a post-industrial stretch of Manhattan’s Far West Side without bearing the costs by using a version of tax increment financing, or “TIF.” However, 14 years later the City has spent an additional $2.2 billion in taxpayer dollars to build what we know today as Hudson Yards. That’s a far cry from being “self-financing.” And it prompts the question: Would New Yorkers have chosen to build a new commercial office district in Manhattan if they understood that rather than it being cost-free, we would end up footing a $2.2 billion bill?

Projects using TIF-type financing are described as “self-financing” based on the theory the revenue generated by a development will pay back the costs of realizing it. However, as the case of Hudson Yards shows, the theory often doesn’t reflect the reality when projects are implemented.

The City rezoned Hudson Yards and decided to build new infrastructure to incentivize commercial office development intended to stem a tide of office leases lost to New Jersey and Connecticut. Using a TIF-type financing structure, $3.5 billion in bonds was issued to finance westward extension of the Number 7 subway line to the area and build a park to wind through the projected new office buildings.

Under the definition of “self-financing” used for TIF-type projects, these bonds would be paid back by designated revenue sources generated by the project. In this case, the City created a set of revenue streams, including payments in lieu of property taxes (PILOTs) and development fees, dedicated to retiring the debt.

Source: https://www.economicpolicyresearch.org/insights-blog/the-cost-of-hudson-yards-redevelopment-project#:~:text=At a $2.2 billion cost, the Hudson Yards,Hudson Yards without creating new net economic growth.