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New York City Comptroller Brad Lander, a staunch critic of public subsidies to fund private developments, admitted that the Manhattan megaproject Hudson Yards has delivered the city far more revenue than predicted.
Lander, a Democrat and former member of the New York City Council, had been outspoken in opposition to then-Mayor Michael Bloomberg's administration’s financing of the development, saying it “used the city’s credit card” to fund it. But in a recent interview, he changed his tune.
“One really interesting thing we looked at this month, in the Class-A, in the trophy parts of the market, things are actually really rebounding well,” Lander said during an interview on NY1 last week. “Hudson Yards is giving about $200M more a year than we expected, and that’s going to grow to $300M.”
“As it has played out, Hudson Yards is financing that debt and now returning, again, a couple hundred million dollars more to the city than we expected,” he said later on in the interview. “So this is one place I've got to say I got it wrong.”
The city issued bonds to pay for infrastructure like the extension of the 7 subway line, and if the revenue came in short, taxpayers would pay the price. The subway extension cost $2.4B, according to The New York Times, while $1.2B was put aside for the cost of 4 acres of park and open space. The city council paid $359M in interest on bonds when revenue fell short.
The full cost of the tax breaks and the assistance amounted to $6B, according to a 2019 analysis from The New School.
Hudson Yards is the largest private development in U.S. history. It is being co-developed by Related Cos. and Oxford Properties on a deck over train tracks between 10th and 12th avenues and from 30th to 34th Street.
“I don’t think parks and subways are subsidies. That’s the role of government to encourage growth of the city,” Related CEO Jeff Blau said at the official opening of the site in 2019, noting Related was not specifically given the tax abatements for development. “The city put those abatements in place to encourage companies to come here. Hudson Yards would not have been here today without that.”
While it hasn't drawn widespread critical acclaim, Hudson Yards' better-than-expected tax revenues are critical at a moment when commercial real estate values — a huge slice of the city's revenue pie — are declining. The project has some of the highest office rents in the city, with Wells Fargo, KKR and BlackRock among the occupants of its office towers.
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