April 29, 2004

NYC to be on hook for $1 billion in Hudson Yards debt

Information about New York City's $5-billion-plus Hudson Yards plan continues to trickle out. At a panel this morning sponsored by the Fiscal Policy Institute and Good Jobs New York, Alan Anders of the city's Office of Management & Budget outlined the latest figures:

• $2 billion to extend the #7 subway line, $400 million to deck over a railyard between 10th and 11th Avenues, and $400 million for land and infrastructure costs would be paid for largely through PILOTs, as discussed back in February.
• A $1.4 billion expansion of the Jacob Javits Convention Center would receive $350 million in money from the Battery Park City Authority, $350 million from "refinancing" of existing state Javits bonds, $500 million from a $1.50/bed hotel tax, and a $200 million private investment from unknown sources.
• The Jets stadium itself - remember the stadium? - would get $600 million from, well, he'll get back to us on that one.

Anders also revealed a new financing twist: Since new development wouldn't start generating PILOTs until 2010 at the earliest, the city would cover the first few years of bond payments with $1 billion short-term borrowing called "commercial paper," which will be backed by city income and sales taxes. Said Anders: "The mayor has committed that up to a billion dollars in city resources are available. ... It's a contingent liability on the city's balance sheet. That is absolutely true."

Translation: If the development fails to materialize, those debts would be paid out of city income and sales tax revenue - in other words, from the general fund, exactly what Mayor Mike Bloomberg has promised would not be the case.

Also left uncertain was what, if anything, the city plans to pay the Metropolitan Transportation Authority for the rights to build a stadium and several office buildings over its rail yards. (Newsday reports today that the MTA may skip public bidding or a formal appraisal for both the West Side yards and the Brooklyn site that Bruce Ratner desires for his Nets arena.) Jim McSpiritt of the city's Law Department said that figure is still to be negotiated, but insisted: "There is no value to the eastern rail yards unless you build the #7 train."

Two weeks ago, you may recall, former MTA chief Richard Ravitch estimated the yards have a value of $3 billion. Break out the pugil sticks!