A Billion Here, A Billion There
Some items you may not have heard amid the media blitz surrounding Hudson Yards, the stadium/convention center/office park that Deputy Mayor Dan Doctoroff hopes will soon grow like crabgrass across Manhattan's West Side: At an estimated cost of $5.5 billion and rising, it would be the most expensive city construction undertaking in recent memory. The New York Jets' stadium itself, at $1.4 billion, would be the most expensive sports stadium ever built, blasting past such monuments to excess as Philadelphia's half-billion-dollar Lincoln Financial Field and Montreal's billion-loonie Big O(we). And of that, $600 million would come out of city and state treasuries, amounting to the largest stadium subsidy in U.S. history.
Perhaps it's a measure of the power of Doctoroff's ingratiating grinor of the anesthetizing effect of the Olympics, which, it is promised, Hudson Yards will bring to New York in 2012that such a plan, in the wake of a city budget crisis, has gotten this far with relatively little public outcry. The clamor, though, is likely to soon get louder: Elected officials are only now noticing that the West Side plans would largely evade legislative oversight, even as the Independent Budget Office and the city comptroller prepare responses to Doctoroff's acres of Excel spreadsheets. Meanwhile, the city's other sports teams are readying demands for their own new pleasure palacesa string of buildings that could leave the city on the hook for a staggering $2 billion or more in stadium taxes. For a man who claimed last December that "we don't have the money to go out and build new stadiums," Bloomberg could be about to launch the stadium juggernaut that his Gracie Mansion predecessor never got off the ground.
- After more than a year of dithering, Doctoroff finally issued his new Hudson Yards finance proposal in February. Originally floated as a $3 billion plan using "tax increment financing" (TIF), a property-tax rebate scheme derided by development experts as too big and too risky, Doctoroff's dream has metastasized into a three-headed monster of a plan that would draw from numerous state and city sources.
- To extend the No. 7 subway line to the Hudson River and build a deck over rail yards west of Penn Station, the city would sell $2.8 billion in bonds backed by payments in lieu of taxes, or PILOTsagreements by developers to pay fees to the fledgling Hudson Yards Infrastructure Corporation (HYIC) in exchange for a full exemption on property taxes.
- A $1.4 billion expansion of the Javits Convention Center would get $500 million from a $1.50-a-room hike in the hotel tax, plus another $700 million in city and state funds. For the city's share, Doctoroff would siphon off Battery Park City PILOT surpluses that currently go into the general funda move that Assembly Speaker Sheldon Silver vowed to block, fuming that it would be a "slap in the face to the people who lived through the tragic events of September 11."
- Bloomberg has bragged that the $800 million the Jets would spend on a stadium would be the largest team contribution in history, and he's right. But with a staggering $1.4 billion price tagthe result of erecting a retractable-domed facility over a working rail yardthe "New York Sports and Convention Center" (as it's officially known to those who tout its use as overflow convention space during non-football season) would require $300 million apiece from the city and state as well. While the source of the city's share remains a mystery, state development czar Charles Gargano has proposed yet another TIF for Albany's portion, this time involving kicking back sales taxes on everything from ticket purchases to stadium hot dogs.
- The 32 acres of MTA land that are Hudson Yards' namesake would be handed over to the city in a "land swap," in exchange for the HYIC's extending the No. 7 line at no cost to the MTA. Transit chief Peter Kalikow has so far been cool to the ideaand little wonder, considering that estimates of the land's value start at $500 million and go up from there, at a time when the MTA is scrambling to plug an $800 million deficit.
Under normal circumstances, a project of this size would be expected to navigate a byzantine path through the City Council and state legislature. But while Bloomberg promised in February that "nobody is trying to cut anyone out" of decision making, by using the quasi-public Hudson Yards Infrastructure Corporation the city would in fact largely evade public scrutiny. This is where the switch from TIFs to PILOTs, which occupied the better part of Doctoroff's 2003, is crucial: While not empowered to spend tax money, development corporations can exempt developers from property taxes if the developers agree to pay them voluntary "fees"effectively picking the city's pocket of property-tax revenue without needing a specific vote by the council. If the gambit is successful, a handful of council zoning votes and obscure MTA committees could end up deciding the fate of the West Side and billions in public money.
Opposition would largely fall to West Side residents, including Broadway theater owners and garment workers who fear the impact on rents in neighboring districts. The biggest obstacle, though, could be bond buyers, who finance experts say could balk at the PILOT plan, which for collateral would rely on revenues from 28 million square feet of office space being built by unnamed developers, with the first building not even going up until 2010.
Then there's the mayor's new bête noire: Cablevision, owner of Madison Square Garden, which sits just four blocks from the Jets' proposed dome. When it looked like Hudson Yards might include cash for a new home for the Knicks and Rangers, Cablevision execs were all for it; now that they've been frozen out of the boodle, they've declared the stadium an unwelcome intruder, and demanded that its retractable roof be lopped off in the planning stages, so as not to compete with MSG for indoor concert bookings. (The mayor responded by suggesting he might strip the Garden of its 22-year-old property tax exemptiona turn of events that must have sparked some amusement at the Independent Budget Office, which has been pestering the city for years to repeal this $12 million-a-year gratuity.)
Cablevision's Dolan family has another reason to be steamed at Mayor Mike, of course: his teaming up with Metrotech developer Bruce Ratner on a $650 million Brooklyn arena proposalentirely funded through city money and state sales-tax rebates to Ratner, to pay off his arena loansthat would bring the New Jersey Nets across the Hudson to do battle with the Knicks for city hoops loyalties. That plan, dubbed "Atlantic Yards"what would sports projects be called today if Baltimore had just called Camden Yards "Oriole Park"?would rely on still more office towers, even as the city tries to jump-start both Lower Manhattan and a new development zone in downtown Brooklyn.
Lurking in the background are the Mets and Yankees, ready to dust off their own twin $800 million stadium plans that expired with Rudy Giuliani's term in office. New Jersey sports czar George Zoffinger recently floated the idea that if the Nets and Jets cross the Hudson, he'll retaliate by seeking to lure a baseball team westa gambit unlikely to entice either team to the swampland, but which could provide a PR boost to George Steinbrenner and Fred Wilpon in their efforts to pry Bloomberg's fingers loose from city coffers. Zoffinger quickly insisted that he didn't want to get into a bidding war, but that's exactly what it looks likeand as other cities' experience has shown, when sports giants battle, the grass needs to hold onto its wallet.
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