The Bloomberg administration is preparing to hand another $328 million in tax breaks to its favored developer, The Related Companies, for … get this … a fancy shopping mall and a high-end office skyscraper in the Hudson Yards project on the west side of Manhattan. [A early mockup of the finished site is at right.]
The board of the city’s Industrial Development Agency, an off-shoot of the Economic Development Corp., is slated to hold a public hearing on the whopping proposed tax breaks on Oct. 10.
James Parrott, deputy director and chief economist of the Fiscal Policy Institute sharply criticized the giveaway. “It is the height of fiscal irresponsibility for the NYC IDA to provide massive taxpayer subsidies to a Manhattan luxury mall,” he tells the Voice.
The IDA awarded another Related skyscraper on the site called the South Tower $106 million in tax breaks. The Independent Budget Office says the move will mean that the city is going to have to pump yet more money than expected into Hudson Yards to pay for the 7 subway line extension. “It also undercuts a shift in city policy away from showering retail projects with tax breaks,” the IBO said.
In other words, you, taxpayer, are going to foot the bill for this.
To some, it feels a little like a bait and switch. Back in 2006, then IDA chairman declared that the tax breaks would be more than repaid by the new growth. The revenue was then supposed to be used to finance the extension of the 7 subway line into the area.
The city would have had to make up the difference with its own funds.
As the IBO points out, what’s happened instead is the pace of development has been slower than expected, and, from 2006 to 2012, the project has generated $113 million less than anticipated. And the city has had to fork over $374 million to cover the subway extension debt service and other costs.
“Giving up tax revenue that would have come from the shopping mall means the city’s tab will continue to grow,” the IBO says.
Parrot says the proposal reminds him of how tax breaks approved by then-Mayor Rudy Giuliani drained funds from the city treasury, forcing Bloomberg to raise taxes 10 years ago.
“It’s bad enough that the City is pouring hundreds of millions of dollars in tax breaks into Hudson Yards office buildings after taxpayers foot the bill for extending the #7 train to this project’s doorstep,” Parrott adds.
John Fisher, who runs Tenant Net, a bulletin board on development and housing issues, says, “It smacks of cronyism. It’s typical of how Bloomberg treats his friends. And if you are taking away tax revenues, you won’t have the money to pay for the subway extension, and then that money has to be covered by the city budget.”
Tellingly, spokespeople for Mayor Bloomberg and City Council Speaker Christine Quinn, who received campaign donations from Related, did not respond to Voice inquiries.
A spokesman for democratic mayoral candidate Bill de Blasio would not comment directly on the proposal, but said, “If elected, a de Blasio administration will of course review all projects with any eye to maximizing affordable housing, creating good jobs and protecting taxpayer’s interests.”
A spokeswoman for Republican mayoral candidate Joseph Lhota did not return a message.
The Related Companies has long been a favorite of the Bloomberg administration, all the way back to when Daniel Doctoroff was deputy mayor. He and Related CEO Stephen Ross were friends and former business partners.