If Hudson Yards Got Taxpayers to Pay for the Platform, What Happens With Atlantic Yards?
The Manhattan megaproject rose from the dead thanks to little-scrutinized political and financial maneuvers. Keep watch in Brooklyn.
The expected new developers of Atlantic Yards/Pacific Park must build six towers (B5-B10) over the two-block Vanderbilt Yard, but we don’t know yet their plan to finance the platform, costing hundreds of millions of dollars, needed for vertical development.
Would it rely on cross-subsidization from even larger, more lucrative towers than initially approved, as developer Greenland USA—still nominally in charge— proposed in 2023?
Or might some financial wizardry channel public subsidy, with little scrutiny?
That latter is the surprise behind Hudson Yards, the Manhattan megaproject that, while far more substantial and self-contained than Atlantic Yards, is actually only half-done.
That suggests the need for continued vigilance, especially since, as I describe below, limited press scrutiny of actions by the developer, City Council, and Mayor greased the Hudson Yards process. Nor did the parties, notably the Council, pursue transparency.
Even substantial criticism from the Comptroller’s office, finally ventilated this past week by the New York Times, deserved a greater push when it was issued July 16.
Casino out
If you rely on the Times to stay abreast of local news, well, you might be confused about the machinations behind the Western Rail Yards, the 13-acre second half of Related Companies’ Hudson Yards, which has been hampered by the cost—once $1 billion, now $2 billion—of the required platform.
The location is between West 30th and West 33rd streets, between 11th and 12th Avenues. The platform would cover 30 tracks, used to store and service Long Island Rail Road cars. The Brooklyn platform, by contrast, would cover just seven tracks.
(Related, by the way, flirted with taking over the project from Greenland, which since November 2023 has been on the brink of losing development rights via a foreclosure. But Related pulled out earlier this year, and Cirrus Real Estate Partners, later allied with LCOR, has stepped in, and awaits certification by New York State as a “permitted developer.”)
Hudson Yards Developer Drops Casino Bid in Face of Political Opposition, the Times reported May 19, noting that casino operator Wynn Resorts pulled out of the plan, given opposition from Council Member Erik Bottcher, who’d hold sway in the City Council vote thanks to the practice of member deference.
(Hudson Yards is a city project, requiring City Council hearings and approval votes. Atlantic Yards is a state one, with approval required by Empire State Development, a state authority with board members who answer to the governor.)
New plan in
But there was an alternate plan for up to 4,000 apartments and 6.6 acres of open space. From the article:
The deal the developers have struck with Mr. Bottcher eliminates the casino, adds more apartments than would have been built under the original casino proposal and allows for more office development than the original deal that Related Companies struck with the city in 2009.
…The new plan would use revenues generated by the new buildings to help pay for the platform; a similar finance structure was used on the first half of Hudson Yards, including to help pay for an extension of a subway line to the neighborhood.
Those should’ve provoked a lot more scrutiny, since the deal already seemed done and the financial structure, in some ways similar, was by no means parallel. Also, as I’ll explain below, there were clues.
Missing the moment
Instead, the Hudson Yards plan passed at the end of June.
It took the Times until Sept. 26 online (and today in print) to report Hudson Yards Developer May Get Another $2 Billion Boost From New York, noting that the swift passage in June came with “Mayor Eric Adams and the City Council agreeing with the developer’s assurances that the complex arrangement made economic sense.”
That’s tough to assess, as a spokesman for the City Council said its finance division had conducted an “in-depth analysis” of the deal—not shown in the Times—and a mayoral spokesman claimed detailed questions were premature.
Premature? How about overdue? From the article:
But the New York City Comptroller’s office has sounded a skeptical note, writing in a recent report that the assistance approved by the City Council in June “relies on representations” from Related, and “more strikingly,” that the Council resolution “assigns no limitation on the amount of borrowing to fund additional investments.”
Actually, that “recent report”—which apparently generated little notice —was in mid-July, part of the Comptroller’s monthly report. It notes Council approval of Related’s request to allow expanded purposes of PILOTs (payments in lieu of taxes), supporting the platform, the open space, a 120,000 square foot, 750-seat K-8 public school, and payments to the MTA for rent and site acquisition.
And while a city-created entity would issue debt, paid off by those PILOTs, the “similar finance structure” is not the same as using PILOTs to pay for the extension of the 7 subway line, as in the first half of Hudson Yards.
The EB-5 angle
From the Times:
[Related spokeswoman Natalie] Ravitz declined to explain why the company, which manages properties valued at more than $60 billion, could not pursue private financing, as it did with the platform for the first phase of Hudson Yards, when the area was still an unproven investment.
That summary leaves a lot out. As the link suggests, Related financed the first phase of the platform by borrowing money at low interest rates via the EB-5 investor visa program and, thanks to its clever financial structure and arguably unethical behavior, has yet to repay most of it, at least as I reported a year ago.
In fact, a key difference between Hudson Yards and Atlantic Yards, as I wrote critiquing a paper from two University of Pennsylvania researchers, was the former’s ability to raise huge sums via EB-5 and, unlike the Atlantic Yards developers, avoid potential foreclosure when they didn’t pay back those loans.
EB-5 financing is harder to raise these days and surely more precarious in the Trump era. (I’ll write more on that.)
Since that EB-5 ship has sailed, Related had to come up with another plan.
Council transparency
“Mr. Adams announced the deal in June, but did not mention the breadth of the subsidies, which the City Council later approved,” the Times reported. That City Council, link, by the way, goes to a page for legislation passed June 30.
The only relevant press release I could find from Council was a June 11 one headlined New York City Council Votes to Pass Legislation Aimed at Reducing Opioid Overdoses and Deaths in City Jails, which, after two introductory paragraphs and then sections on nine items, including “Adding More Drinking Fountains to Parks” and “Recognizing July 2 as Thurgood Marshall Day Annually in New York City,” noted, under Land Use, proposed actions to allow for future development of Hudson Yards, including:
It will no longer include a casino.
It will include approximately 4,000 total residential units. At least 420 units, or 25% of the total number of rental units (whichever is greater), will be newly constructed affordable units.
It will have an increased amount of publicly accessible open space, from 5.6 acres to a total of 6.6 acres within the development, including at least one acre of lawn space.
A June 30 City Council press release, New York City Council Votes to Adopt the Fiscal Year 2026 Budget offered a short summary:
Preconsidered Resolution, sponsored by Council Member Justin Brannan, would approve the expenditure of payments in lieu of taxes to fund the development of infrastructure over the Western Rail Yards in support of the development of housing.
Was anyone watching?
What next?
Surprisingly, the public support still isn’t done. As noted by the Times, the city’s next mayor, surely Zohran Mamdani or Andrew Cuomo, controls the New York City Industrial Development Agency, and could scotch the subsidy plan.
Maybe that’s why Related CEO Jeff Blau has been supporting Cuomo, rather than Mamdani, a professed democratic socialist.
An Atlantic Yards parallel?
“No one ever talked about them using taxpayer-funded bond money to pay their lease payments to the M.T.A, which means that they get the land for free,” Manhattan Community Board 4 member Joe Restuccia, told the Times. “That’s just shocking.” Well, his Council Member should’ve told him.
The potential parallel with Atlantic Yards involves $11 million a year in payments to the MTA through 2030 for air rights over the Vanderbilt Yard. If the towers are enlarged, increasing the air rights and thus their value, that presumably should trigger even larger payments.
Then again, the future Hudson Yards would have 16% to 25% below-market “affordable” units, while Atlantic Yards/Pacific Park is supposed to have 35% affordable units. That said, the level of affordability is key, and the units delivered so far skew to middle-income households. Getting more deeply affordable units costs more.
A prescient prediction
In a July 1 column headlined Related’s $2B card trick, the Real Deal’s Erik Engquist noted that the rezoning for a casino was always unlikely, given opposition from a prosperous local community:
All they really wanted out of Related’s project was affordable housing, and no tower hovering over the High Line.
In the end, they got that, but at a huge cost to the city’s fisc. Instead of Related paying for a $2 billion platform to support the development over the rail yards, taxpayers will. Not a hint of protest was heard from the public, media or politicians at this massive hand-off of the financial burden.
The resolution, Engquist suggested, was what Related likely expected and planned, using the leverage of leaving the site idle, without construction jobs or housing. “Perhaps at some point, the New York Times will write an investigative story about huge subsidies going to the project, as if making some kind of journalistic discovery,” he wrote presciently.
And while Engquist is savvy enough to recognize the public costs, he noted that nearly everyone, as of then “(except the irrelevant outsider Wynn) seems pleased with the outcome,” and saluted the CEO: “Well played, Mr. Blau. Well played.”
Today, well, Assemblymember Deborah Glick is outraged, as is former Council Member Sal Albanese. But there’s no groundswell.
The sequence
In mid-April, the casino plan was approved by the mayoral-controlled City Planning Commission, but it still needed to get past Bottcher and the City Council.
Then, at the end of the month, came what 6sqft headlined Related modifies Hudson Yards casino proposal to include 4,000 housing units, swapping an office tower for two residential ones, adding about 2,500 more apartments than previously planned.
Or, as the local publication w42st put it, Developers “Think Outside the Box” to Add More Housing at Hudson Yards West:
The new plan is built on what the developers describe as an “innovative public-private financing structure,” using a payment-in-lieu-of-taxes (PILOT) program. That structure, which helped fund the eastern section of Hudson Yards…
The structure, as noted, is not exactly parallel. A New Path to Finish The yards, the developer’s (now defunct) website stated, touting the plan for housing:
The expansion is made possible by an innovative public-private financing structure with precedent at Hudson Yards. By creating a payment-in-lieu-of-taxes (PILOT) program to leverage incremental property taxes, Hudson Yards West can overcome financial challenges of the site, including the necessary construction of a $2 Billion platform over the existing railyards. The program, which will finance the construction of the platform and infrastructure for LIRR, will then make it viable to replace a previously planned office tower with two new residential towers. In sum, this would allow for the creation of up to 4,000 total housing units on the site.
Still no leverage
On April 29, w42st covered a City Council hearing on the plan, Western Rail Yards Plan Faces Scrutiny at City Council Hearing Despite Developer’s Last-Minute Housing Pledge. (The only other coverage I could find was from WPIX.)
Friends of the High Line executive director Alan van Capelle, according to the report, “described the addition of more housing in the proposal as an ‘unvetted public financing scheme brought at the 11th hour and 59 minutes.’”
The article captured a key quote from Related CEO Jeff Blau: “Importantly, this plan for additional housing and PILOT funding works with or without the gaming resort.”
Council Member Bottcher was sarcastic, asking “why was this added recently as a financing option?”
The tide turns?
Three weeks later, an essay in City & State, Opinion: An innovative proposal to fund housing development at the Western Yards; Replicating the successful Hudson Yards Infrastructure Corporation model could allow for 4,000 new homes to be built on the site., pointed to a path forward.
The author was Christine Quinn, the former Council Speaker who represented the district and now heads the homeless services provider Women in Need (WIN).
Was Quinn nudged to write (or put her name on) such an essay just because she’s a well-meaning New Yorker? Unclear, but Wynn New York City, the casino entity, is listed as a WIN corporate donor. (That connection was not disclosed.) She wrote:
Now, as a proposal to redevelop the Western Yards works its way through the land use process, the City Council has an opportunity to use that same [financing] model to help deliver on New York’s most pressing need: housing.
….Here’s how it would work: the Hudson Yards Infrastructure Corporation would issue bonds based on the income from the project itself – which is one of the biggest economic development projects in New York City’s history. Once the buildings are operational, they generate the tax revenue to service the bonds and will eventually pay back excess revenue for the city.
Quinn also made the argument that more market-rate housing, however luxury, moderates rent increases by increasing supply.
Bottcher says no
On May 19, Bottcher said he wouldn’t support a casino but he’d won “significant concessions from the applicant,” including 25% affordable units, increased open space from 5.6 to 6.6 acres, and a site plan ““restored to resemble the original 2009 vision.
“We can’t afford to let this opportunity slip away,” he wrote, neglecting to note his previous skepticism about the financing plan. “I look forward to advancing this ULURP and helping turn this long-promised vision into real progress for the West Side and for all of New York City.”
As the Real Deal reported, Related “framed this new direction as an ‘historic agreement’ reached” with Bottcher and noted that the 25% affordability pledge related to expected use of the 485-x tax break.
The coverage, like the Times article noted above, generally left the financing under-scrutinized. Even coverage in the left-wing site, Drop Site News, An Abundance of Billionaires Stalls Hudson Yards West, suggested that “the project keeps stalling,” though it actually had significant new momentum. That said, author Ryan Grim perhaps inadvertently got to a key issue.
“"The case of Hudson Yards West shows that the real enemy of getting stuff built is not the culprits that [authors Ezra] Klein and [Derek] Thompson point to,” such as environmentalists and NIMBYs. “Our problem is that we have too many billionaires with too much power.”
If billionaires with “too much power,” such as supporters of casino opponent Friends of the High Line, helped stall the project, the billionaires behind Related ultimately came up with a plan. They apparently will “get stuff built,” but in ways, as they’ve done in the past, protect themselves financially.
The mayor’s deal
Then came a June 10 mayoral press release, Mayor Adams Helps Negotiate Agreement to add Nearly 50 Percent More Affordable Housing Units to Largest Real Estate Development in U.S. History at Hudson Yards West. (Largest = most expensive, with a $32 billion value.)
It contained a quote from Related’s Blau: “We are also particularly grateful to the Council staff who prepared the unique mechanism to fund housing as part of the new development.”
The press release was scant on those details: “Additionally, the city will utilize future tax revenues from the project to support the construction of a new deck over the rail yards, a proven tool to finance infrastructure improvements without requiring direct public subsidies.”
Soon came zoning changes approved by the City Council, as noted in Crain’s New York Business, the Real Deal, and the New York Post.
“Renderings shared with The Post show two gleaming towers, sleek commercial space and a sprawling public lawn,” the Post reported not so neutrally.
Final passage
News of final Council budget approval came in a June 30 press release from Related, City Council approves financing that enables historic plan to develop the Western Railyards, substantial increase in housing: “This financing structure will fund a $2 billion platform over the active rail lines, unlocking the site for housing and open space without diverting city operating dollars.”
That passage generated little coverage, such as in the real estate publication CoStar, which cited the developer’s statement.
Then came the Comptroller’s newsletter, which, while offering a substantial critique, didn’t exactly put it front and center. The Times just weighed in. (Engquist took a victory lap.)
Now it’s up to the next mayor.
Back to Atlantic Yards
Well, we haven’t seen all the math, but I have a conceptual argument for helping pay for the platform.
The big winner in Atlantic Yards/Pacific Park, BSE Global, which operates the arena and owns the Brooklyn Nets and New York Liberty, should help cross-subsidize the remaining project, even though it’s not responsible for it.
Empire State Development (ESD), the state authority that oversees/shepherds the project, has leverage. It will be asked to make the arena plaza—currently named for sponsor Ticketmaster—permanent, thus preserving revenue for BSE Global and a safety valve for crowds, rather than letting a large tower be built, as currently approved.
The bulk of that unbuilt tower, B1, would instead be moved across Flatbush Avenue to Site 5, longtime home to the big-box stores P.C. Richard and the now-closed Modell’s, recently converted to BSE Global’s short-term Brooklyn Basketball Training Center. That would allow a giant two-tower complex at the parcel known as Site 5.
Cross subsidization could reduce infrastructure costs and also ensure that the tower developers cannot claim their buildings should be ever larger to make the project “pencil out.”