Hudson Yards was expected to earn $283 million in revenue by the end of 2012 but actually earned only $170 million, leaving the city in a bind over its infrastructure investments in the megaproject, according to a New York City Independent Budget Office report seen by the Wall Street Journal.
Currently, developer Related Companies has broken ground on a single 1.7 million-square-foot office tower known as the South Tower, and the project is slated to add another 25 million square feet of office space. The development also generated 40 percent less revenue from taxes and fees from 2006 to 2012 than projected, the IBO report shows.
“The commercial development has been much slower than they thought,” Ana Champeny, an analyst at IBO, told the Journal.
The city issued $3 billion in bonds to fund subway construction and other upgrades. These bonds were backed by tax revenues from the area, to be paid to an agency called the Hudson Yards Infrastructure Corp. The Bloomberg administration also pledged further monies from the city budget to cover interest payments if these revenues would not suffice.
Between 2006 and 2012, the city gave HYIC $137 million from the budget to help it cover these payments. It has allocated $125 million for interest support payments in 2013, according to IBO.
IBO officials told the Journal that HYIC earned additional investment money in those six years, even though actual project revenue fell short. A Bloomberg spokeswoman did not respond to the Journal’s requests for comment.
After the 2005 Hudson Yards rezoning, prominent companies such as Morgan Stanley and Condé Nast expressed their intent to relocate to the neighborhood, but were halted by the financial crisis. [WSJ] –Hiten Samtani