The Real Deal New York

Related turns to Uncle Sam for $1B Hudson Yards loan

Developer seeks low-cost financing from same pool Gateway project has struggled to access
June 18, 2018 09:42AM

Stephen Ross at the Hudson Yards West Side Rail Yards (Credit: Getty Images)

The Related Companies is seeking a $1 billion, low-interest loan for the next phase of Hudson Yards from the same pool of money that the Gateway project has struggled to tap into.

Related filed a draft worksheet with the U.S. Department of Transportation outlining its proposal to use the funds to build a platform over the West Side rail yards, Politco reported.

The low-cost loan would save millions compared to traditional financing for Related, which built the platform for the first phase of Hudson Yards without similar government support.

The $13 billion Gateway project, meanwhile, has struggled to access the Railroad Rehabilitation & Improvement Financing federal loan program Related is looking to use.

But in order to access that funding, Related needs to team up with a railroad partner. The company has reached out to Gateway co-developer Amtrak, which wants Related’s help to build a $440 million box under Hudson Yards that would protect the right of way for a future rail tunnel from New Jersey to Penn Station.

“Is this really what we have to do to fund Gateway?” asked Lynne Sagalyn, a professor of real estate at Columbia Business School. “And if so, it’s sort of like the tail wagging the dog.”

“Gateway is the priority,” Sagalyn added. “It’s a priority for the region. It’s [a priority] for the country. None of us want to think what’s going to happen if one of those tunnels go.”

Related has proven to be adept at benefitting from federal programs. The developer was the biggest user of the EB-5 visa program in 2015, and company founder Stephen Ross donates to both political parties.

Ross has contributed more than $100,000 since 2015 to the National Republican Senatorial Committee, which is effectively controlled by Senate Majority Leader Mitch McConnell.

McConnell’s wife, Transportation Secretary Elaine Chao, oversees the loan program Related is looking at. [Politico] – Rich Bockmann