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New York

Larry Silverstein doubts he’ll ever see $2B Queens project

With Innovation QNS in purgatory, 92-year-old developer laments lack of 421a

Larry Silverstein Says He Might Never See Queens Megaproject
Silverstein Properties' Larry Silverstein, Gov. Kathy Hochul and a rendering of Innovation QNS (Getty, Silverstein; Illustration by Kevin Rebong for The Real Deal)
By
Nov 30, 2023, 6:45 PM

One year after his development team reached a deal with the City Council for Innovation QNS, developer Larry Silverstein is doubtful the housing project will get off the ground during his lifetime.

“I’m now 92 years of age. I’d like to see it happen. Honestly, at this rate, I don’t think I will,” he said during a speech at NYU’s Schack Conference on Capital Markets in Real Estate. “But it is a tragedy because the city needs it, and it needs it desperately.”

The City Council approved the 3,200-unit housing project in November 2022, touting that about  45 percent of the apartments would be affordable.

“The problem is, we have $10 million in that thing, [but] because of no kind of 421a program, we can’t build it. I don’t know how long it is going to take to get this thing going,” the Silverstein Properties chairman said, recounting a conversation with his former CEO Marty Burger moments earlier.

The tax break’s expiration last year loomed large during Thursday’s event. Gov. Kathy Hochul emphasized the need for 421a to make rental projects pencil out. In remarks heavy on sports analogies, the governor lamented that her ambitious housing agenda did not garner enough support in the last legislative session.

“It was a big shot, I didn’t get an assist. A lot of people sat on the bench,” she said.

City & State reported Wednesday that the governor does not plan to revive her proposed housing targets next year after they faced fierce opposition in the suburbs. On Thursday, she told the crowd of real estate professionals that if legislators step up on housing, she will be a willing partner.

But she acknowledged that they will likely be more focused on upcoming elections. Every House and state legislative seat is up for grabs in 2024, and Hochul’s housing agenda was seen as a burden for New York Democrats. Their losses in 2022 cost them control of the House.

In the meantime, she is turning to executive-level actions, which have included creating a 421a alternative in Gowanus. If that pilot program succeeds, it could be expanded to rescue Silverstein’s project as well as Boris Aronov’s 1,400-unit Halletts North in Astoria.

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But even projects that can still qualify for 421a are in doubt. During a separate panel, MAG Partners’ MaryAnne Gilmartin said trying to close financing on two development sites on the Upper East Side and Chelsea has been challenging.

She compared it to the difficulty of developing Barclays Center, which was built by Forest City Ratner when she was an executive there. The arena was part of a larger development now called Pacific Park.

Gilmartin cited Hochul’s 421a alternative in Gowanus, which allows developers to receive benefits in the form of payments in lieu of taxes, saying she is optimistic that the governor will do similar workarounds throughout the city.

She pointed to Pacific Park, where Greenland USA is at risk of losing control of the remaining development sites. The state could provide 421a-like benefits for that project through a PILOT program, though the project faces other hurdles. Whoever finishes it must contend with the cost and complexity of building a platform over Long Island Rail Road tracks.

“You can wring the viability out of anything,” Gilmartin said.

The moderator asked if she had any interest in stepping in on the project. Gilmartin responded that she still has too much PTSD from her years working on it, when it was called Atlantic Yards.

Silverstein repeatedly blamed “progressive leftist thinking” for the lack of 421a and other pro-housing policies. Burger, on the same panel as Gilmartin, echoed that sentiment. The legislature let 421a lapse, arguing that it didn’t produce enough affordable housing.

Burger was ousted as Silverstein Properties’ CEO in October and replaced by Silverstein’s daughter, Lisa. He was coy about his plans for the future, though he indicated that he wants to stay in the same line of work.

“Development is the lifeblood of New York City,” he said. “I’m excited about figuring out what I’m going to do next, but more importantly what’s going to happen in New York City.”

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421aKathy HochulLarry Silverstein