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Thread: Financing Plan Adds Complexity to Remaking of West Side

  1. #1

    Default Financing Plan Adds Complexity to Remaking of West Side

    March 1, 2003

    Financing Plan Adds Complexity to Remaking of West Side
    By CHARLES V. BAGLI

    The Bloomberg administration's financing plan for redeveloping the far West Side of Manhattan is every bit as ambitious as the network of parks, subways, cultural buildings, commercial towers, housing and stadiums it plans to build there.

    At a conference yesterday at the Newman Real Estate Institute at Baruch College, Deputy Mayor Daniel L. Doctoroff clearly dazzled the real estate executives who attended with plans for transforming the low-slung, semi-industrial neighborhood from 28th to 42nd Streets, west of Ninth Avenue.

    Mr. Doctoroff showed off renderings of new tree-lined streets, commuter rail connections and a new business district with skyscrapers along the avenues. The plans also call for spending $1 billion to double the size of the Jacob K. Javits Convention Center.

    Mr. Doctoroff said the administration would pay for the $2.68 billion plan "without using existing city resources."

    Instead, the city would issue bonds that would be paid back with revenues from rising property values in the neighborhood over the next 30 years, as the city extends the No. 7 subway line from Times Square to 34th Street and 11th Avenue, rezones the area for 16 new office towers, erects a football stadium for the New York Jets and builds new parks and streets. In the language of municipal finance, it is known as tax increment financing, or TIF.

    Mr. Doctoroff did not give specifics for the financing plan.

    But some urban planners, economists and C. Virginia Fields, the Manhattan borough president, wondered whether the plan could work. Given the layoffs on Wall Street, a recession and more than 40 million square feet of vacant office space in Manhattan, Ms. Fields said it was hard to imagine who would build the office buildings that are supposed to generate the tax revenues.

    "I have questions about how this will be financed," Ms. Fields said at the conference. "Any bonds backed by funds from planned development, whether it's TIF or the sale of zoning bonuses, will be problematic, since the development will come years after the public investment."

    According to an outline of the administration's financial plan, which was provided to The New York Times, the $1.2 billion extension of the No. 7 subway line, for instance, would be completed by 2007, along with the construction of platforms over the railyards where the stadium and other development would take place, at an estimated cost of $482 million.

    But the sale of development rights over the railyards would not take place until 2009 and the first office tower would not go up until 2010.

    A total of 28 million square feet of commercial space would be constructed on the West Side between 2010 and 2035.

    Critics contend that the New York real estate market never proceeds smoothly. During what was arguably the biggest real estate boom in the city's history, between 1996 and 2002, only seven towers were built in Manhattan, for a total of 6.5 million square feet, according to the Real Estate Board of New York.

    Now there are acres of empty space and Wall Street is continuing to lay off bankers.

    "The commercial real estate market is not going to come roaring back in large part because financial services are not going to come roaring back," said Mark Zandi, chief economist for Economy.com, a consulting firm. "The demand for commercial real estate will be significantly constrained by the ongoing restructuring of the industry over the next couple of years and the weak job growth that the industry will experience in the decade afterward. Some of the difference will be made up by health care and educational services, but I don't think there's any industry that uses office space as intensely as financial services."

    The Bloomberg administration's plans for the West Side dovetail with the effort to bring the Olympic Games to New York in 2012, and with plans to build a stadium with a retractable roof for the Jets on a platform over the railyards, between 30th and 34th Streets and 10th and 12th Avenues. Representatives of NYC2012, the group leading the city's Olympic bid, also made presentations yesterday.

    The Jets have said that the team is willing to pay for a major share of the $1.2 billion stadium, but the city would have to pay for the retractable roof and the platform over the rail yards.

    Ms. Fields presented her own plan, emphasizing a residential neighborhood with some commercial space, as opposed to the city's emphasis on creating a new business district.

    Where the Jets want to build a striking steel football stadium, Ms. Fields shows apartment buildings. The local community board and many neighborhood groups oppose the stadium.

    Mr. Doctoroff said the city must be able to grow to prosper. "If we are going to accommodate growth in this city, we are going to have to find a place to put people," he said.

    The administration calls for building roughly five million square feet of office space and roughly 6,000 apartments by 2014, and an additional seven million square feet of office space by 2019.

    Under its financial plan, the city would enter into voluntary agreements with commercial developers, in which the city would own the land under their projects. The developers, in turn, would make payments to the city in lieu of property, sales and mortgage recording taxes. The city would use the money to pay the tax-exempt bonds issued by a local development corporation for transportation and other projects.

    Residential developers would be offered tax breaks. The city would also sell the development rights to build on platforms over the railyards for about $300 million and the rights to build taller buildings than zoning rules would ordinarily allow.

    Copyright 2003*The New York Times Company

  2. #2

    Default Financing Plan Adds Complexity to Remaking of West Side

    March 11, 2003
    Midtown's Final Frontier

    Forty years isn't very long in the life of a city, but it's long enough to reinvent an entire district. So the Bloomberg administration hopes. Recently city officials, including Amanda Burden, head of the City Planning Commission, and a deputy mayor, Daniel L. Doctoroff, unveiled the Hudson Yards Master Plan, the city's vision for the redevelopment of Midtown West. Merely to walk out of the Javits Convention Center into the low dark streets that surround it is to understand why this section of the city, between 28th and 42nd Streets west of Eighth Avenue, is regarded as the last frontier in middle Manhattan.

    No subways serve Hudson Yards. As the name suggests, much of the area is taken up by rail yards, parking lots and warehouses. The core of the Hudson Yards Master Plan is to extend and connect the transportation links that run nearby. This means, especially, an extension of the No. 7 subway line into the heart of the district. By itself, that would prompt a lot of development. But to their credit, city planners want to guide growth so the district becomes a coherent neighborhood, shaped by new streets, new open spaces and new public buildings.

    Much of this plan makes sense. The Javits Center would expand northward and add a hotel that would give it access to 42nd Street. There would be serious efforts to bring the waterfront into play. On the other hand, the city's plan to create a double row of skyscrapers flanking 11th Avenue unfortunately recalls the street-level dreariness of the Avenue of the Americas in Midtown.

    But for now, the big question is the "multi-use facility," which still amounts to a stadium, possibly for the Olympics and certainly for the Jets. Officials have said that the Hudson Yards plan does not depend on the stadium, but they also argue that the logic of the redevelopment design makes much less sense without it. Its feasibility will clearly depend on two things, a financing plan that does not depend on public money and a way of making "multi-use" more than a euphemism. No one wants a publicly financed hulk that sits empty most of the time and floods the city with traffic when it is being used.

    The plan will have to compete with the city's other big redevelopment program, the plan to rebuild the World Trade Center site. There is not enough money now to move ahead on both fronts, and there is just as obviously a pressing emotional and civic need to make sure that ground zero comes first. Phasing is a word we are all going to learn the nuances of in the next few years. One of the virtues of the Hudson Yards Master Plan is that its phasing takes us all the way to 2040.


    Copyright 2003 The New York Times Company

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