NYCIDA Establishes Incentives to Spur Commercial Develpment on the Far West Side of Manhattan
IDA Also Approves Financing Assistance for Gateway Center at Bronx Terminal Market and East River Science Park in Manhattan, Expected to Create a Total of More Than 3,100 New Jobs.
New York City Industrial Development Agency (IDA) Board today approved an amendment to the Uniform Tax Exemption Policy (UTEP), including a proposal regarding the structure of financial assistance for commercial construction projects within the Hudson Yards area. The financial assistance, in the form of tax abatements, represents the minimum level of incentive necessary to make commercial development of the area economically feasible. Some of the revenue generated will also be used to finance the cost of necessary infrastructure work the City is undertaking in connection with the area’s development. The total value of the incentives is estimated at $650 million over 30 years, spurring approximately $1.8 billion in new PILOT revenue. The IDA Board also approved financing assistance for two development projects that will create more than 3,100 new jobs. IDA is administered by the New York City Economic Development Corporation.
“The Hudson Yards area represents the City’s greatest opportunity to create badly-needed space for new office jobs, but it will not happen without mitigating rising development costs that would continue to deter development in the area,” said Interim IDA Chairman Joshua J. Sirefman. “The UTEP amendment provides the framework for financial assistance to overcome the high cost barrier to development that will enable the City to capture demand for new Class A office space and will fuel the continued growth of the City’s economy.”
The UTEP amendment subdivides the Hudson Yards area into three development zones. The zones were created based on distance from the midtown commercial core, with larger tax abatements applicable to those zones situated further west. Commercial developers will make payments equal to or lower than actual taxes, called Payments in Lieu of Taxes (“PILOTs”), Payments in Lieu of Mortgage Recording Taxes (“PILOMRTs”) and Payments in Lieu of Sales Taxes. The IDA Board also approved the assignment of PILOTs and PILOMRTs received in connection with commercial projects in the Hudson Yards area to service bonds issued by the Hudson Yards Infrastructure Corporation, primarily to fund critical infrastructure in the area, including the #7 subway line extension and a new network of open space. The proposed financing plan was endorsed by the City Council in January 2005, and again in October 2005, when it specifically authorized use of IDA PILOTs for Hudson Yards infrastructure projects.
The overall Hudson Yards project proposal calls for a vibrant, mixed-use district, which would include 24 million square feet of office space, more than 13.5 million square feet of residential space, new hotels, additional retail amenities and the creation of open space. In total, the proposal would allow for the creation of 225,000 permanent and 217,000 construction jobs. In January 2005, the City completed the rezoning of the area to allow for the proposed development.
IDA also approved about $11.2 million in mortgage recording tax benefit to BTM Development Partners, LLC, an affiliate of The Related Companies LP, for development of Gateway Center at Bronx Terminal Market. The project will redevelop a portion of the former Bronx Terminal Market site and the adjacent Bronx House of Detention for Men site into a 957,000-square-foot regional retail center and a 915,000-square-foot parking facility. The $494 million project is expected to create 1,766 jobs and generate more than $22 million in net annual tax revenue for the City.
IDA approved about $5.6 million in mortgage recording tax support to Alexandria Real Estate Equities for development of the East River Science Park. The 542,000-square-foot facility will house a commercial bioscience campus in Manhattan, as well as office space for bioscience venture capital firms, a conference center, a café and street-level retail. It brings a private investment of more than $548 million and is expected to create 1,355 jobs. The East River Science Park is part of the Bloomberg Administration’s efforts to grow the bioscience sector in an effort to diversify the economy.
“Creating jobs in all five boroughs and diversifying our economy are two hallmarks of the Bloomberg Administration’s economic development strategy, and the development of the Gateway Center at the Bronx Terminal Market and East River Science Park are two major steps toward achieve those goals,” said IDA Executive Director Steven M. Berzin. “By waiving about $17 million in mortgage recording taxes, IDA is helping catalyze more than $1 billion in private investment and the creation of more than 1,300 new jobs.”
The New York City Industrial Development Agency provides financing assistance to businesses, including small industrial and manufacturing companies and not-for-profit organizations. IDA is a conduit agency that issues tax-exempt industrial revenue bonds to assist eligible commercial, industrial, not-for-profit and other qualified entities to finance expansion opportunities. IDA also offers qualified companies abatements on sales, real estate and mortgage taxes. To request information and details on IDA programs, call (212) 312-3600 or e-mail [email protected].