HELL’S KITCHEN — The creation of Hudson Yards will cost the city another $368 million through 2019, bringing the city’s total payout to more than $947 million, according to projections from the Independent Budget Office.
The city has been footing the bill for Hudson Yards preparations — including most of the cost of the 7 train subway expansion — by floating $3 billion in bonds through the Hudson Yards Infrastructure Corporation (HYIC).
The cost of the project was supposed to be offset by revenue from commercial and residential taxpayers moving into the area. But the IBO found that taxes have yet to cover the cost of the project, leaving the city on the hook for hundreds of millions of dollars more than expected, as the Daily News reported previously.
The IBO warned of the shortfall in its 2013 report, “City’s Spending on Hudson Yards Project Has Exceeded Initial Estimates.”
“Revenue collected by the Hudson Yards corporation has fallen short of expectations,” the report said.
“The corporation projected that it would collect $283 million in tax and fee revenues through 2012, but in fact has collected $170 million.”
While one-time “District Improvement Bonuses” will temporarily drive down the city’s contribution in 2016 and 2017, the IBO predicts the city will have to kick in $66 million in 2018 and $97.8 million in 2019 to pay HYIC’s bondholders. Additionally, it will hand over $51 million a year in tax revenue from residential properties there to HYIC.
The IBO predicts the city could have to kick in as much $66 million in 2018 and $97.8 million in 2019 to pay HYIC’s bondholders. Additionally, it will hand over $51 million a year in tax revenue from residential properties there to HYIC.
The city's Office of Management and Budget (OMB) disputed the IBO's outlook. They said that while the IBO used OMB numbers to reach their projections, they do not believe the projections to be accurate.
"The only projections of [District Improvement Bonus] for 2018 and 2019 were made for the last bond issue in 2011 and are now very stale,” OMB spokeswoman Amy Spitalnick wrote in an email. "Hudson Yards is likely to cost the City some incremental amount in FY2018 and FY2019, but far less than the $164 million of [Interest Support Payments] conservatively budgeted by the City, and less than originally projected."
The city is also on the hook for cost overruns on the 7 extension. The MTA spent another $53 million on the now $2.4 billion project, according to the MTA’s July budget, even after the planned second station at West 41st Street station was abandoned.
HYIC did not immediately respond to a request for comment.