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Bloomberg sweetens the deal.
Mayor Bloomberg is clearly a fan of the Field of Dreams, if-you-pay-for-it-they-will-come mentality. In order to make Hudson Yards a reality, the city agreed to pick up the tab for the 7 Train extension, with the expectation that tax revenues generated by new development would quickly replenish the city's coffers (a plan that, as The Wall Street Journal revealed this spring, has not worked out very well).
Now, Bloomberg has altered the Midtown East rezoning proposal to follow the same model—rather than waiting for developers who benefit from the rezoning to pay into a fund dedicated to infrastructure improvements (giving the neighborhood transit improvements and additional open space in return for taller towers), he wants the city to front the money to make the area more attractive before developers move in.
The mayor announced the new amendment to the rezoning proposal—which is intended to promote new office development in the city's aging central business district—in an article ("The Shot in the Arm that East Midtown Needs" that he penned today in the Daily News.
"By advancing a significant portion of the money, the public can experience the benefits of the plan — a transformed Grand Central with benefits throughout the Lexington subway line and improvements to streets and public spaces — far more quickly," the mayor writes.
The announcement comes on the heels of several proposal amendments to allow for more housing and an air rights transfer district that will facilitate the sale of air rights for landmarked Midtown East properties. All the recent amendments, stocking the infrastructure fund included, are in response to community criticism of the rezoning plan and may be necessary to get the plan passed, but they certainly aren't needed to draw developers to the established business district.
The mayor has certainly painted this latest move as a response to community concerns, referencing feedback from borough president Scott Stringer and councilman Dan Garodnick—many have expressed concerns that the rezoning would make an already-congested district even more congested until the development fund grew large enough to provide relief. How much work will be done in the early stages remains to be seen. While Bloomberg has said that he expects the fund to generate in excess of $500 million for improvements; it's unclear how much he wants the city to allocate to those improvements up front. Details will supposedly be released in coming weeks.
The only problem? The pay it forward plan hasn't worked out very well for the city in the past. The city issued $3 billion in bonds to pay for the 7 train extension and infrastructure improvements in Hudson Yards, committing additional city funds if the tax revenues were not enough to meet the interest payments. According to a report released by the Independent Business Office, the development has generated only $170 million in tax revenue through 2012, rather than the anticipated $280 million, leaving the city on the hook for the rest of the bill. Since 2006, the city has laid out $262 million in interest payments, according to The Journal.
The plan also seems likely to bolster the arguments of critics who say that Bloomberg is rushing the rezoning through and that the plan needs more time on the drawing board. And while the late-breaking change may not mean that the original plan was poorly conceived, it does point to Bloomberg's eagerness to see the rezoning passed on his watch rather than his successor's.
