Skyscapers from the first phase of Hudson Yards rise along the river. (Image: Maciek Lulko, Flickr)
New York City’s latest mega development—Hudson Yards—was ambitious from the start. Acres of train tracks and industrial land were covered by a 37,000 ton platform allowing for the (re)development of 45 square blocks of prime New York City real estate.
Modeled in part on the Roppongi Hills neighborhood of Tokyo which is also built on a rail yard, the Hudson Yards area was rezoned for mixed uses in 2005 and a subway extension was built to service the area. There are criticisms of Hudson Yards, but it is also seen as a case study in innovative finance and the use of value capture to fund affordable housing, green space, and transit and street infrastructure.
To put the financing plans together, two separate development corporations were created by the city to work with the MTA and other public agencies. Through these corporations, $3 billion in bonds were sold to investors that will be paid back through increased land values. This special arrangement was called a PILOT or “payment in lieu of taxes” and it has been criticized as big property tax break. “The first 5 million square feet of development gets a 40 percent break, the next 5 million earns a 25 percent break, and so on, with all breaks eventually phased out after 19 years.” (Gothamist) Those tax breaks amount to about $785 million the city will be forgoing, according to Gothamist.
Additionally, bonuses were paid or given to developers for rights to increase square footage; by constructing part of the boulevard or park in Hudson Yards they could be eligible for even more money.
And now Dan Doctoroff, the head of Alphabet’s (Google) Sidewalk Labs who was a part of the Bloomberg administration, wants to use the same financing mechanism for Toronto’s Quayside project. To pull this off, they would also create a special purpose corporation in order to help build light rail and district infrastructure. The estimates for infrastructure costs on this project are around $4.5 billion.
Quayside is not without similar controversy where residents of Toronto wonder whether the city would see any benefit to helping a private corporation build, not to mention the privacy concerns that have been raised by building such a smart city under Sidewalk Labs’ watch.
For more information on coordination of transit value capture, check out the case studies, best practices, and recommendations written by researchers at the University of Illinois at Chicago.
What’s new on the pod?
Chicago is America’s third most populous city but it is “very much structured along racial lines,” as Kendra Freeman explains on this month’s podcast episode. While the city has had a TOD policy for years, development hasn’t occurred evenly. But a new update to the city’s TOD policy will seek to change that by expanding TOD to some of the city’s major bus corridors and directing staff to develop an Equitable Transit-Oriented Development Policy Plan. Learn more about eTOD in Chicago with this month’s episode on Soundcloud, Stitcher, iTunes, Overcast or wherever you get your podcasts.
Recent TOD news
Here are a few things that have been happening this week with TOD projects across the country.
- $600M Miami transit-oriented development breaks ground (Construction Dive)
- New rules for development near Charlotte transit may help affordable housing too (The Charlotte Observer)
- Parking, or lack thereof, dominates public hearing on planned Buffalo development (WBFO)
- Matawan, NJ mixed-use development planned for transit parking lot (centraljersey.com)