The Related Cos. will more than double the amount of housing included in its Hudson Yards casino complex, a promise that the developer hopes will help its embattled $12 billion bid get a crucial City Council approval this spring.
The developer will remove a proposed 1,400-foot office tower and replace it with two residential buildings, raising the project’s total from 1,500 apartments to as many as 4,000. The promise comes in response to outcry from neighborhood residents who criticized Related for trying to change the terms of a 2009 rezoning that required 5,800 homes to be built on the site. Related needs the City Council to approve those zoning changes in the coming weeks for the developer to have any shot of competing in the state-led process to award three downstate casino licenses this year.
To pay for the new housing in the absence of the office tower, Related — with its partners Wynn Resorts and Oxford Properties — are proposing a financing structure in which the developer would make payments in lieu of taxes, or PILOTs. Those PILOTs, which likewise need City Council approval, mirror the system that was used for the initial phase of Hudson Yards and would help cover the cost of the new housing and the $2 billion platform over the western half of Hudson Yards where the complex would sit.
“Over the last few months, we met with the community and heard consistent calls to add more housing to Hudson Yards West, even as many acknowledge the unique financial hurdles of developing the site,” Related CEO Jeff Blau said in a statement. “We tried to think outside the box and identified a historically successful funding model that would allow us to increase the amount of housing at the site to up to 4,000 units, while still preserving the other critical benefits of the project.”
It’s unclear whether the changes will satisfy opponents of Related’s megaproject. Its fate is in the hands of local Councilman Erik Bottcher, who has expressed skepticism and is coming under heavy pressure from groups including Friends of the High Line — a nonprofit that is campaigning against the proposal over fears it would harm the linear park. The opposition has threatened to derail what otherwise looked to be among the strongest contenders for a casino license, given its size and promise to create 35,000 construction jobs.
Bottcher and a spokesman for Friends of the High Line did not immediately respond to requests for comment.
Related will ask the council to approve the new PILOT scheme at the same time as the zoning changes, which are due for a vote by early June. All downstate casino bids will also be submitted in June, and the state has given bidders until Sept. 30 to resolve all their local land-use issues.
Even if it does not win one of three downstate casino licenses, Related says the PILOT scheme will be necessary to pay for any future development atop the so-called Western Rail Yards. Although its 2009 deal with the city called for using luxury condo sales to finance that buildout, the developer says construction prices have more than doubled in the ensuing years, while condo sales have become less predictable.
The revised proposal includes the same number of affordable units, 324, as the initial plan, and preserves other perks such as 6 acres of open space, a public school and a daycare.
Allowing Related to make payments in lieu of taxes could prove politically controversial, given the controversy that surrounded the tax-break package that the Bloomberg administration offered for the first phase of Hudson Yards. Under that scheme, the developers were given property-tax exemptions in exchange for making PILOTs on each building they built, which covered the billions of dollars of debt it took on to build the complex.
But some skeptics, like Comptroller Brad Lander, have recently acknowledged the system is working better than expected. With Hudson Yards’ tax revenues exceeding expectations, the city has received about $860 million in surplus payments from those PILOTs since 2017, which go to the city’s general fund.
Related is proposing to pay about $80 million in PILOTs annually for the Western Rail Yards complex.
