Amazons's tax breaks & incentives were big. Hudson Yards' are two times bigger.

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jserraglio
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Amazons's tax breaks & incentives were big. Hudson Yards' are two times bigger.

Post by jserraglio » Sun Mar 10, 2019 10:28 am

NYT

by Matthew Haag

At Hudson Yards, the expansive real estate development that is about to open in Manhattan, seven floors of retail are occupied by Fendi, Dior, Neiman Marcus and other high-end shops. Major corporations, including WarnerMedia and L’Oreal USA, will have their headquarters there. In the luxury residential buildings, one-bedroom apartments will rent for at least $5,200 a month — or you can buy a two-floor penthouse condo for $32 million.
All thanks to the help of taxpayers.
New York was riveted for weeks by a debate over whether Amazon should receive $3 billion in tax breaks and other incentives in return for setting up a headquarters in Queens and creating 25,000 jobs. But with far less public attention, the city government has for more than a decade been funneling even more aid to Hudson Yards, a 28-acre complex of gleaming office buildings and luxury residential towers that is one of the nation’s biggest real estate projects in recent years.
In all, the tax breaks and other government assistance for Hudson Yards have reached nearly $6 billion, according to public records and a recent analysis by the New School.
The city spent about $2.4 billion to extend the No. 7 subway line to Hudson Yards and set aside $1.2 billion for about four acres of parks and open spaces called Hudson Park and Boulevard. The City Council stepped up to pay $359 million in interest payments on bonds when revenue from the development, which was supposed to cover the tab, fell short of projections.
As a result, Hudson Yards is perhaps an even more resonant symbol of the role of government in giving tax breaks and other incentives to spur development. In this case, two of the world’s largest real estate developers, Related Companies and Oxford Properties Group, which together built Hudson Yards, have significantly benefited.
Supporters of the Hudson Yards project say the government incentives will pay vast dividends by creating an entirely new business district, generating thousands of new jobs and retaining many thousands more. They point out that the No. 7 subway extension, the parks and other improvements that the city financed will help make the Far West Side an overall better neighborhood.
But the project’s detractors voice the kind of criticism that reverberated during the Amazon deal: Wealthy businesses, no matter their promises of jobs, should pay their own way and not demand government incentives to undertake projects. (Stung by the backlash over the incentives that it would receive, Amazon last month abandoned its plans for its campus in Long Island City.)
The opponents are focused in particular on a lengthy and lucrative property tax break for developers within the broader Hudson Yards area. So far, the cost of that tax break has surpassed $1 billion, according to the recent analysis by Bridget Fisher and Flávia Leite at the New School.
Future properties in Hudson Yards can also take advantage of the tax break, which can be as much as a 40 percent discount and last about 20 years. The opponents said such incentives inevitably end up widening income inequality in a city like New York.
“We are still giving tax breaks to a development that enriches billionaire developers and high-rise commercial and residential development that is not benefiting ordinary people in New York,” said James Parrott, director of economic and fiscal policies at the Center for New York City Affairs at the New School.
There are other incentives as well.
BlackRock, the world’s largest money manager, which ended 2018 with $5.98 trillion under management, can obtain $25 million in state tax credits if it adds 700 jobs at Hudson Yards. L’Oreal USA is in line for $5.5 million for the same discretionary tax credit, while WarnerMedia can get $14 million.
Even Mayor Bill de Blasio, a supporter of the Hudson Yards project, is now expressing some misgivings about the property tax breaks. Mr. de Blasio had been a backer of the Amazon deal, but since the company pulled out, he has abruptly shifted tone, just as he has been seeking to solidify his credentials with progressives.
Mr. de Blasio said in a statement that the subway and park spending had broad benefits, but added: “We’ve moved away from providing discretionary incentives like the prior administration. I believe state and local economic development programs need to be re-evaluated and updated.”
Hudson Yards sprouted during a moment of post-Sept. 11 pride and economic uncertainty, with the mayor at the time, Michael R. Bloomberg, vowing to reclaim a neighborhood that included a stubby collection of brick warehouses, factories and tenements built when the Hudson River docks were busy. In the middle was an unsightly rail yard.
On Friday, when Hudson Yards officially opens, a city within a city will rise as the centerpiece of an area bounded by Eighth and 12th Avenues from 30th to 42nd Streets. The main site, developed by Related Companies and Oxford Properties, was built over the rail yard, and it is by some estimates the largest real estate project in New York since Rockefeller Center in the 1930s.
The $25 billion neighborhood has 13 buildings, including a school and parks, that will bring more than 55,000 employees to new offices there. There will also be a major dining complex with restaurants run by celebrity chefs like Thomas Keller and David Chang.
“Without a doubt, we now have millions of square feet of office space and housing we did not have,” said Alexander Garvin, a former commissioner on the New York City Planning Commission, who became involved with Hudson Yards in the mid-1990s. “We have that many more jobs, that many more places for people to live, and that much more property taxes that come into the city.”
(The Related Companies chairman, Stephen M. Ross, a 78-year-old billionaire who is one of the world’s richest people, is moving into a penthouse in the 72-story tower, which is known as 35 Hudson Yards.)
L. Jay Cross, president of Related Hudson Yards, which oversees the development of the site, said in an interview that the redevelopment would not have gotten off the ground without the subway extension and tax breaks that allowed for new office space to be offered at rates comparable to Midtown’s.
Mr. Cross said it was vital that the city throw its support behind major development projects to ensure that it remained attractive to businesses in an increasingly globalized economy.
“With all those old buildings we have in aging Midtown, we have to find a way to build modern buildings to compete with London, Singapore and Tokyo,” he said.
Mr. Cross said that as Hudson Yards grows, the city would take in more in property taxes that it could use to pay off the bonds that financed the subway extension.
The groundwork for Hudson Yards was set in motion in the 1980s. When the Metropolitan Transportation Authority created a yard for commuter trains on the West Side, its chairman at the time, Richard Ravitch, knew the site could be valuable one day. He had the tracks spaced far enough apart that columns could be installed to support a deck.
A decade later, the property became the centerpiece for an ambitious plan by a young investor named Daniel L. Doctoroff to attract the 2012 Summer Olympics to New York. The rail yard could be covered and support an Olympics stadium, which could also be the new home for the New York Jets.
While the city debated the merits of hosting the Olympics and the economic impact of a stadium, Mr. Doctoroff, who became a deputy mayor under Mr. Bloomberg, and other city planners moved ahead with the broader redevelopment of the West Side.
The area was rezoned, making room for towering buildings, and Mr. Bloomberg committed to the city to expanding the subway when the M.T.A. said it would not.
“There wasn’t any genuine opposition to Hudson Yards at all,” said Peter J. Kiernan, a lawyer who helped write a 2007 study on the city’s finance plan for the subway extension.
By the time New York lost the Olympics bid to London in 2005, the Far West Side was well along into becoming Hudson Yards. New apartment buildings were going up, and subway construction was about to start. In 2008, Mr. Ross swooped in to pay $1 billion to the M.T.A. to develop a project over the rail yards, salvaging a deal after the first-place bidder backed out.
Hudson Yards would not exist in its current form without significant government assistance, especially the expansion of the 7 line, said Mr. Ravitch, who was initially skeptical of the city’s plan to pay for the subway expansion.
“The M.T.A. didn’t have the money, and it wasn’t a priority,” Mr. Ravitch said last week. “Thank God it turned out to be a great success. It was worth what the city did for it.”
Still, the fallout from the Amazon deal may be having an impact on how the city approaches megaprojects in the future.
Councilman Brad Lander of Brooklyn, a Democrat who is a founder of the Council’s Progressive Caucus, said it was smart to expand the No. 7 subway and create parks on the West Side.
But tax breaks for specific companies are a different story, said Mr. Lander, who was an opponent of the Amazon deal.
“We’re giving away tax breaks without paying close attention to what’s a good deal or not a good deal,” he said.

lennygoran
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Re: Amazons's tax breaks & incentives were big. Hudson Yards' are two times bigger.

Post by lennygoran » Sun Mar 10, 2019 5:34 pm

Thanks for the article-we walk the Highline alot and it's been amazing to see the Hudson Yards progress over the years! Regards, Len


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Rach3
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Re: Amazons's tax breaks & incentives were big. Hudson Yards' are two times bigger.

Post by Rach3 » Sun Mar 10, 2019 8:01 pm

Didn't Trump have a West Side development, too ? When ? Financed how ?

John F
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Re: Amazons's tax breaks & incentives were big. Hudson Yards' are two times bigger.

Post by John F » Sun Mar 10, 2019 9:56 pm

$6 billion in incentives for a 48-acre $20-billion business and residential development in Manhattan, next to the Javits convention and exhibition center, vs. $3 billion for a single corporate sub-headquarters in Queens? That makes the Amazon deal look even more excessive.
John Francis

Belle
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Re: Amazons's tax breaks & incentives were big. Hudson Yards' are two times bigger.

Post by Belle » Sun Mar 10, 2019 10:23 pm

That all depends upon the cost to government and the taxpayer of having thousands of people without jobs, not paying income tax, on welfare and not being consumers (who pay indirect taxes). That cumulative cost could be exponentially higher. Better the devil you know........?

I'm betting Jeff Bezos is right across this!!!

My son from Perth, WA, has been with us and we've discussed the corporate world, government, unions and unemployment. He is right in the middle of the corporate world in the mining sector and his job is occupational health and safety. He speaks about the importance of conveying the right message when getting people ONSIDE rather than OFFSIDE. One thing he said was 'it's no use trying to tell people not to hurt themselves; nobody wants to hurt themselves. Instead the message - like the political one - needs to be sharp enough to get peoples' attention - so that they exercise personal care and responsibility - without condescending and patronizing them, and which is patently in the best interests of the company and the employees". He argued that politicians and elected officials fail because they cannot grasp how to speak to people so that everybody gets what they want and it becomes a win/win.

I couldn't help mentioning the Amazon fiasco in our discussion this morning. That should have been a win/win.

lennygoran
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Re: Amazons's tax breaks & incentives were big. Hudson Yards' are two times bigger.

Post by lennygoran » Mon Mar 11, 2019 4:35 am

Rach3 wrote:
Sun Mar 10, 2019 8:01 pm
Didn't Trump have a West Side development, too ? When ? Financed how ?
Yes he has many developments all over the city-they've been taking down Trump Tower Signs! Now if we can only take him down! Regards, Len :lol:
http://gothamist.com/2018/10/18/trump_p ... hp#photo-1

John F
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Re: Amazons's tax breaks & incentives were big. Hudson Yards' are two times bigger.

Post by John F » Mon Mar 11, 2019 6:21 am

Belle wrote:I couldn't help mentioning the Amazon fiasco in our discussion this morning. That should have been a win/win.
Belle, you're generalizing without information. Unemployment in New York City is presently near an all-time low, at 180,000 of a population of 8.6 million. Of these, most are surely not qualified for those 25,000 high-tech jobs Amazon was talking about. Nearly all the qualified tech talent in the country has jobs already, their unemployment rate is 1.9%, and raiding other companies' tech staffs is just about a zero sum game. Most of the unemployed previously have had non-tech jobs in retail sales, marketing, food service, and so on; they wouldn't even get an interview at Amazon New York, let alone a job there. The Hudson Yards development will have a lot more of the jobs they can handle.

No doubt many Amazon wannabes would have applied from all over the country, but that would not have reduced "the cost to government and the taxpayer of having thousands of people without jobs, not paying income tax, on welfare and not being consumers (who pay indirect taxes)." Its most likely effect would be to increase the burden on New York's infrastructure and drive up rents, especially in Long Island City, to the disadvantage of the many artists and other creative but low-income people who now live and work there. As for the supposed economic benefit to the area, that's hypothetical and likely to be slow in coming, out there in Queens.

What is Jeff Bezos supposed to be right about, and may I take your bet? :mrgreen:
John Francis

Belle
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Re: Amazons's tax breaks & incentives were big. Hudson Yards' are two times bigger.

Post by Belle » Mon Mar 11, 2019 6:41 am

Bezos is 'right across' knowing how an economy works and the downstream effects of having an increase in the working population of 25,000. He knows, as I do, that while the unqualified people wouldn't necessarily get those specific jobs the consumption and general spending of those who do will enable some of those people to get unskilled jobs; cleaning, building repairs, retail, transport, hospitality...the whole range of employment opportunities which come with growing a pie through greater worker participation generally. Bezos would have been using that knowledge to leverage himself a better deal with your government because he knows the huge cost to the taxpayer (not to mention the society) of unemployment. And that employment rate you mention; is that full time, living wage employment? In this country you're swiped off the unemployment stats if you're working 3 hours a week!!!

And what do you imagine armies of illegal immigrants arriving in your country does for burdens on infrastructure, rents, housing and the like? No matter where that is. We have the same situation in Sydney and Melbourne, with both of those cities becoming increasingly unlivable thanks to high rates of immigration. Governments are wedded to the idea of growth through immigration; in fact, it's the only means of achieving economic growth - and it's one of the western world's biggest ponzi schemes!! :(

jserraglio
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Re: Amazons's tax breaks & incentives were big. Hudson Yards' are two times bigger.

Post by jserraglio » Mon Mar 11, 2019 10:28 am

Subtract the proposed 8-million square feet of new office space in LIC and calculate the loss to NYC just in construction jobs, not to mention the multiplier effect such a marquee construction project would have had on the local economy.

It has just been revealed that competition rival, Cleveland, had offered Amazon $3.5 billion in tax breaks and incentives along with a patchwork of 100 acres of urban real estate for the HQ campus. Compared to that, NY's offer to Amazon does not look excessive and calls into question the efforts of opponents like AoC to paint Amazon as the villain of the piece. Market forces at work.

Not that either Cleveland's or NY's proposed discounts on future tax revenues involved spending any hard cash.
Last edited by jserraglio on Tue Mar 12, 2019 7:05 am, edited 2 times in total.

Belle
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Re: Amazons's tax breaks & incentives were big. Hudson Yards' are two times bigger.

Post by Belle » Mon Mar 11, 2019 4:41 pm

High five; way to go!!! :D

John F
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Re: Amazons's tax breaks & incentives were big. Hudson Yards' are two times bigger.

Post by John F » Fri Mar 15, 2019 4:12 pm

If anyone is still interested, here's a New York Times piece about the Hudson Yards development. To me it looks like New York is getting more for its money than from what Amazon was offering. Indeed, I would have thought Amazon could get plenty of office space at Hudson Yards. But of course nobody would have given them $3 million to do that.

Hudson Yards Is Manhattan’s Biggest, Newest, Slickest Gated Community.Is This the Neighborhood New York Deserves?
By Michael KimmelmanMarch 14, 2019

You can see it on the skyline or along the Hudson River, upending Manhattan’s silhouette. During the last half dozen years it has materialized almost like a mirage, levitating above more than a dozen gritty acres of working rail tracks on the Far West Side. The largest mixed-use private real estate venture in American history, it is called Hudson Yards.

The first massive tower emerged at the apex of the High Line, looming over it, a shingled, spiky, reflective blue-glass behemoth, shaped by eccentric cuts and angles, as if sheared by a giant Ginsu knife. Since then, at jaw-dropping magnitudes you can’t begin to grasp until you are actually standing there, Hudson Yards has sprouted a seven-story, 720,000-square-foot shopping mall.

There are also four more supertall skyscrapers as well as a $500 million city-sponsored arts center called the Shed, featuring a giant sliding roof, eye-catchingly swathed in a tufted Teflon-based sheeting that can bring to mind inflated dry cleaning bags. It is temporarily called the Vessel. Hoping for public buy-in, its patron, the lead developer of this vast neoliberal Zion, has invited suggestions for a new name.

Purportedly inspired by ancient Indian stepwells (it’s about as much like them as Skull Mountain at Six Flags Great Adventure is like Chichen Itza) the object — I hesitate to call this a sculpture — is a 150-foot-high, $200 million, latticed, waste-basket-shaped stairway to nowhere, sheathed in a gaudy, copper-cladded steel. It preens along the critical axis between the High Line and the newish No. 7 subway station at Hudson Yards, hoping to drum up Instagram views and foot traffic for the mall, casting egregious shadows over what passes for public open space, ruinously manspreading beside the Shed, the most novel work of architecture on site, and the only building the private developers didn’t build.

New York politics and real estate are notoriously akin to “Rashomon.” Any verdict on an undertaking as costly and complex as Hudson Yards depends on one’s perspective.

For its advocates, the $25 billion development is a shining new city ex nihilo, a wellspring of future tax revenues and evidence of a miraculous, post-9/11 civic volte-face. They note how the project sailed through the public and environmental review processes, winning neighborhood approval partly because at the time it seemed better than an earlier proposal to erect a sports stadium on the site, partly because it was conceived when New York still feared for its economic future and lagged, in terms of Grade A office space, behind global competitors like London.

As a feat of engineering, it rests on a new $1 billion platform, which decks over a stretch of infrastructure that for generations acted as a kind of Nowhereland on the West Side. Nowhereland is now making way for what promises to be 16 new buildings, including some 4,000 new apartments, a school, parkland and upward of 55,000 jobs. Slightly more than 10 percent of those apartments will be subsidized housing (some 430 apartments), with more such housing underway or already built by the developers off site — 1,309 subsidized apartments in total.

Now occupying the eastern end of the rail yards, the project will ultimately cover 28 acres when the western half is finished — an undertaking that has preoccupied two of the world’s largest private real estate developers, Related Companies, led by its chairman, Stephen M. Ross, and Oxford Properties Group. Already, a who’s who of blue-chip hedge funds, law firms and other corporations — SAP, KKR, BlackRock, Wells Fargo, L’Oréal USA, the list goes on — have chosen to move in or will do, when yet another giant office tower, now underway, is completed.

WarnerMedia and CNN are migrating from the Time Warner Center at Columbus Circle, Related’s earlier high-end, mixed-use, mall-centered venture. Star chefs, including Thomas Keller and David Chang (also Columbus Circle tenants), will run restaurants at Hudson Yards, where Neiman Marcus, Cartier, Dior, Gucci, Fendi and more of the usual suspects hope to defy obvious retail trends. Not yet joining the caravan are companies like Google, Twitter and Facebook. Related’s antiseptic, inward-turning, glass-tower formula doesn’t seem to speak to the tastes of cutting edge industries or younger, urban-minded millennials.

Ninety percent of Hudson Yards’ office tenants, according to a recent study by the New School, are also transfers from Midtown, lured by lucrative tax breaks provided by New York politicians to the developers. Moving from Midtown, the investment company BlackRock, which manages $5.98 trillion, will be able to write off $25 million in state tax credits if it adds 700 jobs at Hudson Yards.

The terms du jour are corporate welfare or socialism for billionaires. City officials sold Hudson Yards to New Yorkers as a self-financing venture. That’s not what it may sound like. The city and state provided tax incentives and poured billions of public dollars into an extension of the No. 7 subway line and into acres of open space around the yards — investments presumably benefiting everyone, which the project is supposed to pay back by increasing New York’s GDP.

We’ll see how and when that happens. As the New School study documents, so far the project is shifting economic development from other neighborhoods to Hudson Yards without creating new net growth.

https://www.nytimes.com/interactive/201 ... s-nyc.html
John Francis

jserraglio
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Re: Amazons's tax breaks & incentives were big. Hudson Yards' are two times bigger.

Post by jserraglio » Fri Mar 15, 2019 8:13 pm

Deeding over HY's 28 acres probably would not have met Amazon's needs. At least one other town offered 100.

And NY never offered to give Amazon $3 million [sic]. Just as NY offers tax rebates, so too an auto company dangles "cash back" or "bonus cash" to lure buyers but ordinarily does not give any actual cash back to their customers. Amazon would be the one making payments to NY, not the other way around.

In this case the buyer, Amazon elected to walk away from the negotiations apparently b/c as events unfolded, Amazon didn't feel it could trust NYC's pols not to undercut their deal in the future.

lennygoran
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Re: Amazons's tax breaks & incentives were big. Hudson Yards' are two times bigger.

Post by lennygoran » Sat Mar 16, 2019 5:05 am

jserraglio wrote:
Fri Mar 15, 2019 8:13 pm
Deeding over HY's 28 acres probably would not have met Amazon's needs.
You forget that HY will have a branch of the famous Fairway grocery-that would have met alot of the Amazon workers needs! Regards, Len [fleeing] :lol:

jserraglio
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Re: Amazons's tax breaks & incentives were big. Hudson Yards' are two times bigger.

Post by jserraglio » Sat Mar 16, 2019 6:42 am

Shoot a documentary re-enacting the purchase of Manhattan Island in 1626, featuring jeff Bezos as Peter Minuit and Michael Gianaris, Jimmy Van Bramer and AoC leading the Lenni-Lenape Tribal Nation. Then, to get something approaching the current comedy of errors, play the movie backwards.

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