NEW YORK (BLOOMBERG) — New York is considering a $100 million property tax break for a new Hudson Yards skyscraper proposed by developer Tishman Speyer, in what would be the largest economic subsidy since Mayor Zohran Mamdani took office.<\/p>\n
An arm of the city\u2019s Economic Development Corporation is slated to vote Sept. 15<\/a> on the measure, which would support a 48-story office building in the neighborhood, a district on Manhattan\u2019s far west side that\u2019s thriving by almost any economic metric. <\/p>\n Construction of the $2.7 billion project, known as 99 Hudson Boulevard, is scheduled to begin in January, according to Tishman Speyer\u2019s application for financial assistance filed with the city\u2019s Industrial Development Agency. A public hearing on the application is taking place on Thursday.<\/p>\n If approved, the subsidy could put Mamdani at odds with his progressive base, who argue tax giveaways benefit the wealthy at the expense of essential services and housing. <\/p>\n \u201cHudson Yards has done extremely, extremely well,\u201d said John Kaehny, executive director of Reinvent Albany, a government watchdog group. \u201cA good economic development project or a good subsidy project phases out because if it works, you don\u2019t need it anymore. Hudson Yards has basically worked, and there\u2019s just no reason to offer that.\u201d<\/p>\n A spokesperson for Mamdani did not respond to a request for comment. The mayor has previously said that subsidies as a general practice aren\u2019t necessary to compete for business.<\/p>\n The IDA\u2019s tax-exemption policy says the agency has discretion over whether to provide assistance. Staff and the board can consider factors such as expected job creation, public support or whether the project would be completed \u201cbut for\u201d the subsidy.<\/p>\n The tax benefits for 99 Hudson will cost the city $92.2 million, while generating almost $860 million in direct and indirect tax revenue, according to an analysis by the IDA. <\/p>\n Tishman Speyer acquired the site for 99 Hudson Boulevard, across from the Jacob K. Javits Convention Center along 11th Avenue, in 2016. The planned 1.3 million-square-foot (121,000-square meter) tower would be the developer\u2019s second skyscraper in Hudson Yards. <\/p>\n The company also developed The Spiral, a 66-story office tower with 60 outdoor terraces. It\u2019s home to Pfizer Inc.\u2019s headquarters, and HSBC Holdings Plc, AllianceBernstein Holding LP and hedge fund Marshall Wace LLP also lease space there.<\/p>\n Expected to open in 2030, 99 Hudson \u201cwill transform a long-vacant lot into a world-class office space while generating jobs, tax revenue and meaningful improvements in the public realm,\u201d a Tishman Speyer spokesperson said in a statement. <\/p>\n Transforming state-owned rail yards and a swath of warehouses and parking lots into a new business and residential district was one of former Mayor Michael Bloomberg\u2019s top priorities. Developers needed government tax breaks to make commercial projects in the district feasible, he argued. Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.<\/p>\n During the administrations of Bloomberg and Bill de Blasio, the IDA gave about $1 billion in tax breaks for developers Related Cos., Brookfield Properties and Tishman Speyer, according to agency documents. <\/p>\n De Blasio also used the agency to bolster the life-science industry, while his successor Eric Adams prioritized investments in a Queens movie and TV studio and clean energy, including a project to redevelop the South Brooklyn Marine Terminal into an offshore wind staging and port facility. <\/p>\n But Mamdani\u2019s economic agenda has focused on affordability. His highest profile initiative is the creation of city-owned grocery stores, which will offer a 30% discount on produce, meat, bread and milk. The city will spend $70 million to build the stores, and more to subsidize their operations.<\/p>\n Read More: Mamdani\u2019s City Grocery Plan Sets Up a Monopoly, Lawsuit Says<\/p>\n Booming Development <\/p>\n Hudson Yards got off to a slow start. It was rezoned in 2005, and in December 2006, a city agency began selling debt to finance the extension of the No. 7 subway line \u2014 running south and west from Times Square to 34th Street and 11th Avenue \u2014 which was key to the project.<\/p>\n Then came the Great Recession, and the city was forced to step in and cover $360 million in interest payments on $2 billion of municipal bonds backed by payments from developers in lieu of property taxes.<\/p>\n But in the past decade, developers have built a mega complex boasting some of the highest office rents in New York City, according to Avison Young, a real estate services firm. BlackRock Inc., Wells Fargo & Co., KKR & Co. and a slew of other blue-chip companies have moved to the 26-acre site.<\/p>\n