New York's Metropolitan Transportation Authority announced it chose the Related Cos. and Goldman, Sachs & Co. to develop the Hudson Yards on Manhattan's Far West Side in a deal worth $1.05 billion at net present value. The deal was put together quickly, slightly less than two weeks after an earlier agreement with developer Tishman Speyer collapsed.
The partnership plans to build 13 buildings on two 13-acre parcels that it expects will have total development costs reaching $15 billion. Related Cos. plans to use private equity to build an approximately $2 billion platform over the rail yards on which the approximately 13 million square foot development will be built. The development does not have an anchor tenant.
Related chairman Stephen Ross said they plan to seek bond funding from the New York State Housing Finance Agency to build 2,154 units of rental housing of which about 430 units would be set aside as permanently affordable.
A Related spokeswoman said it was premature to speculate how much bond financing the housing would need. HFA spokesman Phil Lentz said Related had not contacted them about bond financing for the project, but that the HFA was committed to helping the MTA move the project forward.
The project will also include 5.49 million square feet of commercial office space, 757,000 square feet of retail space, a hotel, and a school.
MTA president and chief executive officer Elliot Sander said that the deal, which will go before a special board meeting on Thursday for approval, would help pay for the authority's capital plan.
Under the deal, Related and Goldman will enter into 99-year ground lease and will have the option to delay certain rent payments for two to three years if construction is delayed. MTA chief financial officer Gary Dellaverson said that the authority has the option of bonding against the lease, but that no decision has been made whether it will do so.
One parcel, known as the Eastern Railyard, was rezoned for construction while the Western Railyard still has to go through the city's land review process.
Development fees and payments in lieu of taxes related to development on the site are expected to help pay debt service on bonds already issued by the Hudson Yards Infrastructure Corp.
The HYIC sold $2 billion of bonds in 2006 to finance infrastructure improvements in the area and to help pay for the $2.1 billion extension of a subway line that is seen as crucial to the area's development. Plans to sell $1 billion of additional HYIC bonds in 2011 have not changed, corporation president Alan Anders said.
Goldman is financial adviser to the MTA.
