New York’s Metropolitan Transportation Authority on Sunday expects to open its long-delayed 1.5-mile extension of the No. 7 subway line, a $2.4 billion, city-backed project.
Trains will make an estimated six-minute trek from the current Times Square terminus to the new 34th Street-Hudson Yards station on the far west side of Manhattan, amid a 28-acre retail and residential development under construction.
The project evolved from former Mayor Michael Bloomberg’s failed attempt in the mid-2000s to win a bid for the
To fast-track the project, the Bloomberg administration, with Deputy Mayor Daniel Doctoroff running point, devised a so-called value capture financing plan through the issuance of $2 billion in special-purpose bonds, to be repaid from revenue streams generated by Hudson Yards development and other sources, including payments in lieu of taxes.
“It’s an MTA project that is city-supported, financially, unlike the Second Avenue subway or the Long Island Rail Road to Grand Central [East Side access] project,” said Howard Cure, director of municipal bond credit research for Evercore Wealth Management. “This is a project that the city really wanted, based in its expectations of growth in this area. There had been old warehouses, not much going on.”
The MTA is one of the largest municipal issuers with roughly $36 billion in debt. On Wednesday the authority sold $500 million of Series 2015A dedicated tax fund bond anticipation notes.
The authority began work on the project in 2007, dropping earlier plans for an initial stop at 10th Avenue and W. 41st Street.
Equipment problems related to communications, alarm and ventilation systems accounted for much of the delays. Bloomberg took a ceremonial first ride in 2013, expecting the line to open by the end of his term on Dec. 31.
The project, though delayed, overcame worries that it would not survive the recession of 2008, according to Cure.
“During the financial crisis, people were really scared. There was real concern at that point.”
Competition for development elsewhere in Manhattan could affect the profitability of the Hudson Yards project, Cure added.
“There’s lots of growth going on downtown by the World Trade Center and with the Midtown East project by Grand Central [Terminal]. There’s a lot of potential competition so it’s not a done deal that there will be enough development to pay for the debt.”
Cure, however, said the project could set a precedent.
“How can this model and system be used in other places?” he said. “It could be used for the old ARC tunnel across the Hudson River. Property values could go up in New Jersey. The capture of the property-value gains, that’s the intriguing part.”
The opening will mark the first one for a new MTA station since 1989, when the authority added Lexington Avenue/63rd Street, Roosevelt Avenue and 21st Street/Queensbridge stations on the Manhattan-to-Queens F line.
