Opinion: An innovative proposal to fund housing development at the Western Yards

When the historic deal was struck to build Hudson Yards, I represented the lower West Side of Manhattan on the New York City Council. Despite some rocky moments, including a global pandemic that had a devastating impact on the office market, Hudson Yards is by all accounts a smashing economic success. But what we accomplished went far beyond new gleaming office headquarters and new apartments. We created an innovative way for big New York projects to self-fund critical infrastructure improvements.

The Hudson Yards Infrastructure Corporation took tax revenue created by Hudson Yards and invested it back into the surrounding community, raising more than $2 billion to build the 7 train expansion as well as investment in public places like Bella Abzug park. The venture has been so successful that it has generated hundreds of millions of dollars of surplus revenue for New York and is projected to generate $2 billion in additional surplus revenue by 2028.

Now, as a proposal to redevelop the Western Yards works its way through the land use process, the City Council has an opportunity to use that same model to help deliver on New York’s most pressing need: housing.

Developers Related Companies/Oxford Properties Group and Wynn Resorts had already proposed a strong plan for the site which included 1,500 units of new housing, including 324 units of affordable housing. But in response to community feedback about the urgent need for more housing, they propose replicating the success of the Hudson Yards Infrastructure Corporation and directing the incremental real estate tax revenue created by the project to help finance the platform, making it feasible to construct up to 4,000 new homes on the site. This would make the project one of the largest additions of new housing in Manhattan in decades and help alleviate the huge shortfall in supply. 

Here's how it would work: the Hudson Yards Infrastructure Corporation would issue bonds based on the income from the project itself – which is one of the biggest economic development projects in New York City’s history. Once the buildings are operational, they generate the tax revenue to service the bonds and will eventually pay back excess revenue for the city. This PILOT (payment in lieu of taxes) program makes it possible to finance three residential towers on the side of the site, creating thousands of units of housing.

While some may take this for granted, it is important to acknowledge the uniquely high financial hurdles that exist at Hudson Yards. Developing anything on the western rail yards starts with finding a way to pay for the $2 billion platform over the tracks, making financing particularly difficult for residential versus commercial uses. 

But by replicating the Hudson Yards Infrastructure Corporation model, we can achieve a project that is 50% residential, addressing a critical community need, and still preserve significant overall community benefits, including thousands of new jobs, a K-8 public school, a day care facility, a new 5.6-acre public park, and more than $2 billion in revenue for the MTA.

It is also important to note the significance of building housing at this scale, which can serve as a rising tide to lift all boats. A 2023 academic analysis conducted by NYU’s Furman Center showed that market-rate housing construction slows regional rent increases and in some cases can reduce rents – without displacing low-income households. Restricting new housing supply, by contrast, raises rents for all.

In other words, it is a true win for New York, and that’s not something anyone should take for granted in this difficult environment. 

What it comes down to is this: there is a need for more housing at all levels in New York City and we can’t look to Washington or Albany to fix it.  We need to solve our city’s challenges with creative solutions and this PILOT program enables a huge amount of housing to be built at the western yards. And the fact that the City Council has used this model so effectively before should give everyone comfort.

So, the question before us is clear: Do we want to create 4,000 new homes where there is currently nothing? Do we want to improve our community with new jobs, green space and a school? The answer should be an obvious yes.