The city just came out with a new proposal for tax breaks for developing the Hudson Yards (PDF) which appears to scale back some of the generous incentives it was originally contemplating. The 40-block West Midtown area would be split into three vertical zones, with the blocks west of 10th Avenue receiving the deepest cuts to encourage real estate developers to beginning excavating there faster.
Still, James Parrott, deputy director of the liberal Fiscal Policy Institute, says no tax breaks are needed to get developers interested in moving west, certainly not for the superblock around Madison Square Garden, where Vornado Realty Trust is considering building almost 5 million square feet of office towers. (The proposal would tax improvements to the MSG site at the regular rate for the first four years, then cap tax increases for the following 15 years.)
“It’s a joke that these incentives are needed to build in Midtown,” Parrott told us, arguing that high rents in core Midtown are forcing companies further west. “You have to worry about unintended consequences. Is that going to lead to outer borough areas insisting on steeper property tax incentives? Is that going to result in pressure form Midtown property owners to hold the line on assessments or some other city action?”
The city’s Industrial Development Agency will hold a public hearing on the proposal next Thursday, August 3, and is supposed to vote on it the following week.