Statement on IBO Analysis of $3.6B NYC Subsidy for Western Rail Yard

Reinvent Albany thanks the NYC Independent Budget Office (IBO) for its report estimating the potential taxpayer subsidy to the Related Companies for their Western Rail Yard project at Hudson Yards West (“Western Raid Yard”), which we requested on November 6, 2025. (The analysis was also requested separately by Manhattan Community Board 4.) We greatly appreciate the IBO’s work and the very fact that NYC has an independent, fact-based fiscal analyst – something the state of New York badly needs.

Mayor Mamdani Should Not Approve $3.6 Billion in Subsidies to Build Western Rail Yard

Reinvent Albany supports dense development near major Manhattan transit hubs. However, based on the IBO’s analysis, we urge Mayor Mamdani not to approve any NYC subsidies to the Related Company from the Hudson Yards Infrastructure Corporation (HYIC) and the New York City Industrial Development Agency (NYCIDA) to build Western Rail Yard. We believe $3.6 billion in subsidies is an excessively large amount of public investment in a real estate development that should be able to attract ample private capital and that market risk should be borne by the Related Company, not NYC taxpayers.

$3.6 Billion in NYC Subsidies

We requested the IBO analysis in the hope it would clarify how big any planned public subsidies will be and whether this is a good investment of public funds. According to the IBO, Related will get over $3.6 billion in subsidies, including:

• $2.2 billion in project costs paid for with bond borrowing repaid with public funds, that would otherwise be property taxes going to NYC’s general fund
• $1.3 billion in 485-x property tax breaks
• $137 million in commercial property tax breaks

IBO’s analysis does not include potential sales tax breaks, which have been provided for similar projects.

$2.2 Billion in Bonds Potentially Issued by Hudson Yards Infrastructure Corporation Would Be Repaid With NYC Tax Dollars

Reinvent Albany wants to underline that the bonds issued by the City-controlled HYIC to pay for the Related Company’s Western Rail Yard platform and open space would be repaid by Payments in Lieu of Taxes (PILOTS) that would otherwise be property taxes going to the NYC general fund. As the IBO notes, repaying HYIC loans has gotten more expensive because interest on municipal bonds has increased by 4.5% to 5.2% in the last year. These increased borrowing costs mean more PILOT funds go to repaying bonds, and therefore less to the NYC general fund.

For those not familiar with PILOTs or deals like Western Rail Yard, in most real estate deals a developer gets a bank loan and repays the loan with rent from business or residential tenants. That developer does not get to repay that bank loan with the property taxes they would otherwise pay to the City – what Related is doing with Hudson Yards and wants to do with Western Rail Yard.

NYC Has Already Booked HYIC Revenue from Hudson Yards in Future Years – Revenue that Could Go to Western Rail Yard Bonds

NYC faces a significant budget deficit, and if HYIC issues new bonds for Western Rail Yard, paying them back will reduce the revenue from Hudson Yards the city is already counting on, as shown below.

Source: Hudson Yards Infrastructure Corporation FY 2027 Budget and Five-Year Plan

If Western Rail Yard Moves Ahead, City Hall Should Consider Separating It From HYIC and Creating a New Bonding Authority

Currently, it is assumed that the Hudson Yards Infrastructure Corporation (HYIC) will borrow money to pay Related to build a platform over Western Rail Yard. HYIC will then be repaid with PILOT payments (money otherwise being paid as property taxes) from both Hudson Yards and the future Western Rail Yard. This ties the financial future of Hudson Yards to Western Rail Yard and puts at risk hundreds of millions in PILOT revenue NYC is already counting on. Rather than co-mingling the debt and payments to HYIC from Hudson and Western Rail Yards, City Hall should consider walling off revenue paid to HYIC and creating a new borrowing entity solely for Western Rail Yard.

Western Rail Yard Does Not Include a Major Public Benefit Like the 7 Train Extension, But Does Include $988m in Rent to MTA Over 80 Years

The Hudson Yards project used city subsidies to build an extension of the 7 train that benefits the general public, plus a platform over the rail yards. Western Rail Yard would use public funds to build a platform that only Related benefits from, plus some public space. This said, there is public value to developing the Western Rail Yard and paying about $11.6 million a year to the MTA over an 85-year period (2027 through 2112) for a net present value of $988 million.

New York City’s Office Market is Red Hot

Related Companies has argued that without enormous NYC subsidies, it will not build a platform over the Western Rail Yard and build on it. However, NYC’s office market has soared since COVID and Class A office space is in historically high demand.

Here’s how real estate developers and business publications describe New York City’s office market:

“Everyone, and I mean everyone – analysts, investors, the press and even out-of-town office companies – now agree that the New York market is by far the strongest in the country and maybe even the strongest that it’s ever been…I couldn’t be more bullish.” Steven Roth, CEO, Vornado per Crain’s (10/30/2026)

“We’ve never seen it as strong as it is right now…Not even close.” Glen Weiss, head of office leasing, Vornado per Crain’s (10/30/2026)

The New York City Office Market Is Roaring Back, and It’s Pricier Than Ever, Wall Street Journal, 10/14/2026

Manhattan’s Red-Hot Office Market Poised for Its Best Year Since 2000, Wall Street Journal, 06/09/2026