The New York City Industrial Development Agency approved a $328 million tax exemption for Related Cos. for the construction of an 80-story North Tower building and shopping mall at its Hudson Yards development site along Manhattan's West Side.
The IDC, a unit of the New York City Economic Development Corp., unanimously approved the measure at its board meeting Oct. 15.
According to an IDC spokesman, this is simply the second iteration or execution of a previously agreed-upon Uniform Tax Exemption Policy framework, which the City Council, the Office of Management and Budget, the IDA and Hudson Yards Development Corp. approved in 2006.
The North Tower and mall will total a combined 3.8 million square feet, just over twice the square footage of the South Tower for which Related has begun construction. The IDA's estimated tax break for the South Tower is $106 million.
"The rent the mall can command from retailers makes it especially valuable and is apparently driving the difference in the size of the property tax breaks between the two sites," the Independent Budget Office watchdog agency said in a report.
The IBO said this second phase of the project could cost the city more.
"Providing a property tax abatement for the mall means the city will need to pump more money than previously expected into Hudson Yards to meet the development's debt service obligations. It also undercuts a shift in city policy away from showering retail projects with tax breaks," the IBO's Doug Turetsky wrote in an Oct. 3 report.
