New York City is poised to pay $2 billion to build a platform over a Manhattan rail yard at the behest of one of the country’s biggest developers, who would then erect mostly luxury housing along the Hudson River.
The tentative deal comes on top of billions in government aid that had already benefited the firm, Related Companies, when it built the first phase of Hudson Yards, a sprawling project that now commands some of the country’s highest apartment rents and steepest office prices.
Related pledged more than 15 years ago to fill the rest of Hudson Yards with residential towers, parks and a public school on Manhattan’s Far West Side. But this second phase of the project never broke ground, with Related claiming that the cost of building over the rail yard had become too high, and that only a more lucrative project, anchored by a casino, would make financial sense.
When community opposition killed Related’s casino bid last spring, the new assistance package quickly rose from the casino bid’s ashes. It was approved in weeks, with Mayor Eric Adams and the City Council agreeing with the developer’s assurances that the complex arrangement made economic sense.
A spokesman for the City Council said its finance division had conducted an “in-depth analysis” of the deal as proposed by Related, and signed off on it before it was approved.
“We took additional time for this analysis, with the goal of protecting the use of taxpayer dollars,” said the spokesman, Rendy Desamours. “It is a fiscally responsible path forward.”
But the New York City Comptroller’s office has sounded a skeptical note, writing in a recent report that the assistance approved by the City Council in June “relies on representations” from Related, and “more strikingly,” that the Council resolution “assigns no limitation on the amount of borrowing to fund additional investments.”
“This is open-ended; it could be anything as far as we know,” said Francesco Brindisi, the executive deputy comptroller for budget and finance. “That’s why I called it rushed, and where our concern comes in.”
As proposed by Related, a city entity would issue debt for the new development, and Related would pay discounted taxes that would go toward paying down that debt.
Related and other developers in the larger Hudson Yards neighborhood currently send reduced tax payments to a city entity that repays $2.5 billion in debt issued years ago for the infrastructure projects that helped revitalize the entire neighborhood, mainly the extension of the No. 7 subway line. Initially, the city had to subsidize those debt payments, but the contributions from the new developments have grown to cover the cost of the debt and produce a surplus.
Critics note that subsidizing more than $2 billion in expenses for a private company diverts resources at a time when federal funds are drying up and the city is forecasting budget shortfalls. They note that while housing routinely gets built with city subsidies, it was worth questioning the wisdom of putting such resources toward a $2 billion platform rather than subsidizing housing in less costly areas.
“That platform is extremely expensive,” said Stijn Van Nieuwerburgh, a professor of real estate and finance at Columbia Business School. “So the bang for the buck is maybe pretty low.”
Mr. Adams announced the deal in June, but did not mention the breadth of the subsidies, which the City Council later approved.
The mayor, who is running for re-election on an independent ballot line, has since contemplated dropping out of the race.
For Related, it is critical that the next mayor support the deal. It still has to win approval from the New York City Industrial Development Agency, an obscure board controlled by the mayor, who also has the power to pull back the subsidies should he so desire.
Jeff Blau, the company’s chief executive, has recently tried to rally support among fellow business leaders for former Gov. Andrew M. Cuomo, who trails in mayoral polls behind the Democratic candidate, Zohran Mamdani, a democratic socialist.
Mr. Adams is polling in fourth place and has told allies he is considering jobs outside of city government, even as real estate developers have privately discussed finding employment for him.
A spokeswoman for Related Companies, Natalie Ravitz, said the deal paves the way for an otherwise underdeveloped site in Manhattan to be transformed into thousands of homes, in a public-private partnership “that is not only viable, but proven to work.” She added that city lawmakers’ request for more housing had necessitated the subsidies, and Related officials believe the city would have to issue $2.5 billion in bonds.
Ms. Ravitz declined to explain why the company, which manages properties valued at more than $60 billion, could not pursue private financing, as it did with the platform for the first phase of Hudson Yards, when the area was still an unproven investment.
The new deal goes beyond assistance for a platform. It also calls for the city to cover, for decades to come, the rent that Related has been paying to the Metropolitan Transportation Authority, which owns the yards. The cost of rent this year is $36 million according to the M.T.A., and it is scheduled to increase.
“No one ever talked about them using taxpayer-funded bond money to pay their lease payments to the M.T.A, which means that they get the land for free,” said Joe Restuccia, executive director of the Clinton Housing Development Company, who as a member of the local community board has been closely involved in Hudson Yards discussions for years. “That’s just shocking.”
The resolution also extends the city’s assistance to the construction of a school on the site, as well as 6.6 acres of open space.
If the city subsidizes the construction of the school, Related would avoid having to pursue private financing for that project as well, according to Mr. Van Nieuwerburgh, the professor of real estate.
Asked about such an arrangement, Ms. Ravitz said, “This makes no sense.” She said that Related had never agreed to pay for the school and that it was the Council, not the firm, that was responsible for adding it to the list of benefits in the resolution approved by the City Council.
The resolution states that its inclusion had been requested by Related.
William Fowler, a spokesman for the mayor, declined to answer detailed questions about the deal, saying that they were premature.
“As the most pro-housing administration in city history, the Adams administration is proud to have played a part in helping reach a tentative agreement to move forward on a historic affordable housing development at Hudson Yards West,” Mr. Fowler said.
Construction of the last portion of Related’s project in Hudson Yards would be a milestone in the city’s decades-long effort to redevelop the Far West Side, formerly a low-rise neighborhood of parking lots, industrial buildings and warehouses.
The platform site stretches 13 acres, from West 30th to West 33rd Streets between 11th and 12th Avenues, with unobstructed views of the Hudson River. The platform would cover 30 tracks, used for the storage of Long Island Rail Road cars.
Related’s proposed development is similar to what it promised in 2009 — several skyscrapers, including an office tower and a hotel, and a school. It would include thousands of housing units, with at least 625 so-called affordable units, an increase from its 2009 proposal. The final number would be dependent on whether Related would qualify for another tax benefit, it said.
Despite opening just before the pandemic, Related says the first phase of the Hudson Yards project has been a financial success, with its multimillion-dollar condominiums nearly sold out and its office buildings attracting major corporations like Warner Media and BlackRock.
If the numbers contained in the mayor’s announcement of a new deal hold, only about 16 percent of the new apartments would be offered at a below-market rate. If the company’s Hudson Yards condominiums are any indication — they have sold for an average of $7.4 million in 2025 — the rest are likely to be “ultra luxury, most-expensive-in-the-city type of luxury,” Mr. Van Nieuwerburgh said.
The apartments that Related built at its first Hudson Yards project have been leased this year at an average rent of $19,475 per month, according to Jonathan Miller, the president of Miller Samuel Inc., a real estate appraisal firm. Across Manhattan, the average new rental lease in August was $5,522.
Ms. Ravitz said she objected to calling the company’s proposed residences “luxury.”
Matthew Haag is a Times reporter covering the New York City economy and the intersection of real estate and politics in the region.
Dana Rubinstein covers New York City politics and government for The Times.
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