Iconic Hudson Yards Project Tests Mamdani’s Approach To Development

NEW YORK — The final phase of the largest private real estate development in American history now rests in the hands of New York City’s socialist mayor.

Completing Hudson Yards would cap a 20-year transformation of Manhattan’s far West Side into a canyon of luxury towers, corporate offices and largely high-end housing.

But plans for the final build-out are tied to some $2 billion in tentative public subsidies that still need sign-off from Mayor Zohran Mamdani.

For Mamdani, who comes out of a political movement that has often decried “corporate handouts,” the decision is more than procedural. It’s a defining early test of how he tangles with the city’s most powerful developers — including one whose executives rallied behind his chief rival in the mayoral contest.

The project would add thousands of apartments in a city starved for housing. But critics say the public price tag is too steep, with one progressive group labeling it “the biggest corporate bailout in New York City history.”

“We hope Mayor Zohran Mamdani rejects this boondoggle and makes clear that City Hall will not bail out powerful corporations at the expense of working people,” said Olivia Leirer, executive director at New York Communities for Change, a left-leaning advocacy group that was one of Mamdani’s earliest endorsers.

The Hudson Yards megacomplex, developed by Related Companies and Oxford Properties Group, has been described as a “city within a city.” Built atop active rail yards next to the Hudson River, office space commands some of Manhattan’s highest rents, and one penthouse apartment sold for $28 million last year.

Depending on who you ask, it’s either an economic development marvel and testament to New York’s capacity for endless reinvention — or a playground for the ultra-rich and symbol of excess in an increasingly unaffordable city.

The question is how Mamdani will proceed on an agreement struck by his developer-friendly predecessor Eric Adams, under which the city would cover the cost of a $2 billion platform over the last section of rail yards — making way for some 2 million square feet of office space and 4,000 apartments, roughly 15 percent of them affordable. Future revenues generated from the project would be used to pay back the debt.

City Hall is assessing that financing arrangement and has not yet taken a public stance on the details.

“This project has the potential to deliver much-needed housing, including affordable housing, on Manhattan’s West Side,” Deputy Mayor for Housing and Planning Leila Bozorg said in a statement to POLITICO. “We support the broad goal of delivering housing for New Yorkers and will carefully evaluate any potential public financing for this project to ensure it delivers meaningful public benefits.”

The path ahead

The city first rezoned the western rail yards site for office and residential development in 2009 under former Mayor Mike Bloomberg, but Related never moved forward with construction and argued last year that rising costs had left the development unworkable without public financing.

Related announced a proposal in 2022 to build a casino at the site, but pulled out of that competition after failing to win local support. The City Council nonetheless approved further land use changes sought by Related last June. The Council quietly approved a resolution in support of the public financing a few weeks later.

The previous administration then raced to advance that financing before Adams left office in December. The former mayor celebrated the agreement, touting that in exchange for the subsidies the project would now contain at least 625 affordable apartments, up from 420 Related had previously committed.

But the framework set into motion leaves key approvals up to the new mayor, and several people familiar with the financing model say Mamdani has broad leeway to reshape the agreement if he chooses to.

Related CEO Jeff Blau and founder Stephen Ross tried to keep Mamdani out of City Hall. Blau raised alarms about Mamdani’s candidacy and implored some of the city’s wealthiest residents to rally behind his chief opponent, former Gov. Andrew Cuomo. Ross contributed $50,000 to the pro-Cuomo super PAC Fix the City.

But now, the company says it’s optimistic about the project's prospects.

“We look forward to continuing to work with the new Administration on the plan for the Western Railyard,” Kayla Parker, a spokesperson for Related, said in a statement. The project will “help us create an even more vibrant neighborhood that contributes to NYC’s long-term growth and economic vitality.”

“We would expect that any new Administration would want to understand what we’re looking to build,” she continued, “but fundamentally we are very optimistic because it delivers on NYC's needs: thousands of units of housing, more green open space, a school, union jobs, and businesses making a long-term commitment to our City and keeping office workers here."

Related still needs to secure an anchor tenant and bring a specific proposal before the largely mayor-appointed board of the little-known Industrial Development Agency, which oversees tax incentives and is housed within the Economic Development Corporation. Mamdani has yet to name his pick to lead the economic development arm, which he is refashioning to focus on “economic justice.”

The Hudson Yards Infrastructure Corporation — a body set up to finance projects in the area — has yet to conduct an analysis to ensure that revenues from the future development would be sufficient to pay back the city-backed debt. The board of that corporation, which is controlled by the mayor, would then need to actually approve the bonds and finalize the terms of the financing.

Finally, the mayor must sign an agreement before the financing structure can go into effect.

Reopening the deal

The issue puts Mamdani in a tricky position with respect to his base.

While Mamdani and others on the left have taken a more pro-development posture in recent years, it was DSA-aligned politicians who sank the Amazon headquarters deal seven years ago after deeming tax subsidies in the agreement too generous to one of the world’s biggest corporations. The collapse of that deal — which was expected to bring more than 25,000 jobs to New York — sent shockwaves through the city’s political establishment and reflected the growing power of the left wing of the Democratic Party, for whom Mamdani is now a standard-bearer.

On the other hand, the western rail yards project would create a significant infusion of residential units amid a mammoth housing shortage and affordability crisis — an issue that was the centerpiece of Mamdani’s insurgent mayoral campaign. Tinkering with the agreement risks Related walking away, leaving the vast site undeveloped.

Parker, of Related, said the latest plan can “realistically be built and financed, despite the enormous and growing costs of the platform over the working railyard.” Once it secures an anchor tenant — it’s having conversations with a few well-known companies — Related plans to engage with City Hall.

Parker noted the “unanimous support” for the latest plan from the council, and said it responds to a push from local leaders for more housing at the site.

But even people who support some level of public financing — particularly for the costly platform — think the tentative agreement needs further study.

The 625 affordable apartments are “not enough,” said Assemblymember Tony Simone, who represents the area.

“We want to ensure the best deal for the city and try to get the percentage of affordable apartments higher,” Simone said. Referencing an agreement that was attached to the 2009 rezoning, he added, “I want to see those promises fulfilled before any approval happens and I’ve aired that with this administration.”

Manhattan Borough President Brad Hoylman-Sigal, who previously represented the area in the state Senate, said he would “hope that any economic deal that was made in the 11th hour by the Adams administration would be scrutinized by Mayor Mamdani and his team, including this one.”

The local community board’s land use committee discussed the financing scheme at a meeting Wednesday, and the board is planning to write a letter to the new mayor, City Council speaker and comptroller formally asking them to reevaluate the agreement. Some members say the deal received little oversight when it was first advanced last year, and appears to extend city assistance to public benefits that — community members hold — Related previously committed to covering on its own, like the construction of a public school.

“It’s one thing to say, as Related came to us with a compelling case – this platform is just so expensive, it’s so complex, and the costs have ballooned, we need help to build the land,” Joe Restuccia, a member of the board, said at the Wednesday meeting. “But to come and say that all the benefits they already agreed to are now not going to be, in a simple way, on their dime but the public dime, that’s a problem.”

Related insists that it was never responsible for financing the construction of the school.

Ellen Baer, an IDA board member, voted in favor of a step to advance the financing deal when it came up in November. She echoed concerns about “the lack of analysis,” but added a word of caution.

“I understand that this is a commitment that was made — anecdotally, verbally, whatever it is, over time — by the city and I do feel that the word of the city has to matter in some of these negotiations and has to go through administration after administration,” she said at the November meeting. “The city has to be an entity on which the private sector can rely in order for us to have ongoing public-private partnerships.”