Financing

 

Hudson Yards Infrastructure Corporation

Hudson Yards Infrastructure Corporation (HYIC), a not-forprofit local development corporation, was established to provide financing for infrastructure improvements to facilitate economic development on Manhattan’s far west side. Improvements include the extension of the No. 7 subway line west and south, construction of a park, as well as the acquisition of development rights over the MTA rail yards.

In December 2006, HYIC issued its first series of bonds in the principal amount of $2 billion. HYIC completed its second issuance of $1 billion of bonds in October 2011. Principal on the HYIC bonds is being repaid from revenues generated by this new development, notably payments-in-lieu-of-property taxes (PILOT) on the commercial development and various developer payments. To the extent these revenues are not sufficient to cover interest payments, the City has agreed to make interest support payments (ISP) to HYIC subject to appropriation. ISPs have not been required to be made since 2015.

In May 2017, HYIC issued approximately $2.1 billion of refunding bonds which refinanced all of its initial $2 billion bond issue and a portion of its second bond issue under a new legal structure. This refinancing allowed HYIC to remit approximately $110 million of accumulated revenues for City benefit in 2017. Moreover, the refunding enabled HYIC to transfer to the City any excess revenues over and above amounts needed for HYIC debt service. HYIC remitted $450 million to the City in total in fiscal years 2019 through 2020.

Although the economic impact of COVID-19 has affected the credit ratings on HYIC bonds, the revenues securing the debt remain robust. In connection with credit rating action on the City, Moody’s downgraded its rating on HYIC to Aa3 with a negative outlook. Fitch downgraded the first and second indenture ratings to A+ and A, respectively, and assigned a negative outlook on HYIC. Despite the negative rating actions, revenues collected to date fully fund all debt service due this fiscal year obviating the need for ISP.

The No. 7 Subway extension was constructed by the MTA and began service in September 2015. The secondary entrance to this station located at W. 35th Street and Hudson Boulevard East opened in September 2018. Phase I of the Hudson Park and Boulevard opened to the public in August 2015 and is managed by the Hudson Yards Hell’s Kitchen Alliance Business Improvement District.