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The Cost of New York City's Hudson Yards Redevelopment Project

: Bridget Fisher and Flávia Leite
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Flávia Leite: Schwartz Center for Economic Policy Analysis (SCEPA),

No 2018-02, SCEPA working paper series. from Schwartz Center for Economic Policy Analysis (SCEPA), The New School

Abstract: Tax increment financing (TIF) has exploded in popularity on the municipal finance landscape as cities compete for scarce public resources to fund economic development. Previous studies evaluate TIF's efficacy and ability to spark economic growth. This research expands the evaluation of TIF by questioning the widespread understanding of TIF as a “self-financing†tool through an analysis of its risks and costs to taxpayers. We present a case study of the Hudson Yards redevelopment project in New York City, the country's largest TIF-type project. Our analysis reveals a project that, rather than being “self-financing,†cost the city $2.2 billion, largely due to tax breaks to incentivize development and standard development risks and costs. We conclude that positioning TIF and its variants as “self-financing†is incomplete and that analyzing costs and risks associated with TIF and TIF-variant projects is necessary to provide a robust cost-benefit analysis to those municipalities considering its implementation.

Keywords: TIF; Hudson Yards; Municipal Fiscal Health; Costs and risks (search for similar items in EconPapers)
JEL-codes: E21 H2 H30 (search for similar items in EconPapers)
Date: 2018-11
New Economics Papers: this item is included in nep-mac, nep-ppm and nep-ure
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