The proceeds from the bonds will be used to extend the No. 7 subway line west and south. The current line stops at the Times Square station at Seventh Avenue and 41st Street, but under current plans the line will run to 11th Avenue and 34th Street. Construction is slated to begin next summer but will most likely not be complete until 2013.
Fitch Ratings has assigned the bonds an A- rating, according to a release. The company bases its rating on "The historical strength of the midtown Manhattan real estate market, the expectation of the strong demand for commercial and residential development in the Hudson Yards area that will support the bonds, and, significantly, New York City's obligation to pay interest on up to $3 billion of HYIC bonds when project revenues are insufficient for this purpose."
Hudson Yards is a 45-square-block area bordered by West 43rd Street, Seventh and Eighth avenues, 30 Street and 11th and 12th avenues. Originally a manufacturing area, the city rezoned the entire place for medium- to high-density commercial use, which will allow for office buildings, hotels and residential buildings.
Fitch Ratings points out the importance of the No. 7 line's extension as it will enable more office buildings to be built in the area. "The subway extension is critical to commercial development in the Hudson Yards area; office building in Manhattan is dependent upon subway access and the area is currently underserved."
The city is offering tax incentives to developers willing to build in the Hudson Yard area, as the establishment of office and residential projects in the area will further back-up the HYIC bonds, according to testimony from George Sweeting, deputy director of the Independent Budget Office of the city.
In September, the Metropolitan Transit Authority and the city agreed to pay for the No. 7 extension. HYIC will provide $2 billion toward the project. In a statement at the time of the agreement, Mayor Michael Bloomberg said, "The agreement will help us continue to move forward with our plan to build more affordable housing, create jobs and extend the No. 7 subway line past Times Square which together will grow this underutilized asset into a vibrant new community.
The fiscal 2007, series A bonds will sell through negotiation with a syndicate of Goldman, Sachs & Co. They are due on Feb. 15, 2047.
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