FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`
`INDEX NO. 159154/2022
`
`RECEIVED NYSCEF: 02/07/2023
`
`Empire Station Complex
`Funding and Financing Considerations
`
`Community Advisory Committee Working Group Meeting
`
`May 25, 2021
`
`ESD EXHIBIT 76
`
`
`NYSCEF DOC. NO. 172
`
`INDEX NO. 159154/2022
`
`RECEIVED NYSCEF: 02/07/2023
`
`Empire Station Complex
`Funding and Financing Considerations
`
`Community Advisory Committee Working Group Meeting
`
`May 25, 2021
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`Cost Sharing Model for Large-Scale Rail
`Infrastructure Projects
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`Federal
`contributions
`
`Local / state
`contributions
`
`Gateway: Hudson Tunnel $13.7 B
`
`Portal North Bridge
`
`$1.9 B
`
`BART to Silicon Valley II
`
`$6.9 B
`
`Local
`(PANYNJ,
`NY, NJ),
`49.90%
`
`FTA CIG
`New
`Starts,
`38.90%
`
`Amtrak,
`11.20%
`
`Source: FY22 Financial Plan
`
`New
`Jersey,
`41.80%
`
`FTA CIG
`Core
`Capacity,
`43.30%
`
`Other
`Federal,
`3.00%
`Source: Sep. 2019 Financial Plan
`
`Amtrak,
`11.80%
`
`FTA CIG,
`25.00%
`
`State,
`13.30%
`
`Local,
`61.70%
`
`Empire Station Complex Funding & Financing Considerations | Page 2
`
`Source: Infrastructure Journal
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`CIG: Primary Federal Discretionary Program for
`Rail Projects
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`FTA Capital Investment Grants (CIG) Program
`
`Program Overview
`
`CIG New Starts (NS)
`
`CIG Core Capacity
`(CC)
`
`• Projects that are new fixed guideway projects or extensions to existing
`systems with a total estimated capital costs of at least $300m or requires a
`minimum CIG request of $100m
`
`• By statute, maximum federal share is 60% under New Starts; per actual
`policy implementation, maximum federal share is 50%
`
`• Federal share tends to decrease with an increase in project costs
`
`• Projects that are substantial corridor-based capital investments in existing
`systems that increase capacity by not less than 10% of an at or near-
`capacity corridor
`
`• By statute, maximum federal share is 80% under Core Capacity; per
`actual policy implementation, maximum federal share is 50%
`
`• Federal share tends to decrease with an increase in project costs
`
`Empire Station Complex Funding & Financing Considerations | Page 3
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`CIG Program Funding Availability
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`• Grant funds are distributed over multiple years due to limits on annual appropriations.
`
`• Federal share tends to decrease as project costs increase due to appropriation limit and competition
`among projects.
`
`Source: FY22 Financial Plan
`
`Empire Station Complex Funding & Financing Considerations | Page 4
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`President Biden’s Infrastructure Proposal
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`• Proposes $2 trillion total investment spread over eight years
`
`• $165 billion for public transit and railway, with an average annual spend of $21 billion nationwide
`
`• Not clear how much funding would be directed to existing versus new funding programs
`
`Empire Station Complex Funding & Financing Considerations | Page 5
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`CIG Program Mechanics and Timing
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`• Highly competitive and funding is subject to annual congressional appropriation
`
`• Multi-year process, with final decisions on grant amounts not made until just prior to Construction
`phase (up to 6 years into the process)
`
`• Process is designed to thoroughly vet project costs and risks prior to committing federal funding
`
`• Local contributions must be identified and committed during earlier phases
`
`General / simplified CIG funding process
`
`Project Definition
`
`Project
`Development
`
`Final Design &
`Funding
`
`Construction
`
`No timing constraints
`
`Complete within 2 yrs
`
`Complete 3-4 yrs from PD start
`
`Project-dependent timing
`
`No
`Federal funding
`
`No
`Federal funding
`
`No
`Federal funding
`
`Federal contribution
`appropriated annually
`
`• Prelim. project definition
`• Alternatives analysis
`(NEPA)
`• Corridor studies
`
`• Advance design work
`• Select preferred alternative
`• Secure initial local
`funding commitments
`• Early engagement with
`and validation from
`USDOT
`
`• Complete design and
`engineering requirements
`• Secure environmental
`approvals (NEPA)
`• Secure all necessary
`local funding
`commitments
`• Project approved for
`funding by USDOT
`
`• Federal and local
`funding sources drawn
`
`* Upon receipt of request to enter Project Development, after receiving all the information required from the project sponsor,
`FTA will send a letter within 45 days indicating the sufficiency of the information for entry into Project Development.
`
`Empire Station Complex Funding & Financing Considerations | Page 6
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`Financing Considerations
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`Timing
`
`i. What federal grant programs would be available for the project and what
`are their timing and requirements?
`
`ii. What are the conditions precedent to financing? (e.g., approval of
`GPP, agreements with funding partners, property acquisition,
`sequencing of project components, etc.)
`
`iii. What are expectations for receipt of funds vs project spend?
`
`Revenue Profile
`
`i. How do the revenue streams and project uses impact debt capacity,
`taxability, funding agreements, and project delivery strategy?
`
`ii. What is the investment quality of the revenue streams; will the
`financing require credit enhancement to achieve investment-grade
`quality; and what are precedent structures for credit enhancing similar
`projects/revenue streams?
`
`Empire Station Complex Funding & Financing Considerations | Page 7
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`Timing Considerations
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`• Development-related revenues from the Empire Station Complex GPP sites can potentially serve as
`NY’s share toward the Penn projects’ capital costs.
`
`• However, the timing differences between project spend and receipt of these revenues is the key
`consideration of any financing strategy.
`
`2028
`
`Development Period
`
`One-time and recurring revenues from new development
`
`$$$
`
`Revenues
`
`Development
`
`Penn Capital Costs
`
`Empire Station Complex Funding & Financing Considerations | Page 8
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`Revenue Profile Considerations
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`• Tax revenues related to potential future development carry uncertainty around timing and amount.
`
`• Credit enhancement mechanisms are usually required in order to address this uncertainty and
`achieve investment-grade ratings.
`
`• E.g., financing for the No. 7 subway line extension relies upon Interest Support Payments from the
`City to bridge the timing gap between project needs and development-related tax revenues.
`
`Illustrative diagram of credit enhancement requirement
`
`Development revenues available for debt service
`
`Debt service paid by development revenues
`
`Debt service support payments
`
`Rail Project Construction
`
`Development Period
`
`Empire Station Complex Funding & Financing Considerations | Page 9
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`Financing Tools for Local Contributions
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`Program Description
`
`Key Precedent
`
`Transportation
`Infrastructure Finance
`and Innovation Act
`(TIFIA)
`
`• Federal loan with favorable interest rates based
`on Treasury rates (plus 1 bp statutory margin)
`
`• Flexible capitalization/amortization terms and
`35-year term beyond project completion
`
`• Caps loans at 33% of eligible project costs
`
`• Federal government subsidizes credit risk;
`investment-grade rating required
`
`• Federal loan with favorable interest rates based
`on Treasury rates (plus 1 bp statutory margin)
`
`Railroad Rehabilitation
`& Improvement
`Financing (RRIF)
`
`• Flexible capitalization/amortization terms and
`35-year term beyond project completion
`
`• Can finance 100% of eligible project costs
`
`Tax-Exempt Bonds
`
`• Credit Risk Premium ranging between 0% and
`5+%, depending on the credit risk of the project
`
`• Current low-yield environment helps to reduce
`overall financing costs
`
`• Not subject to cap requirements
`
`• Term of bonds limited by useful life of projects
`
`• Financing must include public payments or
`public use
`
`Moynihan Train Hall
`
`Gateway: Hudson Tunnel (plan)
`
`Extension of the 7 Line
`
`Empire Station Complex Funding & Financing Considerations | Page 10
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`Case Study: Moynihan Train Hall
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`Key Takeaways:
`
`• Newly opened rail station for Amtrak seen as first step in the redevelopment of the
`Empire Station Complex
`
`• Project funded from multiple sources, including upfront and long-term developer
`payments, federal grants, federal loan and direct state contributions
`
`• Despite strong developer and strong commercial incentives to complete, MTA
`backstop for debt service reserve needed to achieve investment-grade rating
`
`Development revenues committed to project:
`
`• Recurring: PILOT
`
`• One-time: Up-front lease payment
`
`Empire Station Complex Funding & Financing Considerations | Page 11
`
` Project Sources
`
` TIFIA loan
`
` ESD
`
` Developer payment
`
` PANYNJ
`
` Amtrak
`
` Federal CMAQ & Resiliency
`
` MTA
`
` PILOT during construction
`
` $m
`
`526.1
`
`475.3
`
`230.0
`
`150.0
`
`105.0
`
`62.2
`
`54.9
`
`14.9
`
` Project Uses
`
` $m
`
` Moynihan Train Hall Phase 2
`
`1,260.0
`
` Project Management & Other Costs
`
`334.0
`
` DS Reserves / Financing Costs
`
`24.4
`
` Total
`
`1,618.4
`
` Total
`
`1,618.4
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`Case Study: Denver Union Station
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`Key Takeaways:
`
`• Newly configured transit hub in Downtown Denver which included substantial real
`estate development on former freight rail yard
`
`• Project funded by development-related revenues, grants and local stakeholder
`contributions
`
`• TIFIA and RRIF financing structure utilized annual obligations from transit agency
`(RTD) and City of Denver contingent support to improve financing credit profile
`
`Revenues committed to project:
`
`• Recurring: FasTracks sales tax; District property taxes
`• One-time: Property take downs
`
`Ref: FHWA project profile on Denver Union Station; Build America Transportation Investment Center (BATIC) Institute
`presentation on Denver Union Station Innovations in Practice Webinar.
`
`Empire Station Complex Funding & Financing Considerations | Page 12
`
` Project Sources
`
` RRIF loan
`
` TIFIA loan
`
` Federal grants
`
` RTD FasTracks
`
` Land sale / other
`
` State grants
`
` Total
`
` $m
`
`155.0
`
`146.0
`
`79.0
`
`51.0
`
`29.0
`
`21.0
`
`481.0
`
` Project Uses
`
` Bus terminal
`
` Streets & public spaces
`
` Light rail
`
` Commuter rail
`
` Total
`
` $m
`
`185.0
`
`162.0
`
`70.0
`
`64.0
`
`481.0
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`Case Study: Hudson Yards/7 Line Extension
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`Key Takeaways:
`
`• Development-related revenue provided substantial funding for the extension of
`the 7 Line
`• Revenue bonds issued for the project were backed by future development-related
`revenues, which necessitated credit support to appeal to investors
`Interest Support Payments (ISP) from the City provide support on interest
`payment shortfalls for the bonds (subject to annual appropriation).
`
`•
`
`*
`
`Development revenues committed to project:
`
`• Recurring: PILOT, Tax Equivalency Payments (TEP)
`
`• One-time: District Improvement Bonus (DIB), Transferable Development Rights (TDR) payment, PILOMRT
`
`* Sources & Uses table reflects consolidated project budget using 2007 and 2012 financing statements
`
`Empire Station Complex Funding & Financing Considerations | Page 13
`
` Project Sources
`
` Tax-exempt bonds
`
` Bond premium
`
` $m
`
`3,000.0
`
`133.8
`
` Project Uses
`
` $m
`
` 7 Subway extension & amenities
`
`2,879.4
`
` Total
`
`3,133.8
`
` Total
`
` TDR purchase
`
` Issuance costs
`
` HYDC expenses
`
`200.0
`
`37.4
`
`17.0
`
`3,133.8
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`Projected Cost Sharing – Current Agreement
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`Anticipated
`Federal
`Contribution:
`50%
`
`Anticipated
`New Jersey
`Contribution:
`25%
`
`Anticipated
`New York
`Contribution:
`25%
`
`Anticipated
`Federal
`Contribution:
`$15-20 Billion
`
`Anticipated
`New Jersey
`Contribution:
`$7.5-10 Billion
`
`Current Project Cost
`Estimate:
`$30-40 Billion
`
`(includes Hudson Tunnels,
`Penn Expansion and Penn
`Reconstruction)
`
`Anticipated
`New York
`Contribution:
`$7.5-10 Billion
`(including $1.3B
`NYS 2021 Budget
`appropriation)
`
`Empire Station Complex Funding & Financing Considerations | Page 14
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`Projected Cost Sharing – CIG New Starts
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`Anticipated
`Federal
`Contribution:
`60%
`
`Anticipated
`New Jersey
`Contribution:
`20%
`
`Anticipated
`New York
`Contribution:
`20%
`
`Anticipated
`Federal
`Contribution:
`$18-24 Billion
`
`Anticipated
`New Jersey
`Contribution:
`$6-8 Billion
`
`Current Project Cost
`Estimate:
`$30-40 Billion
`
`(includes Hudson Tunnels,
`Penn Expansion and Penn
`Reconstruction)
`
`Anticipated
`New York
`Contribution:
`$6-8 Billion
`(including $1.3B
`NYS 2021 Budget
`appropriation
`
`Empire Station Complex Funding & Financing Considerations | Page 15
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`Potential Development-Related Revenues
`for NY Contribution
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`The following categories of revenues could be used toward the required NY contribution to
`the Penn rail projects.
`
`Land value payments: Upfront and/or periodic payments received through long-term
`lease agreements (Sites 1-3)
`
`Additional development rights (ADR) value: Payments for additional development rights
`to be used on privately-owned sites (Sites 4-8)
`
`Payments in lieu of taxes (PILOT): Ongoing payments in lieu of ad valorem property
`taxes (potentially all sites)
`
`Payment in lieu of mortgage recording tax (PILOMRT): One-time payment in lieu of
`mortgage recording tax (potentially all sites)
`
`Payment in lieu of sales tax (PILOST): One-time payment in lieu of sales and use tax on
`construction materials for development (potentially all sites)
`
`Empire Station Complex Funding & Financing Considerations | Page 16
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`Proposed Construction Phasing
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`Project Component
`
`Construction Start
`
`Construction Finish
`
`Reconstruction of Existing Penn Station
`
`Demolition at Sites 1, 2, and 3
`
`Site 7
`
`Hudson River Tunnel
`
`Expansion of Penn Station Below-Grade
`on Sites 1, 2, and 3
`
`New Penn Station Service Building
`
`Site 5
`
`Site 1
`
`Site 2 (East) – Building 1
`
`Site 4
`
`Site 6
`
`Site 8
`
`Site 3
`
`Site 2 (West) – Building 2
`
`2021
`
`2024
`
`2022
`
`2019
`
`2024
`
`2025
`
`2029
`
`2029
`
`2029
`
`2030
`
`2031
`
`2033
`
`2033
`
`2034
`
`2026
`
`2026
`
`2028
`
`2030
`
`2028
`
`2026
`
`2033
`
`2033
`
`2035
`
`2034
`
`2037
`
`2038
`
`2038
`
`2038
`
`Sources: Empire Station Civic and Land Use Improvement Project, Draft Environmental Impact Statement (DEIS), Chapter 20, Construction;
`Hudson Tunnel Project, DEIS and Draft Section 4(f) Evaluation, Chapter 3, Construction Methods and Activities
`
`Empire Station Complex Funding & Financing Considerations | Page 17
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`Challenge: Fully Funding New York’s Share
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`Penn Project Costs: $30-40B
`
`• Property Acquisition
`• Relocation
`• Demolition
`• Service Building Construction
`
`• Hudson Tunnel Construction
`• Penn Renovation Construction
`• Penn Expansion Construction
`
`2022
`
`Penn Project Federal/NY/NJ Funding (Assuming CIG NS): $30-40B
`
`Anticipated
`Federal Share:
`$18-24 Billion
`
`Anticipated
`NJ Share:
`$6-8 Billion
`
`Anticipated
`NY Share:
`$6-8 Billion
`
`2022
`
`Penn Project New York Funding Share: $6-8 Billion
`
`2030
`
`2030
`
`GPP Sources: ~$3.3B
`
`Funding Gap: $4-6B
`
`Future GPP Sources
`
`• ADR Value
`• PILOST/PILOMRT
`•
`Land Value
`•
`$1.3 B NYS Budget
`appropriation
`
`2022
`
`• TIFIA
`• RRIF
`• Tax Exempt Bonds
`• Other Financing Sources
`
`• ADR Value
`• PILOT/PILOST
`• PILOMRT
`•
`Land Value
`
`2030
`
`Empire Station Complex Funding & Financing Considerations | Page 18
`
`ESD EXHIBIT 76
`
`
`
`FILED: NEW YORK COUNTY CLERK 02/07/2023 11:48 PM
`NYSCEF DOC. NO. 172
`Conclusions
`
`INDEX NO. 159154/2022
`PRELIMINARY DRAFT FOR DISCUSSION PURPOSES
`RECEIVED NYSCEF: 02/07/2023
`
`Best case scenario: a portion, but not all, of the billions of dollars
`necessary for New York’s share could be generated by ESC real estate
`by 2030, when the Penn Projects are projected to be completed.
`
`A portion of these early funds will be dedicated to the GPP’s transit and
`public realm improvements to support the Penn Projects.
`
`The urgency of the GPP is highlighted by the timing gap between when
`funds are needed to construct the Penn Projects and when real estate
`revenues are generated.
`
`The funding gap caused by this timing problem will be closed, at least
`in part, by financing against future revenues, particularly PILOT.
`
`Empire Station Complex Funding & Financing Considerations | Page 19
`
`ESD EXHIBIT 76
`
`
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