State clears the way for $1.4B Javits expansion

Real Estate Weekly, Dec 15, 2004 by Barbara Nelson

The first milestone for the city's plans for the redevelopment of the West Side was reached this week when the state legislature passed legislation that clears the way for the expansion of the Jacob K. Javits Convention Center.

"Beyond solid jobs and economic opportunity it represents the ability to bring thousands of visitors here to fall in love with New York City," said Eileen Mildenberger, COO of the Empire State Development Corporation. "It will bring more trade shows and conventions and that's always a positive thing."

However, construction industry leaders say two more decisions are critical for the economic future of the far West Side.

"I think it's a tremendous step, but it's just the first of three," said Lou Coletti, president of the Building Trades Employers' Association. "The other two of course is the Jet's stadium and the zoning piece."

The Jets Sports and Convention Center that has brought much opposition from community members and government officials alike, needs approval from the Empire State Development Corp and then from the Public Authority Control Board, which may come as early as January. The City Council is expected to rule on the rezoning of the 59-block area of the far West Side by the end of January.

Another critical decision, Mildenberg said, also comes in January when the City Council will vote on whether to approve the Environmental Impact Statement.

The first piece of legislation for the Javits Center expansion proposed by the Governor included the Jet's stadium, but that stipulation was taken out in later drafts. In fact, the final legislation includes specific language that would prohibit the funding for the expansion of the Javits Center to be used towards the construction of a stadium, or anything that would facilitate the building of a stadium.

"This legislation moves the Javits expansion forward but not the stadium," said Assembly member Richard Gottfried, who represents communities surrounding the convention center and sponsored the original legislation to create it. "Javits is the right choice for New York and expanding it is good for jobs, economic development and increasing revenue for the state and city."

However, earlier this year to quash the opposition to NYSCC construction, industry leaders had a four-month study conducted by the national policy and management consulting firm of Hamilton, Rabinovitz & Alschuler, Inc. It concluded that the NYSCC possesses every element shared by other successful stadium projects--elements that are pivotal in predicting success. Construction leaders contend that the stadium will be "the catalyst" for economic growth on the West Side.

The Javits expansion will take place in two phases, with Phase 1 expanding south to 33rd Street and north to 40th Street. The new Javits Center will be expanded from 760,000 square feet to 1,100,000 square feet of exhibit space, 256,000 square feet of meeting space, as well as 86,000 square feet in new ballroom space as part of the Phase 1 expansion. The expansion will create the largest ballroom in New York City, capable of holding 6,000 people.

The Phase 1 expansion will cost $1.4 billion, funded through several sources. The City will contribute $350 million pursuant the signed Memorandum of Understanding. The State will contribute $350 million through restructuring of existing Javits Center bonds and utilizing special federal advanced refunding legislation. The hotel industry has agreed to a dedicated $1.50 per key surcharge that will generate $500 million.

Private financing will help build a 1,500-room headquarters hotel at 42nd Street and 11th Avenue. After Phase 2 expansion, total exhibit and meeting space will be 1,705,000 square feet--this expansion will be financed separately. Construction is expected to begin in spring 2005.