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The New York Times

February 12, 2004, Thursday, Late Edition - Final

SECTION: Section B; Page 3; Column 5; Metropolitan Desk

LENGTH: 686 words

HEADLINE: Financing Plan to Rebuild Far West Side Is Unveiled

BYLINE:  By CHARLES V. BAGLI

BODY:
City officials unveiled a long-awaited plan yesterday to borrow $3.7 billion to transform the far West Side of Manhattan with an extended subway line, parks and a deck over a railyard where office buildings and a cultural institution could be built.

In a related move, Charles A. Gargano, chairman of the development corporation for the nearby Jacob K. Javits Convention Center, is to announce a conceptual plan today to expand the center to about 1.3 million square feet of exhibition space from 720,000 square feet, city and state officials said. The convention center would be linked to a proposed $1.5 billion stadium for the New York Jets. The state is continuing work on a design and a financial plan for the Javits expansion.

At City Hall yesterday, Deputy Mayor Daniel L. Doctoroff and Mark Page, the director of the city's Office of Management and Budget, said the city had hired Goldman Sachs & Company, J.P. Morgan Chase & Company and Bear Stearns & Company to act as senior underwriters for the bond offering. The bonds, they said, would be paid off through the sale of development rights and zoning bonuses on the West Side, and tax revenues from new projects.

Mr. Doctoroff said the extension of the No. 7 subway line from Times Square to 11th Avenue and 34th Street, the deck over the railyard and new streets and parks would open up the West Side to development that is "absolutely critical to the future of New York City." Mr. Page said the city would ultimately issue about $2.8 billion in long-term bonds and about $900 million in "commercial paper," or short-term debt.

The city's announcement dealt with one of three elements of its financing plan for the West Side. The Bloomberg administration is developing a plan to rezone the area, from 27th Street to 43rd Street, to encourage the creation of 28 million square feet of office space and 12,000 apartments over the next 30 years. Many community groups have already formed a coalition opposing the plans, which they say would "bulldoze" a vibrant neighborhood.

In the coming weeks, the city and the state are expected to announce the two other pieces of the financing plan: the $1.4 billion expansion of the Javits center, and $600 million in public funds for a football stadium for the Jets, which would also serve as an Olympic stadium if the city wins its bid for the 2012 Summer Games. The Jets have committed to investing $800 million in the 75,000-seat stadium.

The announcements are propelled by the Jets' need to build a new stadium before the lease runs out on their current home in the New Jersey Meadowlands and by the city's need to show some progress on the stadium before July 2005, when the International Olympic Committee will select the host for the 2012 games. Mr. Doctoroff said he expected the West Side redevelopment to generate about $16 billion in revenues by 2035 to pay bondholders. But before those revenues materialize, about $1.7 billion will be needed to build the subway extension alone.

"Repayment is being tied to a stream of revenues that won't exist for at least a decade and which ultimately may or may not be sufficient," said Ronnie Lowenstein, director of the Independent Budget Office. Assemblyman Dick Gottfried, a founder of the Hell's Kitchen-Hudson Yards Coalition, also questioned aspects of the financial plan, which will bypass the City Council and be under the control of a public authority. He called "the idea of raising billions by selling development rights and then putting the money in an off-budget fund" administered by that authority "an extraordinary departure from democratic government. A huge chunk is being siphoned off for a one-stop subway line for a stadium that should not be approved."

But the Regional Plan Association applauded the efforts to do "what it takes" to finance badly need infrastructure.

"This is a comprehensive, long-term strategy for a part of New York," said Richard T. Anderson, president of the New York Building Congress. "I haven't seen anything like it in my 40 years in the business."