(Updated) ESD says it didn't approach Related to become designated developer for project. Did Related pull out because the state wouldn't re-create 421-a?

Updated 4 pm: I got the following statement from Empire State Development (ESD), which asserts that my initial conclusion, based on a secondhand statement, was incorrect:

• ESD had not approached additional entities to step into the project, including Related. Greenland USA has and as of today remains to be the developer of the Atlantic Yards project pursuant to the project documents.
• For USIF to pursue foreclosure proceedings given Greenland’s EB-5 default, the project documents require ESD to approve an entity as a permitted developer.
• USIF had presented a JV including Related, Fortress, and themselves as a permitted developer, but opted not to proceed.
• As discussed at the April [March, actually] 2025 AYCDC meeting, we have communicated timelines and milestone expectations to relevant parties regarding advancing the project and the collection of liquidated damages.

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We don't know why Related Companies, the developer of Hudson Yards, pulled out of a contemplated joint venture to develop the six railyard sites, as reported Feb. 1.

But maybe we know why Related was even considering a joint venture, which also would involve an affiliate of the U.S. Immigration Fund (USIF), the company that organized the EB-5 loans in default, and Fortress Investment Group. (See flowcharts here.)

They were asked, by New York State officials, it seems.

A document I got from the state Attorney General's office, in response to a Freedom of Information Law request, contained an email, from Michael O'Regan, Deputy Chief of Staff, to colleagues.

The email indicated that Related Executive VP Charles O'Byrne told him that Empire State Development (ESD), the state authority that oversees/shepherds the project, "had approached Related to gauge their interest in becoming the designated developer for the Pacific Park project, in place of Greenland [USA], which has defaulted."

(The email didn't use the term "joint venture.")

I had thought that the USIF had approached Related, but maybe it makes sense that ESD has better local contacts, especially since Related formed its own "regional center"--rather than work with USIF, the industry leader--to raise low-cost loans under the EB-5 investor visa program. 

ESD response

I asked ESD late Tuesday, more than two business days ago, to confirm or clarify that characterization, and whether it was now approaching other developers.

I didn't yet get a response when I initially published this this morning, but the response is now added up top.

That included a response to other questions about the project, such as the May 12 deadline to start the platform and the May 31 deadline for the 876 units of affordable housing, which face $2,000/month in liquidated damages. 

As I reported in March, a new development plan might emerge. ESD's Joel Kolkmann told the Atlantic Yards Community Development Corporation that ESD would consider delaying the liquidated damages, “If we were to receive something in the very near term,” involving “very clear milestones of what would have to happen.”

Alternatively, I could imagine ESD placing a pause on deadlines, perhaps invoking the current uncertainty regarding tariffs.

Pending issues & 421-a

The Related executive, according to O'Regan's message, indicated that much was unknown, "but that issues such as ensuring 421 a extension, MTA [Metropolitan Transportation Authority] status as a stakeholder, procurement, and community engagement/approval are being discussed."

"He thinks there may be more clarity on these items by mid August, and they will affect whether the company will continue to pursue the designation," the message continued.

The 421-a tax break has expired and was replaced by 485-x, which offers a longer tax break but demands lower rents in the spinoff affordable units. The message suggests that Related may have been seeking a synthetic recreation of 421-a, which ESD granted for projects in the Gowanus neighborhood and has goosed development there.

So, this raises the question: did Related's interest wane because it couldn't get 421-a benefits?

Or, perhaps, it was the challenge of wrangling with the MTA over the required platform for the Vanderbilt Yard.