Chicago - Success Stories

HVS Hotel Tax Study Supports $700 Million Bond Sale for Javits Center Expansion

Project
The Empire State Development Corporation has embarked on a major expansion of the Jacob K. Javits Convention Center in New York City. The expansion would include the addition of approximately 300,000 square feet of prime exhibit space and the development of a 1,500 room headquarters hotel adjacent to the convention center. On April 1st, 2005 the State of New York initiated a new lodgers’ fee to finance part of the proposed $1.7 billion expansion project. The new fee is called the Convention Center Hotel Room Unit Fee (“Unit Fee”) and it applies a $1.50 per night tax on each room rental that occurs in New York City.

The Development Corporation’s financial planners, UBS, retained HVS to project the future tax revenues that will be generated by the new Unit Fee in New York City. The HVS analysis was used to support the sale of bonds, backed by the new Unit Fee, to finance the expansion project. HVS presented its tax projections to UBS, the Development Corporation, and several bond rating agencies including Moody’s, Fitch, and Standard & Poor’s.

Results
In November of 2005, UBS underwrote a $700 million bond issuance to fund the project. The HVS study appeared in the bond issue. New York City Mayor Bloomberg and Governor Pataki hosted a ceremonial groundbreaking for the expansion project in October 2006. The project is scheduled to be complete in 2010.