KBRA Downgrades the New York State Urban Development Corporation Moynihan Train Hall Project TIFIA Loan to BBB-; Outlook is Stable
26 Sep 2025 | New York
KBRA has downgraded the long-term rating on the New York State Urban Development Corporation (d/b/a Empire State Development) Moynihan Train Hall Project TIFIA Loan to BBB- (from BBB). The Outlook is Stable. The rating action reflects the substantial degree to which the taxable assessed valuation (AV) of the Moynihan Train Hall Project (the Project) continues to lag projections as the transaction approaches the June 2030 end of the Fixed Payment In Lieu of taxes (PILOT) Period. An investment grade rating remains warranted give the effective credit backstop provided by the Metropolitan Transportation Authority (MTA).
Key Credit Considerations
The rating downgrade reflects the following key credit considerations:
Credit Positives
- The release of MTA’s obligation to replenish the DSRA cannot legally occur until at least 2033 and is subject to the satisfaction of performance conditions.
- PILOT payments are fixed at predetermined amounts through June 2030, insulating them from market valuation volatility.
- All office space was leased to Meta in 2020 for an initial term of 15 years, subject to extension. The Meta lease is expected to provide some support for AV levels beyond the Fixed PILOT Period.
- PILOT obligations have priority relative to other Tenant obligations, and ESD can terminate the underlying Lease in the event of a PILOT default.
Credit Challenges
- The Property’s assessed value is substantially lower than originally projected, with less than five years remaining in the Fixed PILOT period.
- Following the Fixed PILOT period, the property may be assessed certain local taxes or special assessments from which ESD may not be exempt. The RV Tenant has the right to pay the assessment or taxes and offset such payment against amounts due under the Lease.
- Ultimately, PILOT payments are derived from a project area that KBRA considers narrow by size and property type.
Rating Sensitivities
For Upgrade
- Significant and sustained improvement in Project AV prior to the end of the Fixed PILOT Period.
- Consistent debt service coverage of at least 1.25x from PILOT payments beginning in FY 2031.
For Downgrade
- Deterioration of credit quality or financial performance of the MTA.
- Deterioration in Project AV prior to the end of the Fixed PILOT Period.
- Deterioration in regional or national property values that impact rent and PILOT assumptions.
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