Deal with yards developer dead

By Matthew Sweeney | msweeney@am-ny.com

3:01 PM EDT, May 13, 2008

Despite MTA efforts to revive a plan for development of the West Side rail yards, it appears after negotiations today with developers that the deal is dead.

MTA officials met today with developer Tishman Speyer, but a spokesman said a final agreement could not be reached and the MTA has revisited talks with other developers in its efforts to transform Manhattan's far west side.

In its effort to resuscitate development of the Hudson Yards, the city yesterday sought to reassure the developer that cost overruns for extending the 7 train to 11th Avenue and 34th Street would be covered.

"The City is already providing $2.1 billion in financing for the #7 and we will continue to work closely with the MTA to determine respective shares of any remaining costs," John Gallagher, a City Hall spokesman, said in an e-mail.

Yesterday the Metropolitan Transportation Authority's chief financial officer, Gary Dellaverson, and Rob Speyer, president of Tishman Speyer, met for 45 minutes to discuss Tishman's $1 billion deal to build on the 26 acres.

The extension of the 7 train is crucial to making any development at the West Side Rail Yards accessible and attractive to potential tenants.

Already, a second stop has been cut from the 7 train extension to curtail the rising cost of the project.

The MTA declared an impasse last week when Tishman balked at finalizing the agreement until all the property had been rezoned, leaving the agency thinking that the company had cold feet and wanted out of the deal it won in March through competitive bidding. If the MTA waited until rezoning was finished it could delay payments to the agency for 18 months at a time when the authority needs an immediate budget infusion.

Meanwhile, the mayor and Sen. Charles Schumer (D-NY) yesterday clashed over control of another west side project. Schumer declared that it made no sense for the inaccessible rail yards to be developed before Moynihan Station is built at the Farley Post Office.

Mayor Michael Bloomberg, who has made development of the Hudson Yards a major program of his administration, gave a testy response, particularly to the senator's proposal that the Port Authority take over management of the $14 billion Moynihan project. The Port Authority is already behind schedule rebuilding the World Trade Center site, the mayor pointed out.

"The city's priorities are clear," Bloomberg said. "We set the city's priorities. They don't come out of Washington."