MTA begins West Side Yard talks again

By Matthew Sweeney | msweeney@am-ny.com

7:09 PM EDT, May 13, 2008

The MTA jumped right back into negotiations with past bidders on the Hudson Yards Tuesday, shortly after it announced the death of its $1 billion deal with Tishman Speyer.

The apparent front-runner, a partnership of the Durst Organization and Vornado Realty Trust, is "interested in resuming discussions on its development," said Jordan Barowitz, a spokesman for the Durst Corporation. Metropolitan Transportation Authority officials said they remained optimistic about finding a new developer.

But not everyone had such a positive outlook on the proposed development.

Kenneth Patton, associate dean of NYU's Real Estate Institute and the former city economic development administrator of New York, said that uncertain zoning and design approval and questionable financing of both the 7 train extension and infrastructure development are all concerns to an investor.

Faced with falling rents for office space and softening in the condo market, the developers need the city and state to offer more financial incentives to smooth development, Patton said.

"The government's job should be to increase the feasibility of private development for public purpose," he said.

Mayor Michael Bloomberg, who has pushed for the area's development for years, said the city would work with the MTA to find another developer.

Tishman Speyer balked at finalizing a deal until the entire 26 acres had been rezoned, which would have lead to an unacceptable 18-month delay in the MTA's view. Rob Speyer, Tishman's president, said the failed negotiations lasted for weeks.

The MTA returns to a group of three possible developers. Besides the Vornado-Durst bid that approached $1 billion, the other companies that were in the running prior to MTA's selection of Tishman were Extell Development Co. and Related Companies. Related declined to comment. Extell did not return calls for comment.

The MTA, which is in need of funding its capital budget, is not expected to entertain new proposals because the elaborate plans could take many months to develop.