MTA says "yards" talks with Tishman Speyer at "impasse"

May 9, 2008

Late yesterday afternoon, the Metropolitan Transportation Authority released a brief statement that "negotiations between the MTA and Tishman Speyer over the development of the Rail Yards on Manhattan's Far West Side reached an impasse."

"The cause of the impasse," the statement continued, "was Tishman Speyer's attempt to change a central deal term in an effort to postpone the closing on the Eastern Yard until the Western Yard was satisfactorily re-zoned. This demand changed the economics of the proposed deals and the certainty of payments to the MTA. The MTA remains committed to developing these unique and very valuable parcels of land."

The announcement comes only six weeks after the agency had selected Tishman Speyer, one of the city's major real estate concerns and owner of the Chrysler Building and Rockefeller Center, over four other ventures that had submitted bids to redevelop the 26-acre yards to the west of Penn Station with millions of square feet of office space and several thousand units of housing.

The design of the Tishman Speyer proposal by Helmut Jahn was widely criticized as the most unattractive. Morgan Stanley initially had been a partner in the proposal, but subsequently withdrew and an article in today's edition of The New York Times by Charles V. Bagli said that Tishman Speyer has been looking recently unsuccessfully for a major office tenant, adding that "Even two companies that had been allied with other bidders for the project, Cond¿ Nast Publications and the News Corporation, turned it down, according to real estate executives who were briefed on the negotiations."

Mr. Bagli's article also reported that the executives maintained that Tishman Speyer "also jettisoned its designs by the architect Helmut Jahn."

The yards are divided in two sections and the western half still requires a rezoning that has yet to begin to go through the city's Uniform Land Use Review Procedure.

An article by Brian Kates, Kirsten Danis and Leo Standora in today's edition of the Daily News said that "Tishman wanted to postpone closing on its lease for the site east of 11th Avenue between W. 30th and 33rd streets until the City Council rezones the western half of the property to its satisfaction." That article also quoted a MTA spokesman, Jeremy Soffin, as stating that Tishman Speyer no longer has development rights to the property. It also quoted Robert Lawson, a spokesman for Tishman Speyer that "we still hope to be able to complete this deal and reach an agreement that satisfies the needs of everyone."

The MTA yards project is the latest of several very large and very important ones on the West Side that are now in doubt. Madison Square Garden recently pulled out of a plan to relocate to the Farley Post Office and its participation had been required to permit the transfer of millions of square feet of development rights in the vicinity to a joint venture of the Related Companies and Vornado Realty Trust. At the same, architect Richard Rogers has reportedly withdrawn from participation in an expansion of the Javits Convention Center and funding for a second station for the extension of the 7 subway line west from Times Square does not exist.

Meanwhile, today Assemblyman Richard Brodsky announced a bill to create a new public authority similar to the one that oversees Battery Park City to take over the redevelopment of the yards by selling parcels to developers as they are ready.


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