Tuesday, October 09, 2007

About those Hudson Yards bids, and the Vanderbilt Yard flashback

From Crain's New York Business:
About the only certainty as developers put the finishing touches on bids for the Hudson Rail Yards is that the offer, due Oct. 11, will top the $500 million that the city was willing to pay when it wanted to put a football stadium there.
...An appraisal commissioned last year by the MTA valued the yards at $2.74 billion. The agency plans another appraisal to account for current market conditions, but hasn't scheduled it yet.


Remember, the MTA's appraiser valued the Vanderbilt Yard in Brooklyn at $214.5 million. Some 18 months after Forest City Ratner was endorsed by the city and state political establishment to get the site, the MTA put it out for bids. Forest City bid $50 million in cash; the only other bidder, Extell Development Co., bid $150 million.

Total package

The MTA decided to negotiate exclusively with Forest City Ratner, which upped the cash component to $100 million. FCR argues that the total package should be analyzed; it valued the bid at $329.4 million dollars outside of the cash component.

(In the lawsuit challenging eminent domain, the complaint states that the MTA refused to answer technical questions from Extell; it's unclear whether that developer was able to present a complete package regarding railyard improvements. Perhaps we'll hear about that in the oral argument today.)

Remember, when challenged as to why the MTA would accept Forest City Ratner's bid, while the property had been appraised at $214.5 million, MTA Chairman Peter Kalikow famously dissed the appraiser, saying it was "just some guy's idea of what it's worth. That was his opinion, and it wasn't borne out by the marketplace."

Zoning level

And Forest City Ratner executive told the Bergen Record that the MTA appraisal was unrealistic because it was based on a level of zoning "that doesn't exist on the land today."

That statement, in retrospect, is truly stunning. The whole point of Forest City Ratner's project is to develop the land based on a level of zoning that doesn't exist today--actually, to override zoning.

What if?

What if the MTA tried an appraisal to account for current market conditions, those that led Forest City Enterprises executive Chuck Ratner to call the 22-acre AY site (the Vanderbilt Yard plus another 13.5 acres) a "great piece of real estate"?

And what if there were a truly open bidding process, with all developers starting from the same point, as with... Hudson Yards?

And what if the city followed its promise in PlaNYC 2030 regarding development over railyards and highway cuts:
Building communities requires a carefully tailored approach to local conditions and needs that can only be developed with local input. We will begin the process of working with communities, the agencies that operate these facilities, and other stakeholders to sort through these complicated issues.

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