Wednesday, February 04, 2009

MTA shows flexibility on Hudson Yards deal; would it offer same to Forest City Ratner?

Nearly two weeks ago, Metropolitan Transportation Authority executive director Lee Sander said that the agency recognized the pressures faced by real estate companies and that it "would not be pleasant" to see the Related Companies walk away from the $1 billion Hudson Yards deal, but "that's not an outcome we're looking forward to."

Indeed, yesterday, the MTA announced a one-year extension of the “conditional designation” period, which gives Related another year to commit to the project without having to pay the the $43.5 million it was obligated by the original schedule. It will pay $8.6 million “in exchange for the extension,” up to half of which may be used to offset expenses incurred by MTA, the City and the developer regarding regarding a rezoning.

The AY implication

Asked whether the MTA would be flexible with Atlantic Yards developer Forest City Ratner, Sander responded two weeks ago that the agency was always "flexible and thoughtful."

Forest City Ratner has been trying to delay paying the $100 million it would owe the MTA for the Vanderbilt Yard, so the agency's actions yesterday suggest that it may not pressure FCR.

The difference is that the price for the Hudson Yards was much higher, not merely because of differences in size and location, but also because there was a competitive bidding process.

The 2005 sale of rights to the Vanderbilt Yard attracted only one other bidder, given that the RFP was issued 18 months after Forest City Ratner was anointed the city and state's favored developer.

2 comments:

  1. The answer to your question is "well, duh!"

    Why wouldn't the MTA offer the same deal or BETTER to Ratner than it did to Related? Less risk.

    And you think Gramercy is going to call that loan the same month as oral arguments are held on the last significant legal challenge?

    Of course not.

    And if indeed the design for the arena is simplified--and it most certainly will--doesn't that throw into question the timetable for arena construction?

    Of course it does.

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  2. Why should the MTA offer a better deal to Ratner when the latter got its deal through an uncompetitive process?

    I suspect Gramercy wouldn't want to be a property owner in the AY footprint whether or not the legal cases are resolved soon.

    Might a revised arena design make it easier to build? Sure.

    Might a revised arena design call into question the ESDC's approval given in 2006 of a glass-walled project at $637.2 million? Sure.

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