Tuesday, April 27, 2010

First the Vanderbilt Yard, then Hudson Yards; the MTA seems ready to cave to a developer's revised deal

The Metropolitan Transportation Authority (MTA) is still at the mercy of developers who (apparently) have the ear of the governor and mayor who control the authority.

Now the issue is a revised deal for the Hudson Yards, which gets far more incisive treatment from Michael D.D. White, as described below, than from the New York Times.

The "bum's rush"

From a Times article today headlined Railyards Deal May Still Be Weeks Away:
Members of the authority’s board, who received details of the deal on Sunday, expressed frustration that they had no time to review the plan before being asked to approve it. “I really feel that in these big developer deals we get the bum’s rush,” said Doreen Frasca, a board member. The finance committee issued no recommendation on the plan.
And last June?

When the revised Vanderbilt Yard deal was revealed last June 22, Frasca said, "This is just an observation, and I know staff has worked very long and hard on this, including into this weekend, but I note that it's one month shy of four years since the board accepted the Forest City Ratner proposal, and this committee and this board is being given less than 48 hours to understand the complexities and vote intelligently... I think that's pretty outrageous. Why do we have to vote on Wednesday?"

"Well, of course, you don't," MTA CFO Gary Dellaverson responded. "It's entirely at the board's discretion to accept or reject or send back to the negotiating table... I think that, in terms of why must it be now in the summer versus in the fall, I think it really relates to Forest City's desire to market their bonds as a tax-exempt issuance [by a December 31 deadline]."

Two days later, Frasca, saying she'd studied the deal intensely, signed on. Maybe she'd gotten a phone call, as well.

The revised deal

Under the new deal, Related can post a promissory note in lieu of cash. As White points out, now the developer has more time and must only pay in cash part of what was originally pledged.

Moreover, the 99-year lease wouldn't start until after the city’s real estate market improves.

White skewers rookie transit reporter Michael Grynbaum's assertion that
The arrangement addresses a sticking point in a negotiation that began in 2008, when the economy was still going strong.
White points out that "when the deal with Related was struck in May of 2008 the economy was already in a dramatic collapse."

The private-public partnership

He observes:
So the MTA is structuring a new plan. As is typical with so-called public-private partnerships where what is public and what is private is confused and up for grabs, the public is taking all the risk and the private developer (now getting a lower price and having less obligation) is cherry-picking to get all the benefit.

...Presumably, if the original bid had made it clear that the buyer had the option of proceeding only when the market was good, the competing bidders would have been willing to bid far higher amounts at the outset.
Forest City Ratner already got a very nice revision from the MTA.

1 comment:

  1. No wonder the MTA is in the red! It juat wants to give away money to developers, and bring it in the far away future! Promisory notes instead of cash. Try spending those! Do the board members or the mayor want to give the MTA cash to use for them or get paid in them? Bloomberg definetely has the money!

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