Ex-MTA Chief Sees Big Obstacles to West Side Development

A former chairman of the Metropolitan Transportation Authority, Richard Ravitch, is casting doubt on the idea that development of millions of square feet of space at the West Side rail yards is feasible. In a telephone interview yesterday, Mr. Ravitch criticized the Metropolitan Transportation Authority for failing to make public the specifics of its request for proposals to developers and said discussions about the project were "academic" until market conditions improved.

"You are talking about 13 million square feet of commercial real estate and the economy is sliding," Mr. Ravitch said. "You think anyone is going to build this?"

Next week, Mr. Ravitch is scheduled to testify before the City Council's new infrastructure task force about the Hudson Yards and other development projects in the city.

Mr. Ravitch's comments come at a delicate time in the bidding process for the development rights on 26 acres owned by the MTA. The MTA is awaiting the return of supplemental proposals from five teams of private developers. The MTA recently sent out an addendum to their original request for proposals seeking a more detailed financial payment plan for a 99-year lease on the property. The issuance of the supplemental proposals has dovetailed with a weakening marketplace and the subsequent collapse of a number of other major development deals in and around Manhattan.

Mr. Ravitch applauded the MTA's decision to lease for 99 years instead of selling, but he called the bidding process "ill conceived" and said he did not believe that "the MTA can get the ultimate real value of that area until the economy turns around."

He also criticized the MTA — the agency where he served as chairman from 1979 to 1983 — for lacking transparency in the bidding process.

"We've gone above and beyond certainly what was required of us," a spokesman for the MTA, Jeremy Soffin, said. He said the MTA had agreed to go through the city's land use planning and review process, had held community outreach meetings, and had sought input from the City Council. "Every step of the way there has been public input," he said.

The question now is how the supplemental proposals — which real estate sources say shifts more of the financial risk to the developer from the MTA — could affect the bids. The MTA is seeking a lease deal with an equity interest, along with a $9.2 million fund to improve a Long Island Rail Road facility near Shea Stadium, and a $10 million letter of credit.

A source with knowledge of the process who declined to be identified because the bids are still outstanding said that almost all the original bids were on par with one another in a range pegged as being between $1 billion and $1.2 billion. The five bids came from the Durst Organization and Vornado Realty Trust; Tishman Speyer; Related Companies; Extell Development, and Brookfield Properties. The new proposals are due to the MTA by February 19.

New York's real estate market is showing signs of a downturn. Governor Spitzer recently scrapped plans for proposed expansion of the Javits Center, and court filings have questioned the financial viability of developer Bruce Ratner's Atlantic Yards project. Cost estimates have soared and plans have been scaled back on large public projects such as the Fulton Street Transit Center and the extension of the no. 7 subway line. Yesterday, the owner of the Gristedes supermarket chain, John Catsimatidis, a possible Republican mayoral candidate, put his Myrtle Avenue project in downtown Brooklyn on hold because of financing troubles. The plan had called for the construction of more than 700 apartments and more than 200,000 square feet of retail space.

Yesterday, Bloomberg News reported Brookfield would develop another rail yard site between the Hudson Yards and Penn Station. Brookfield would construct a platform over the rails and construct 5.4 million square feet of office and mixed-use space at a total cost of $600 million. It is unclear how the new project would affect its interest in developing the larger rail yards two blocks to the west. Brookfield could not be reached for comment.