By , Staff Reporter of the Sun | March 26, 2008
The board of the Metropolitan Transportation Authority gave tentative approval today to offer Tishman Speyer Properties a 99-year lease to develop the 26 acres constituting the Hudson Rail Yards project on Manhattan's West Side. Tishman Speyer's bid was valued at $1.004 billion, which according to the MTA was $112 million more than the second best bid offered from a joint venture of The Durst Organization and Vornado Realty Trust. The decision puts an end to a selection process that has lasted eight months.
"This demonstrates the MTA's ability to pull off a complex and challenging real estate deal," the MTA executive director, Lee Sander, said during a press conference following the vote.
But even before today's vote by the MTA's 17-member board of directors took place, administrators and developers were already questioning whether city officials were sufficiently involved in the negotiating process and are asking why the Tishman Speyer bid, which had elicited the most criticism from the community, would likely win out.
The Tishman Speyer plan, designed by architect Helmut Jahn and landscape architect Peter Walker, encompasses 13 million square feet spread across 13 new buildings, including four office towers. The plan calls for more than 10 million square feet of commercial space, around 3 million square feet of residential space, and 1,450 parking spaces.
"Community-wise, when we had our meeting it was the proposal that was the least liked," the district manager of Community Board 4, Robert Benfatto, said, adding that the main criticism centered on the project's 10 million square feet of commercial space, which he said was considered excessive. Mr. Benfatto said the community board thought the design of the buildings were "corporate and antiseptic." He predicted that changes to the plan would almost certainly occur even before it gets to the city planning commission.
Critics say the plan provides a meager amount of housing for low- and middle-income New Yorkers, an issue that has been at the forefront of the Bloomberg administration, and promises to come up in the 2009 mayoral election.
Just before the MTA put out a request for proposals in July, city and state officials pledged to designate up to 20% of the rental units on the site as "affordable" housing.
Tishman Speyer's plan calls for 3,000 residential units, of which 300 - or 10% - would be dedicated to "affordable" housing, according to a real estate source familiar with the bids. The Vornado-Durst offer - the likely runner-up - included 5,500 units of residential, 600 of which were "affordable." Other bids were made by Extell Development Co., the Related Cos., and Brookfield Properties.
A real estate executive who has closely followed the process wondered how city officials, specifically the speaker of the City Council, Christine Quinn, who represents the district and is said to be considering a run for mayor, would accept 300 units of "affordable" housing being built on the largest swath of undeveloped land in Manhattan.
"They are going with the plan that has the least in common with what the city is looking for. It's just sort of strange. The community just wants there to be a neighborhood there. This is absolutely the worst-case scenario for what the community wanted and is going to be a big challenge to get through," the real estate executive, who declined to be identified, said.
Speaking at a press conference today, Ms. Quinn was asked about the MTA's decision to award Tishman Speyer.
"I am glad that the MTA made a decision I am glad that the MTA was able to come to a financial deal that worked for them in this tough economic climate. What is going to happen now is this proposal is going to go through the land use process and end up before the city council and one of the things I had said throughout this entire process is that I want this part of city and my district rezoned and developed. But my highest priority is to have as much permanent affordable house as we can," she said.
Representatives from Mayor Bloomberg's office involved in the negotiations included a former deputy mayor for economic development, Daniel Doctoroff, and the director of the New York City Office of Management and Budget, Mark Page.
A city official who declined to speak for attribution before a deal was officially announced did not fault the MTA for leaning toward the Tishman Speyer bid, but predicted the city's land use review process could have an effect on what ultimately gets designed and built.
"When you look at the mix of uses, that is something that is more of a city issue than a seller issue. So what the MTA wants and what the city wants are generally pretty well-aligned, but the mix is something we and the City Council are more focused on than the MTA. There will be more engagement and involvement with the community but they always want something," the city official said. If the developer were pushed to increase the amount of "affordable" housing in the bid in order to secure passage through the Bloomberg-controlled Planning Commission and the City Council, it is unclear if the developer would alter its bid for the right to develop the rail yards, sources said.
