Yard Sale

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The New York Sun

Just as New Yorkers were celebrating the one-year anniversary, more or less, of the collapse of what would have been a monumental boondoggle atop the Hudson Yards on the West Side, the mayor and his economic adviser are at it again. This time, Mr. Bloomberg and Daniel Doctoroff, abetted by City Council Speaker Quinn, are proposing that the Metropolitan Transportation Authority sell the city the rail yards for a total of $500 million, as our David Lombino reported Friday.

The whizzes at the MTA might want to look up the word “auction.” This new-fangled concept has become all the rage for selling old furniture, farm implements, and fine art. It allows sellers to get the best possible prices for things. Land, too. We first suggested the idea of auctioning the West Side site on March 26, 2004, when we wrote that “by far the best outcome would be for the state to sell the rail road and its land to the highest bidder and let the new owner negotiate a private real estate deal.” At the time, it looked like the deal would be with the Jets, but with the stadium idea all but dead any market deal will do just fine.

What could an auction accomplish on the West Side? It would, for starters, enable the MTA to collect an approximation of the market value of the site, which has been appraised at between $900 million and $1 billion for the former stadium site on the western half of the yards, depending on whom you ask. That’s a far cry from the less than $100 million the Jets were initially willing to offer two years ago and even higher than the $600 million bid Cablevision made when the MTA first tried its hand at auctioning the site. The city is offering only $300 million, with the other $200 million going for air rights on the eastern side.

Fetching the full $1 billion might be tough given the infrastructure challenges at the site, especially the need to build a $400 million platform over a working rail yard. That said, no one knows how the market would discount that expense because no one has ever allowed the market to try. The last round of bidding was hampered by the city’s unwillingness to zone the western half for anything other than Messrs. Bloomberg and Doctoroff’s beloved stadium.

Now the mayor and the speaker argue they must all be allowed to try again. They concede there’s no plan for the site right now. They ignore the fact that the site is undeveloped because of the lengthy and politicized process that resulted in the failed stadium plan in the first place. Instead, they argue that the city must be allowed to buy the site precisely to ensure they have an opportunity to go through that kind of process all over again.

“The City,” the mayor and speaker wrote to the MTA, “working closely with the MTA and other agencies, created the comprehensive plan for the Hudson Yards area, which involved several years of urban design, construction feasibility, zoning, and environmental review work, hundreds of community meetings, and an extensive public review process…. The City’s acquisition will insure that any future development plan is the result of the same type of consensus building process.”

Messrs. Bloomberg and Doctoroff aren’t entirely off base in their vision for that part of mid-town. Part of the haste driving the latest deal-making is motivated by a desire to have all the papers signed in time to line up advantageous financing for the westward extension of the no. 7 subway line, which would be a boon to that neighborhood. Haste, however, has its own costs.The authority is in the middle of a five-year capital plan for which it hopes to raise $1 billion by selling off real estate. While the mayor and speaker describe the $500 million deal as “a significant contribution toward achieving that goal,” the MTA would benefit from finding out whether it can wring even more money out of the market in an auction.

That point was not lost on Attorney General Spitzer, who scooped his opponent for governor, John Faso, by issuing a statement on Friday condemning the proposal for offering an amount “grossly under market value.” Quoth Mr. Spitzer: “Any sale of an asset of this magnitude, size and value must only be approved after a process that is open, transparent and provides an opportunity for public bidding.” Mr. Faso, who’s supposed to be the Republican in the governor’s race, said he believes, despite the rail yard’s own history, that the mayor and speaker are the people “most able to effectuate an expeditious development of the area.”

The right way to go about this is for the MTA to put the site out to bid and for the city to announce its willingness to re-zone for any use a private developer dreams up, whether a sports stadium, office towers, or the residential units that are believed to be the most fruitful use for the space. Then New Yorkers will be able to sort out how much the market will discount for the cost of building a platform, the MTA will maximize its return, the city will be spared the trouble — and temptation — of concocting its own plan for the site, and New Yorkers currently alive will have some hope of seeing development on the parcel before they die.


The New York Sun

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