City Offers $500M for Hudson Rail Yards

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The New York Sun

The Bloomberg administration is looking to jump-start its ambitious plans for the far West Side of Manhattan.

The city is offering the Metropolitan Transit Authority $500 million to consolidate its control over the Hudson rail yards, the vast undeveloped tract of land in Midtown West where the mayor’s dreams of a sports stadium were stymied a year ago.

In a letter dated today to the MTA chairman, Peter Kalikow, Mayor Bloomberg said the sale and property transfer would spur the city’s vision for dense commercial and residential development in the neighborhood, and provide funds for the transit authority to meet its five-year capital improvement plans.

The proposal must be approved by the MTA board, and Mr. Bloomberg asked Mr. Kalikow to consider the offer at a meeting this month. That would enable the city to move ahead with its plan to issue bonds by September to fund a series of Hudson Yards infrastructure projects, most notably the western extension of the 7 subway line.

In statement, Mr. Kalikow said that the MTA would seriously consider the offer.

“Naturally the MTA’s principal interest in the yards has been the conversion of its property rights to support our ongoing enormous capital needs,” Mr. Kalikow said.

The city’s offer was co-signed by the City Council speaker, Christine Quinn, whose district includes the rail yards and who was an outspoken opponent of Mr. Bloomberg’s vision of a sports stadium. This time around, Ms. Quinn says she is on board. Ms. Quinn said in a statement: “Together the city must work to create a mixed-use commercial and residential district, one that protects existing residents, businesses, and manufacturers while also creating new employment opportunities, affordable housing, and parks.”

Deputy Mayor Daniel Doctoroff said in an interview that conversations over the proposal have already taken place between the city and the MTA. He said the purchase was important to insure that the city’s $3 billion bond issue for Hudson Yards improvements will be well received by investors. “There can not be any conflicts between different public sector sellers,” Mr. Doctoroff said.

Specifically the city is offering to pay the MTA $200 million for more than three million square feet of air rights over the eastern half of the rail yards, which can be transferred to nearby sites.The MTA would retain around six million square feet of development rights over the eastern rail yards, which have already been zoned for commercial and residential development.

A corporation set up by the city to oversee the area’s development would pay the MTA the $200 million and include the cost in its upcoming bond issue. The city is planning to pay off the bond debt over about 30 years with the payments in lieu of taxes it receives from new development in the special Hudson Yards district.

The city is also offering to pay the MTA $300 million, from the city’s own capital budget, to purchase the development rights over the western rail yards, where the stadium would have been. That area has not been rezoned, and city officials insist that they have no set plans for the area. The mayor’s letter indicated that any future plans would have to pass through the city’s land use and environmental approval process.

Last year, the MTA said the appraised value of the western rail yards for residential development was about $923 million. The yards were put out to bid after a public outcry over their sale to the Jets, and the site attracted additional bids from a power-plant operator, Transgas, and from Cablevision, which owns Madison Square Garden.

Mr. Doctoroff said the city’s offer of $300 million was discounted because the city would pick up several development costs, including building a platform over the train tracks for about $400 million.

“We want to control the development process to ensure what happens on the western rail yards is consistent with our overall vision,” Mr. Doctoroff said.

“We hope to recoup the investment, but we are not out to make a killing on the investment from the MTA,” he added.

The New York Sun

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