MTA Releases Competing Bids For Rail Yards

Last night, less than three days before a board meeting to decide the future development of the West Side rail yards, the Metropolitan Transportation Authority released the three bidders’ proposals. If a rezoning called for in the New York Jets’ proposal is ultimately granted, the MTA could realize $720 million from the deal – more than seven times the football team’s original offer for the air rights.The MTA sought bids after Madison Square Garden, an implacable foe of the Jets’ plan to build a football stadium over the rail yards, threw the team’s negotiations with the MTA into turmoil February 4 by announcing an offer it valued at $600 million for the development rights.In the formal proposal made public at 6:30 p.m. yesterday – pages given to reporters were still warm from the photocopiers – the Cablevision subsidiary entered a bid it valued at $760 million. That includes, however, $360 million for the cost of the platform, leaving the MTA with $400 million. Madison Square Garden proposes to build a 5-acre park with 5,800 housing apartments, a hotel, a school, and a library.The Jets’ bid calls for a $1.9 billion, 75,000-seat domed football stadium that would also serve as an addition to the Jacobs K. Javits Convention Center and, the Bloomberg administration hopes, the Olympic Stadium if New York City is awarded the 2012 Summer Games.More than half of that sum is contingent, however, on the 13-acre site’s rezoning. Absent the rezoning, the Jets’ payment to the MTA would be $280 million.Furthermore, the Bloomberg and Pataki administrations have said they would each furnish $300 million to build a platform over the vast rail yards and a retractable dome for the stadium, which is formally known as the New York Sports & Convention Center.“The Jets proposal is based on the ‘Where Is/As Is’ condition of the site; however, the Jets propose that the MTA will retain any FAR that may become appurtenant to, but may not be utilized on, the site as a result of future rezoning,” the Jets bid reads. FAR stands for floor-area ratio and is the key to how much square footage a developer may build.If their bid is accepted, the Jets offer an immediate payment of $50 million plus a $200 million letter of credit. Cablevision promises a $400 million upfront payment, according to its bid document.The $440 million deal between the Jets and a group of six developers, who include the Brodsky Organization, Glenwood Management, Jack Resnick & Sons, Related Companies, and Donald Zucker, is nonbinding. It gives the developers the right to buy 4.4 million square feet of air rights, for about 4,400 residential units, and transfer them out of the rail yard to build elsewhere – probably in the surrounding Hudson Yards neighborhood. The air rights would be bought for $100 a square foot and would be contingent on a rezoning to an FAR of 11.The project budget of the Madison Square Garden development is $4.1 billion. It would cost about $2 billion to develop the housing, which Madison Square Garden plans to finance by reinvesting the proceeds from condominium sales, so that the net equity it will have to pay for the entire development would be $950 million.The president of the Real Estate Board of New York, Steven Spinola – a key figure in enriching the Jets’ bid – estimated early yesterday afternoon that it would cost $2.5 billion for the residential development. He expressed skepticism about the feasibility of the plan.“Cablevision has shopped around to bring developers on as partners and weren’t able to find one,” he told The New York Sun. “I know my members, and if they believed they could make money, they would do it – despite a fear of alienating the mayor or Dan Doctoroff. It may be that some didn’t want to get in the way of an Olympics, but I believe that the bigger issue was related to profit.” Deputy Mayor Doctoroff has been the point man in the administration’s plan to redevelop the West Side and attract the Olympics.The MTA, in its request for proposals, solicited “offers that are in some way conditioned upon future zoning will not be deemed responsive.”A Jets source, who spoke on condition of anonymity, agreed the team’s bid was contingent on a rezoning but said it was widely expected a rezoning would occur and the $440 million should be included.“Everyone agrees the site will be rezoned, so there is no difference,” he said, adding that the MTA did allow for proposals that were contingent on a rezoning.“Our bid is contingent on rezoning but will bring the MTA $720 million. The Cablevision bid will only give them $400 million – it is an obvious choice,” he said.The MTA did allow for such a proposal contingent on a rezoning in its request for proposals, although it does not clarify whether it would factor that into the main bid price.“A Proposer may submit an alternative proposal that provides for an initial up-front payment that would be enhanced in the event that the site were rezoned to the same FAR as the eastern portion of the West Side Yards or otherwise,” the proposal says.The proposal of roughly 50 pages that was submitted by TransGas, the long-shot third bidder, is light on details and hinges on government support for an unrelated power plant the company wants to build in Brooklyn.TransGas is collaborating with its partners on the power-plant project, Siemens Westinghouse and ABB, in its Hudson Yards bid.While it values its bid at $1.05 billion, only $200 million would be a cash payment, and $180 million of that would come after closing the deal on the Brooklyn energy plant.The rest of the money, $850 million, has even more strings attached. It would come in the form of power system upgrades that it will provide the MTA. That investment, TransGas says, would vastly improve infrastructure on the subways and provide an emergency backup power supply.The company also stresses repeatedly in its bid that it is willing to sublease the site to NYC2012, the city’s Olympic committee, for $1 a year, to construct a stadium and a platform. It does not, however, provide any detailed plans of what it would do with the site if New York City is not awarded the Olympics.The Jets, according to their bid, have retained 19 firms as part of a “design and consulting team.” The team provides highlights to the MTA of high profile projects that each of those firms have worked on. The firms include New York companies such as Kohn Pedersen Fox Associates, which is involved in the Shanghai World Financial Center, and the Thornton-Tomasetti Group, which worked on Terminal One at JFK International Airport.The Jets’ bid comes across as the most polished and uses a “more than a stadium” approach. Tucked in the fine print, the football team says it invested “upwards of 61,000 billable hours” for biweekly meetings with the Long Island Rail Road and the MTA to hash out its plans. The LIRR operates the rail yards, which are near Pennsylvania Station.In addition to the elaborate explanation of how the domed facility would convert from stadium to exhibition hall, the team includes quotes throughout the several hundred pages from public figures expressing support for the plan. Those figures range from Mayor Koch to a professional soccer league official.With the opposition in mind, the bid also attempts to alleviate concerns that the stadium will be a fortress like structure and will be cut off from the community. Along 11th Avenue, the face of the stadium will include 30,000 square feet of retail space, an elevated plaza, and a broadcast studio.

MTA Releases Competing Bids For Rail Yards

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