In a joint statement from MTA and Related, which is partnering with Goldman Sachs on the project, "the economic downturn and collapse of traditional commercial lending" were blamed for the inability to finalize a contract on the 26-acre development site. "Nonetheless, the MTA and Related/Goldman remain fully committed both to the Eastern Rail Yard and Western Rail Yard projects and the business terms of the deal," according to the statement.
Up to half of the $8.6 million payment may be used to offset expenses incurred by MTA, the city and Related as they move forward on the project. Primarily these expenses would stem from the rezoning process for the 13-acre Western Rail Yard, which must still go through the Uniform Land Use Review Procedure. The Eastern Rail Yard was rezoned in 2005.
In addition, the MTA and Related/Goldman have agreed on a set of revised provisions to guide their contractual negotiations during the extended designation period. Although the extension is up to a year, "both parties are committed to moving forward as quickly as possible, and the planning process continues to advance," according to the statement. Calls to MTA for additional details were not returned by deadline.
Elliot Sander, MTA's executive director and CEO, says in a statement that the agreement acknowledges "current economic realities without derailing our partnership on this important site for New York's future. The development team made their commitment to the project clear and this new understanding keeps us on the path to obtain the funding critically needed for the MTA's current capital plan." For his part, Related chairman Stephen Ross says that "when the markets rebound and with zoning in place, New York will be poised to build a vibrant new mixed-use community at the rail yards."
Under the initial agreement reached by Related and the MTA last May, the rezoning process for the Western Rail Yards would not begin until after a contract was signed. At that time, it was expected that a contract would be signed a few months after the MTA's selection of Related as Hudson Yards developer, and that the ULURP cycle would be completed by the end of 2009. With rezoning in place, construction on the Western Rail Yard portion of the site could begin, including erection of a platform over the rail yard.
However, the ULURP timetable is thrown off by the one-year extension, and last May Ross acknowledged that Related and Goldman were committing to Hudson Yards without an anchor tenant to replace News Corp., which had walked away from the project 24 hours before final bids were due.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
