The deal for billions of dollars worth of development over the West Side rail yards collapsed Thursday afternoon, with the Metropolitan Transportation Authority and Tishman Speyer hitting an impasse in negotiations. The failure to reach a deal came more than five weeks after the M.T.A. announced Tishman Speyer as the winner of the development rights, after a months-long bidding contest between six of the city’s largest development firms.
According to a statement from the M.T.A., the failure to complete the deal came as Tishman Speyer refused to close on the agreement for the eastern half of the rail yards until the western half was rezoned, a process that could easily take until late 2009, if not 2010. The accord reached in late March held that Tishman would close on the eastern half; then, after the western half was rezoned, they would close the deal on that section, completing the deal. The total deal was estimated to bring the M.T.A. about $1 billion from Tishman.
The collapse in talks came one day after the M.T.A. passed a self-imposed seven-day deadline to finish negotiations and sign a conditional letter of designation, a document that was not signed when Tishman won the bidding. Officials said at the time of that announcement, in late March, that they were highly confident a final deal would be reached, characterizing the designation letter as something of a formality.
From M.T.A. spokesman Jeremy Soffin:
Late this afternoon, negotiations between the MTA and Tishman Speyer over the development of the Rail Yards on Manhattan’s Far West Side reached an impasse. The cause of the impasse was Tishman Speyer’s attempt to change a central deal term in an effort to postpone the closing on the Eastern Yard until the Western Yard was satisfactorily re-zoned. This demand changed the economics of the proposed deals and the certainty of payments to the MTA. The MTA remains committed to developing these unique and very valuable parcels of land.
Unclear is what the next step is from here. The M.T.A. could conceivably go back to the other bidders—a team of the Durst Organization and Vornado Realty Trust had a bid within about $40 million of Tishman’s—though presumably the bids would be lowered should Tishman’s $1 billion bid be out of the picture.
A spokesman for the Durst Organization, Jordan Barowitz, said, “This is an extremely important project to the city, and it’s imperative that the M.T.A. figure out a way to get it done.”
Tishman Speyer’s statement seemed to leave hope that the firm was still at the table, and could reach a deal. From spokesman Robert Lawson:
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