Once Again, M.T.A.’s West Side Rail Yards Deal Faces Delay
Eliot Brown March 26, 2010, 2:06 p.m.
Apparently it takes a lot longer to sign a development contract when construction is only theoretical, compared with when shovels are ready to hit the ground.
For the second time in three months, and the fourth time in a year and a half, the anticipated contract for the Related Companies to develop the 26-acre West Side rail yards has been delayed. Related and the M.T.A., which owns the rail yards near the Javits Center and initially granted Related the development rights in May 2008, have agreed to extend by one month a March 31 deadline for signing the contract to develop the site. An M.T.A. spokesman confirmed the extension.
Multiple people familiar with the discussions said that the process of readying the legal documents has dragged on, taking longer than expected.
This is, in some ways, a repeat of two months ago, when Related faced a Jan. 31 deadline to sign onto a contract before it was extended until March. However, at that point, Related renegotiated the terms in the face of the recession. Whereas in the initial deal, Related was to sign a lease worth $1 billion in payments to the M.T.A. over 99 years, now the firm will not have to close on the deal until the economy hits certain specific benchmarks, showing improvements in such areas as vacancy rates.
This time, Related is not expected to renegotiate the terms, and people familiar with discussions did not express worry that the firm was delaying due to financial concerns. The development firm has invested tens of millions thus far in the planning for the site, which, if ever completed, would entail $15 billion in construction on a commercial, residential and retail mega-complex.
With that said, Related’s 33 percent partner in the deal, Goldman Sachs, pulled out in January, so the firm probably wouldn’t mind another investor.
Should Related indeed complete the contract, it would be required to put $21.75 million into escrow, with another $21.75 million to follow.