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April 27, 2010

Surprised? MTA Restructures the Hudson Yards Deal; Developer Cherry Picks More Benefit While Public Keeps the Risk

Noticing New York

Michael D.D. White is back, with a look at how the MTA is following the proven-unsuccessful model it developed with the Vanderbilt Yard giveaway in its negotiations with developer Related Companies over Manhattan's Hudson Yard.

In light of the New York Times report today about delays and proposed developer-favorable modifications with respect to the West Side’s 26-acre Hudson Yards Project we would like to note how it confirms and hearkens back to concerns we raised a long time ago. (Railyards Deal May Still Be Weeks Away, by Michael M. Grynbaum, April 26, 2010.) Are we really that much smarter than the MTA’s board? Or are we just more attentive to protecting the public interest?
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So the MTA is structuring a new plan. As is typical with so-called public-private partnerships where what is public and what is private is confused and up for grabs, the public is taking all the risk and the private developer (now getting a lower price and having less obligation) is cherry-picking to get all the benefit.
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Here is some advice for "frustrated" MTA board members: You wouldn’t be getting in these kinds of binds if they abandoned the ill-advised practice of doing these single developer mega-deals and you wouldn’t be surprised with so little time to think about things if you were reading some of the Noticing New York articles where we consider these critical issue ahead of time.

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Additional coverage...

Atlantic Yards Report, First the Vanderbilt Yard, then Hudson Yards; the MTA seems ready to cave to a developer's revised deal

The Metropolitan Transportation Authority (MTA) is still at the mercy of developers who (apparently) have the ear of the governor and mayor who control the authority.

Now the issue is a revised deal for the Hudson Yards, which gets far more incisive treatment from Michael D.D. White, as described below, than from the New York Times.

The "bum's rush"

From a Times article today headlined Railyards Deal May Still Be Weeks Away:

Members of the authority’s board, who received details of the deal on Sunday, expressed frustration that they had no time to review the plan before being asked to approve it. “I really feel that in these big developer deals we get the bum’s rush,” said Doreen Frasca, a board member. The finance committee issued no recommendation on the plan.

And last June?

When the revised Vanderbilt Yard deal was revealed last June 22, Frasca said, "This is just an observation, and I know staff has worked very long and hard on this, including into this weekend, but I note that it's one month shy of four years since the board accepted the Forest City Ratner proposal, and this committee and this board is being given less than 48 hours to understand the complexities and vote intelligently... I think that's pretty outrageous. Why do we have to vote on Wednesday?"

"Well, of course, you don't," MTA CFO Gary Dellaverson responded. "It's entirely at the board's discretion to accept or reject or send back to the negotiating table... I think that, in terms of why must it be now in the summer versus in the fall, I think it really relates to Forest City's desire to market their bonds as a tax-exempt issuance [by a December 31 deadline]."

Two days later, Frasca, saying she'd studied the deal intensely, signed on. Maybe she'd gotten a phone call, as well.

Posted by eric at April 27, 2010 11:28 PM