Crain’s: MTA Should Pick Most Financially Sound Developer

Unsurprisingly in the wake of the subprime crisis and general market shakiness, much of the Rail Yards dialogue has turned away from design and towards financials.

Of course, guessing is a bit tough, given the MTA’s refusal to make the financial bids public (which the HYCAC called for as part of its summary of top community concerns).

Background on the financial situations of each of the developers has led to a lot of speculation over which one would be the surest bet for the MTA, an agency that knows its way around fiscal headache.

A Crain’s editorial recently endorsed Related and Tishman Speyer for the site, pointing to anchor tenants to add heft to the deal:

There are no more resourceful, experienced or financially solid real estate companies in New York. Their tenants—News Corp. for Related and Morgan Stanley for Tishman—offer a strong likelihood the project will get off the ground.

The Crain’s site is for subscribers only, but the complete editorial is after the jump.

The MTA still plans to announce a decision by the end of March.
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Crain’s has more on the MTA’s Strings Attached

Crain’s has the latest on an increasingly complicated set of requirements for developers, as outlined by the MTA in their January 28 letter.

According to the article by Theresa Agovino, the winning developer will be contractually obligated to create a set of seperate funds that will go to the MTA for Rail Yards expenses and earmarks for other MTA projects (including a $9.2 million fund to improve the MTA’s LIRR facility near Shea Stadium).

None of these expenses would be paid back if the deal should fall through. Given the uncertain economic climate and fear of a national recession, it looks like the MTA is raising the bar to safeguard the site against developers pulling out later. Essentially, the agency is transferring risk onto the developers.

The MTA will also require developers to front “transaction payments” to back any condo sale or other transaction on the site once it’s built out. The tricky part is, the MTA doesn’t specify a set amount for these payments– bidders have to come up with their own maximum figure.

Full text after the jump.

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MTA Pushing Developers to Lease the Rail Yards

According to Crain’s,  it now looks as if the MTA would prefer to lease the Rail Yards site to developers for 99 years, rather than sell it.   

A source at one developer said the MTA was caving in to public pressure not to sell the property, which includes active MTA rail operations. But the MTA spokesman says that under a 99-year lease agreement the developer would still control the site.

 In this plan, the MTA would also recieve a portion of the profits from individual building leases, but the agency has not made any numbers public.

On Monday, the MTA sent a 60-page financial questionnaire to the five developers, so it could compare the proposals. The document outlined the MTA’s ideal financial structure, and the developers now have three weeks to respond with additional information, or alter their proposals in response. The MTA has acknowledged that it will still consider proposals to buy the site, though its preference is to lease.

The agency hopes to possibly narrow down the field once the questionnaires are returned, and have a developer selected by the end of March.

 MTA Prefers Leasing Hudson Yards (Crain’s)

Open letter to the MTA from Hudson Yards Community Advisory Committee

HYCAC, an official community coalition made up of members of Community Board 4, local electeds and community organizations, has written a letter to MTA CEO Lee Sander with its reaction to the five proposals.

The letter also brings up community concerns about the planning process at large, including the lack of infrastructure and affordable housing planning, the megablock configuration, the threatened High Line, and the extreme density allowed on the site. HYCAC also urges the MTA to make the financials of the bids public, which has not been a requirement of the process.

The letter is based on the December 10 public presentation and input session with the developers.

The letter is available for download as a PDF, and full text is after the jump. It’s lengthy, but worth reading in its entirety, as it suggests plausible solutions to many of the problems addressed.

A summary of points in the letter:

  1. There is too much density for a successful environment. 
  2. There is no public infrastructure and no commitment to build it. 
  3. There is no plan for affordable housing. 
  4. Allowing changes in the ERY zoning and WRY design guidelines will create a better plan. 
  5. Make real New York City blocks. 
  6. Big open space may not be best.    
  7. The entire High Line can and must be preserved. 
  8. Require a genuine commitment to sustainability.         
  9. Strong labor provisions and opportunities for minority- and women-owned businesses must be provided. 
  10. Put the school in a good location.
  11. Modify the cultural facility zoning on the ERY, since there is no committed not-for-profit user. 
  12. Make good connections to Hudson River Park.
  13. The financial aspects of the proposals must be made public. 



Elliot G. Sander
Executive Director and Chief Executive Officer
Metropolitan Transportation Authority
347 Madison Avenue
New York, New York 10017

Re: Proposals for Development at the West Side Yard

Dear Mr. Sander:

Thank you for allowing the five development teams that have made proposals for the West Side Yard to put their models on public display and encouraging each of the teams to openly discuss their urban design plans. This amount of public disclosure with little formal public process is an important contribution to open government and better planning.

The development teams responded with remarkable enthusiasm. The models enjoyed a four week run in the storefront at 43rd and Vanderbilt, which drew a large and steady stream of keenly interested viewers. The teams made detailed presentations of their plans to a sell-out crowd of over 1000 people in the Great Hall at Cooper Union on December 3. Two hundred people turned out on December 10 for a public forum sponsored by this Committee and Manhattan Community Board 4, which featured presentations by the development teams followed by working group discussions of the community’s reactions to the proposals.

While many broad questions remain about the development process and how best to serve the various public interests at stake, this letter is focused on the planning and design aspects of the five proposals, and is based on what we heard from participants at the HYCAC/CB4 forum.

We are under no illusion that any of the plans will be built exactly as proposed, and look forward to continuing to work with the MTA, the City and the development teams toward a plan that addresses these comments and the community’s priorities.

1. There is too much density for a successful environment.

Seeing all of the models makes us realize that the Requests for Proposals (“RFPs”) called for too much density. The scale of the buildings is overwhelming. The base floor area ratios (FARs) of 11 on the Eastern Rail Yard (“ERY”) and 10 on the Western Rail Yard (“WRY”) seem reasonable until you realize that they are calculated across the entire sites, including open space and streets. Excluding open space and streets (as parks and streets are excluded elsewhere in the City), the effective density of these proposals is in the neighborhood of 25 FAR. That is, to our knowledge, an unprecedented density over such a large area anywhere in the City, and far exceeds what can be considered good planning for the future of the City or the local community. To develop successfully, this must be a place where people will want to live, work and visit. That is unlikely to happen in an environment dominated by monumental and intimidating buildings, no matter how much open space there is or how carefully it is designed.

2. There is no public infrastructure and no commitment to build it.

The Hudson Yards area’s infrastructure is already strained and insufficient. It simply cannot support such overwhelming additional development without additional investment in public facilities. Although the Hudson Yards Environmental Impact Statement (“EIS”) called for two additional power substations, a police station, a fire station, public schools, a library and day care facilities, no plans exist to construct any of this essential infrastructure . When the additional impacts of adding a substantial residential population on the WRY are considered, the infrastructure needs will be even greater than what was called for in the EIS.

In contrast to plans for the rail yards, transportation to another high-density area in the City, Times Square, is provided by more than 10 subway lines and the Port Authority Bus Terminal. Transportation to the high-density West Side Yard is to be provided by extending the already overcrowded # 7 subway line a single additional stop, and there still is no agreement on how to cover all the costs of that extension. This is insufficient.

Transportation and other infrastructure improvements represent a large yet hidden public cost of the project that must be provided for before development proceeds.

3. There is no plan for affordable housing.

We have consistently advocated that 30% of the residential development on this public site must be allocated to permanent affordable housing for low-, moderate- and middle-income families. This message was strongly reinforced by the community’s comments in reviewing each of the proposals. Yet the RFPs only required that any rental housing be built using HFA’s 80/20 program. Condominium or cooperative units are exempt from any affordable housing requirement, and none of the rental units are required to be permanently affordable. As a result, the proposals range from 300 to 600 units for low-income families (out of 2,617 to 6,500 total residential units), and it is unclear how many of those will be permanently affordable. This result is simply not acceptable.

Public land is one of the few places where government can require that development address the housing needs of a broad range of New Yorkers, and this is the largest publicly owned development site left in Manhattan. Moreover, this new neighborhood will not be a healthy neighborhood unless it includes the broadly diverse population that is this City’s hallmark. The State and the City must get together and figure out how to solve this problem.

While the MTA has a corporate responsibility to maximize the value it gets for the property, it is also a public entity; it is appropriate that the MTA’s drive for financial gain be tempered by standards of public responsibility that might not apply to a private owner.

Possible solutions include:
• A mortgage subsidy program, as was used in the Mitchell Lama program
• Battery Park City Authority excess revenues and unused bonding capacity
• Union-supported financing
• Pension fund financing
• The City’s New HOP program
• Limited-equity coops

Whatever the method, the bottom line is that the State and the City must ensure that development of the West Side Yard creates permanent affordable housing opportunities far greater than the unacceptably small amount currently contemplated in the proposals.

4. Allowing changes in the ERY zoning and WRY design guidelines will create a better plan.

We have said, from the beginning of the process, that the plan for the ERY should have been updated to reflect the new conditions on the WRY. Furthermore, all of the development teams have commented to us informally that they find the RFPs’ design requirements unduly confining, and several have submitted plans that do not conform to all of the design requirements. The non-conforming plans feature some good ideas that should not be rejected simply because they are non-conforming.

The MTA and the City have already agreed to seek a zoning text change to change the ERY parking requirements. We support that text change, and would welcome the inclusion in that process of additional text changes to extend the street grid into the site and allow buildings along the east side of Eleventh Avenue all the way to 30th Street. Other changes in the WRY design guidelines should also be considered. For example, many believe that buildings should be allowed along the west side of Eleventh Avenue and/or that the open space should be arranged differently. As the MTA engages in discussion with the development teams, each of them should be given the opportunity to produce the best plan structurally possible, not simply that plan that conforms to the design judgments underlying the zoning and the design guidelines.

5. Make real New York City blocks.

All of the plans seem, to varying degrees, like private enclaves in the City, disconnected from the surroundings and out of step with the feel of Manhattan. Development on the West Side Yard should be an extension of the City surrounding it, not an isolated anomaly. It must be integrated with the City and community around it, welcoming pedestrians in and through the development from all directions. To accomplish this:
• Reintroduce the street grid and break down the superblocks, with particular attention to the Tenth Avenue frontage;
• Allow buildings along both sides of 11th Avenue;
• Create individual development parcels with street frontages;
• Provide multiple access points from the perimeter to the central open spaces, each of them open to the sky, aligned with the surrounding streets, and usable by the disabled;
• Require a variety of ground floor uses and users, particularly on the open spaces, so that no individual use or user dominates;
• Activate the wall that will be created along 12th Avenue between street level and the level of the WRY platform above.

6. Big open space may not be best.

The variety of open space proposals invited lively discussions about what makes for good public open space. Although we want open space to be maximized, after seeing the models we have concerns about assuring the usability of large open space. This space will have to be articulated, subdivided and programmed to be successful, and not overwhelmed by the surrounding buildings. It may well make sense to leave the options for planning open for now, but it should be acknowledged that planning must take place at some point.

Before we saw the proposals, we thought the east-west open space corridor made sense, but the conforming plans raise a concern that they might produce a wind tunnel effect.

The smaller yet more distinctive commercial plaza, residential park and 30th Street Promenade in the Brookfield plan help create a greater sense of inviting public space in the heart of a varied city. Separate, distinctive open space has the added advantage of being constructible in phases and not dependent on completion of the entire plan for the public amenity to be realized.

Some HYCAC members feel that multiple open spaces with distinct programming will be better than one large space without a clear purpose.

The ERY should include a plaza, which should not be dominated by any individual private tenant or user. The WRY should include a clearly separate, pastoral residential park that is programmed to be inviting to users beyond the residents of the surrounding buildings, and that will enjoy as much sunshine as possible. We appreciate the idea of a 30th Street promenade, as shown in the Brookfield plan. It would provide a softer portal to Chelsea to the south, celebrate the High Line, and convert 30th Street into a broad boulevard to the Hudson River. It would require activity at the street level – at the base of the rail yards buildings and under portions of the High Line – but could be a uniquely urban and inviting front porch to residential development along both sides of 30th Street.

All open spaces should be free of obstructions (except for the High Line), and should not segregate any group of users from the others.

7. The entire High Line can and must be preserved.

The Brookfield, Extell and Related proposals, which preserve the entire historic High Line structure on the site, including the spur over Tenth Avenue, demonstrate that full preservation is both feasible and preferred. Given this response, the MTA should make full preservation of the High Line, including the spur, a requirement of any development of the rail yards. Anything less than full preservation is unacceptable.

More specifically, the proposals demonstrate the following principles, which should be adopted for future development of the High Line on the rail yards site, many of which are consistent with how the High Line is treated south of 30th Street:

• the High Line should have a consistent identity along its entire length, incorporating the basic design treatment from the southern sections, so that the entire High Line is experienced as a consistent park environment;
• the High Line structure should be distinct from adjacent structures;
• the 30th Street view corridor should be open and unobstructed by buildings along its entire length;
• connections to the High Line should be made at multiple but discrete points, both from grade and to the platform over the rail yards.

In addition, the continuation of the High Line on the 33-34 Street block should be anticipated, so that the High Line can be fully preserved all the way to its current terminus at grade at 34th Street.

8. Require a genuine commitment to sustainability.

We are pleased that three of the development teams (Brookfield, Durst/Vornado and Tishman Speyer) have indicated that all of their buildings would attain LEED Gold certification and three (Brookfield, Durst/Vornado and Related) would seek LEED certification for Neighborhood Development. This confirms that a high level of sustainability is financially feasible, and should be required of all developers.

9. Strong labor provisions and opportunities for minority- and women-owned businesses must be provided.

The discussion at our public forum has reinforced our long-held belief that all construction and ongoing employment opportunities on the rail yards should be subject to strong labor provisions (including requirements for living or prevailing wages, standard benefits, and apprenticeship training programs) and should maximize opportunities for minority- and women-owned businesses.

10. Put the school in a good location.

Several of the proposals site the WRY school along 30th Street, in the midst of the greatest concentration of residential buildings on the rail yards, and closer to 11th Avenue to be accessible to area residents. This seems the most logical location. Playground space must be included.

11. Modify the cultural facility zoning on the ERY, since there is no committed not-for-profit user.

The City has sought to establish a major new cultural facility on the ERY since the Hudson Yards rezoning first began to take took shape in 2002. In all that time, no user has been identified, and no concrete plan has been proposed. The development teams were invited, but not required, to provide their own ideas. None of them has come up with a committed user for the ERY space. In addition, several of the proposals strike us as primarily commercial uses, such as trade show/convention center uses, rather than the not-for-profit cultural facility uses required by the ERY zoning. (The teams were encouraged in this direction by the City’s Cultural Facility Study, which identified the concept of a “Pavilion in the Park.”)

No separate cultural facility for a not-for-profit user should be built on the ERY without the normal process of identifying a qualified and capable user and then designing a building for that user’s needs. Providing a notable piece of architecture at this site on the ERY is desirable, but it should not take precedence over planning for a real user.

The ERY zoning should be changed to allow other development, preferably residential, at the southwest corner of the ERY. This would strengthen the residential character of 30th Street, provide additional opportunities for affordable housing, and absorb some of the site’s problematic density.

We support the desire to enliven the rail yards with cultural activity, but believe that can best be accomplished by providing substantial space throughout the development for smaller cultural uses, especially non-profit theatrical and arts companies and artistic support services.

12. Make good connections to Hudson River Park.

The five proposals present a variety of locations and ideas for the pedestrian bridge to Hudson River Park. There are advantages to each of the proposed locations. Its eventual location should be closely coordinated with the Hudson River Park Trust to maximize its accessibility and minimize its incursion into the park. The design of the bridge should be dimensionally inspired by the adjacent High Line – broad enough to not quite feel like a bridge, but not an overpowering structure. It should remain open to the sky, and function as an extension of the Hudson River Park and the open space on the WRY, rather than a passageway between the two.

The corner of 30th Street and 12th Avenue is also critical for pedestrian access between the WRY and Hudson River Park, as well as bringing activity to the desolate edge of 12th Avenue. This design challenge is already nicely reflected in the WRY Design Guidelines and in several of the proposals.

13. The financial aspects of the proposals must be made public.

It is impossible to thoroughly assess the proposals without knowing what the revenues to the MTA will be, over what period of time, or what conditions and assumptions may be attached to the proposals. This information must be made public before the selection process proceeds, so that the public can be assured that this vast public asset is being disposed of on the best terms possible.

At the public hearing held by the Assembly Committee on Corporations, Authorities and Commissions on January 3, 2008, arguments were made by some members of the HYCAC and other opinion leaders in New York for substantially changing the process for developing the West Side Yard. The comments in this letter are all made in the limited context of the current RFP process.

Thank you for this opportunity to comment. We look forward to further discussion as the plans develop and the selection process continues.


[signed by]
Anna Hayes Levin