The Metropolitan Transportation Authority was scheduled to announce who will win the rights to develop the Atlantic Rail Yards in Brooklyn today, but the agency instead gave the favored bidder more time to sweeten the deal.
At an MTA board meeting Wednesday in Manhattan, instead of making a final decision between competing bids from Forest City Ratner and the Extell Corporation for the property, the agency announced it is entering into an exclusive 45-day negotiation period with developer Bruce Ratner to see if he will agree to pay more money to build his planned development over the rail yards.
Ratner's plan calls for a sprawling commercial and residential development anchored by a new basketball arena for the New Jersey Nets. Ratner offered $50 million in cash for the development rights, in addition to other investments, while Extell offered $150 million in cash.
The MTA has a mandate to get as much for the property as it can, and several board members said while they preferred the Ratner plan over Extell’s, his price was too low.
“I think that the bid that we did get from Forest City, while complete and well thought out, frankly was not as high as I expected,” said MTA Chairman Peter Kalikow. “I expected the MTA to receive more money.”
“The dollars involved with the Ratner proposal are unacceptable," said board member Barry Feinstein.
While the MTA has agreed to exclusively negotiate with Ratner's company, it says it is also not ruling out the Extell bid.
"The Extell proposal remains. It has not been rejected,” said MTA Vice Chairman Edward Dunn, “If Extell chooses to firm up details of its proposal in the meantime, it is certainly free to do that."
Extell said in a statement it was disappointed the MTA decided to enter into exclusive negotiations with Ratner, and believe they should also have a chance to change their bid.
“I think our bid speaks for itself,” said Extell’s Lela Goren. “There's $100 million more there for the MTA and for the riders of the MTA, and I think the MTA has a fiduciary duty to its agency and to its riders to pick the highest bid and also to pick the bid that's best for the community.”
Ratner says he was pleased with the MTA's decision, and looks forward to providing even more benefits for the agency, transit riders and the surrounding communities.
Also on the MTA's agenda Wednesday was the future of the Hudson Rail Yards on Manhattan’s west side, where the New York Jets had planned to build a football stadium. Acknowledging that plan is all but dead, the MTA is now considering building a platform over the yards itself, hoping to more than recoup the $400 million cost by then re-bidding the site to a new developer.
“I don't know how much it will generate. There were some people that a few months ago said it was worth at least $1 billion, and there were some that said it was worth several billion dollars,” said MTA Executive Director Katherine Lapp. “We will find out what the market suggests it's worth."
The MTA says the platform could be paid for out of the much bigger-than-expected budget surplus it's now projecting for this year of more than $830 million. That money, largely the result of better than expected tax revenue, also eliminates the need for service cuts next year.
It will also allow the MTA to boost funding for security and for cleaner subways.
“There's a lot of good news in the budget,” said Lapp. “A lot of great things have happened to improve our finances."
It wasn't all good news, though. The MTA is still planning what it calls a modest fare increase in 2007, and projects a budget gap of almost $800 million in 2008.
Brooklyn Residents Have Mixed Reactions To MTA's Decision To Negotiate With Ratner