MTA Move To Open Bidding Raises Ire

The Metropolitan Transportation Authority's solicitation of competitive bids for development rights at the West Side rail yards has drawn the ire of some civic groups and politicians, who said the MTA engineered the process to ensure that the New York Jets will be the only bidder left standing.

The state-run mass-transit agency has said it would accept proposals for developing the 13-acre rail yard along the Hudson River under the property's current zoning, which is restricted to manufacturing and commercial use with a low density: a floor-area ratio of two. In contrast, the Jets negotiated a plan with the city that would have rezoned the site to allow for a 75,000-seat domed sports and convention center with a high-density FAR of 12.

In addition, critics of the MTA's decision Tuesday said its request for proposals for the rail yard offers no subsidies for a platform to be built over the site, even though the Jets' deal includes $600 million in subsidies from the city and state for a platform, a retractable roof, and air conditioning for the New York Sports and Convention Center.

"It may be that the system is being rigged for the lowest possible price, so that only the Jets can win," the Democrat who represents the area in the Assembly, Richard Gottfried, said. "If Peter Kalikow is honestly trying to get the highest and best price for the site - which is his fiduciary duty as the chairman of the MTA - then he should be asking developers what they would pay for it on the same terms as his own appraisers appraised it at."

When the MTA conducted its appraisal of the rail yards it assumed an FAR of 12, and the property was appraised for $900 million. The Jets have offered to pay $100 million for the rights to develop one-third of the area - the western yards, for which bids were solicited this week - while Madison Square Garden has offered to pay $600 million, less perhaps $250 million for the cost of the platform.

"If this is a scandal, then this is a huge scandal that should be investigated not by the legislature, but by a grand jury," Mr. Gottfried, who has opposed the stadium plan, said.

"Peter is a grown man," he said of Mr. Kalikow, "and if the mayor and governor won't cooperate with helping him get the highest and best price, then he should fight for his agency, because that is what we pay him to do."

Another Democrat who represents the area and opposes the stadium plan, City Council Member Christine Quinn, said: "We need a process that actually goes out into the marketplace and finds out what the market in its entirety can bear, and doesn't predefine the market as the Jets and the Bloomberg administration."

One of the Democratic candidates for mayor, Fernando Ferrer - who urged the MTA two weeks ago to solicit bids - said: "I'm calling on the MTA to ... give New Yorkers a fair open-bidding process that isn't tilted toward any one bidder, and one that ensures the best price for the land. They must do this immediately, or risk losing the public's confidence in the process altogether. Only then can we be sure that taxpayers and straphangers are getting the best possible deal."

An Assembly Democrat who has been critical of the MTA's handling of the air-rights sale, Richard Brodsky of Westchester, told The New York Sun he had spoken with Mr. Kalikow yesterday afternoon. Mr. Brodsky said the MTA was forced to use the site's current zoning because "it cannot formally solicit bids with a fictitious zoning that does not yet exist."

Mr. Brodsky, who is chairman of the Committee on Corporations, Authorities, and Commissions, said Mr. Kalikow also told him that bidders for the development rights "should be creative and put conditions into the proposals," and Mr. Kalikow said he would consider such proposals "very seriously."

To make a proposal conditional on a rezoning, developers must also offer a proposal for the site as it is currently zoned, an MTA spokesman, Thomas Kelly, said.That could lock the winning bidder into the "as is" offer, however, if a rezoning does not take place.

"I don't think developers are going to make any move to issue a proposal until it is clear the Jets deal has completely disintegrated," one developer, who spoke on condition of anonymity, said.

Developers "respect" Mayor Bloomberg, this industry insider said, adding, "We like the guy and we don't want to muck it up for him."

The president of the Real Estate Board of New York, Steven Spinola, guessed that Madison Square Garden would not make a genuine bid for the site with its current zoning. Mr. Spinola, whose organization backs the stadium plan, said: "The city believes MSG will make a submission and still make a housing bluff, conditional on a rezoning."

To make the land valuable for developers and to discover the true market value, it must be rezoned at a higher density. And it is up to the city to rezone the rail yard, because the MTA, which would still own the land, can rezone property it owns only for transit use, real-estate experts said.

To that end, the deputy mayor for economic development, Daniel Doctoroff - who has been the leading proponent of the stadium and of the related West Side redevelopment plan and New York City campaign for the 2012 Olympics - commented Monday that it was "highly unlikely" the city would rezone the site. The Department of City Planning, which would be responsible for any rezoning, completed a 360-acre rezoning of the Hudson Yards neighborhood in January but excluded the western rail yard.

With the MTA having decided to solicit bids, its tentative deal with the Jets to enter into nonbinding arbitration for the rights, through the chairman of the board of the Walt Disney Company, George Mitchell, has been scrapped, Mr. Spinola confirmed yesterday.

Neither the Jets nor MSG would comment yesterday, and there was no indication of whether bids they are expected to submit to the MTA next month would be the same as their previous offers for the development rights, or more - or less.