http://www.observer.com/2008/real-es...al-faces-delay
Related's West Side Rail Yards Deal Faces Delay
by Eliot Brown
November 3, 2008
The deal to put $15 billion in residential and commercial development atop the M.T.A.'s West Side rail yards has hit a delay, as
the agency will not sign a contract with developer Related Companies this week, as was originally scheduled. The state authority says it has reached an agreement with Related (which is in a joint venture with Goldman Sachs) to push back the deadline for signing a contract for the property by another 90 days, as the M.T.A. has been slower than expected in producing the needed paperwork.
"We have together agreed on an extension of the designation period," said Gary Dellaverson, the CFO of the M.T.A. (who has to have one of the least enviable jobs in government these days). "Our expectation was that the documents would have been turned a month and a half ago.
"This is my fault—the fault of the M.T.A.," he said. "This is not a product of either Related or Goldman or their lawyers."
The M.T.A. named Related the conditionally designated developer back in May, when Related beat out other developers, offering to pay over $1 billion for the rights to develop the 26-acre West Side site. At the time, the agency gave itself and Related 165 days to sign a contract, according to details of the agreement provided to the M.T.A. board at the time, a window that would have expired today. But
the agency has been slow to create the contract, a fact it says is due in part to the collapse of the credit markets. The M.T.A.'s attorneys for the deal, Paul, Weiss, have had much work related to the financial crisis and have been slower than expected in finishing their work, Mr. Dellaverson said. As a result, the first draft of the contract and other documents have not yet been provided to Related.
The contract is an important, but not final, step in the solidification of the deal with Related, which would need to be closed some months after going to contract. The M.T.A. originally envisioned closing on the eastern half of the rail yards four months after signing the contract, while a closing on the western half would wait until after it has gone through the rezoning process, an approval targeted to come in late 2009.
The M.T.A. first selected Tishman Speyer to develop the yards in March, though the deal fell apart a month later when the firm tried to change the deal's terms. While the negotiations over the contract have yet to occur, Mr. Dellaverson said he is not worried that the financial crisis will push Related to back out of the agreement.
"I don't have any indication, and they haven't brought anything to me that would indicate slowness or desire to delay on their part," he said. "Everything that I've seen, is they're continuing to operate in good faith and pursuant to a desire to consummate the transaction."