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Utility Bids $700M on Rail Yard

By PRADNYA JOSHI
STAFF WRITER

February 23, 2005

Let the bidding begin -- officially.

As New York's push for the 2012 Olympics continues with the delegates in town, another bidding war also got its formal start yesterday as the Metropolitan Transportation Authority released its request for bidders for its 13-acre site on the West Side.

Applicants must provide a $25,000 fee and formal plans within a month. Several real estate experts said the arrangement was not likely to attract too many more offers.

"It's not a level playing field for other developers to bid," said M. Myers Mermel, president of TenantWise Inc., a real-estate advisory company. "It's as if they're selling a Hummer to the Jets but it's a Pinto to everybody else."

Monday, TransGas Energy Systems, a power-plant developer, submitted a $700-million bid for the rights to build above the rail yards with several conditions. An MTA spokesman confirmed that the agency received the TransGas proposal, but he declined to comment on it.

This follows Cablevision Systems Corp.'s unsolicited $600-million bid in early February to build a residential and shopping complex on the MTA's Hudson Rail Yards. That competes with a plan from the Jets to pay $100 million for development rights. The city says its offer to build a New York Sports and Convention Center would be the "crown jewel" in its quest for the 2012 Olympics.

TransGas president Adam Victor said his bid for the rail yards depends on several conditions, including his plans to build a power plant in the Williamsburg section of Brooklyn.

According to Victor's letter to MTA chairman Peter Kalikow, the offer lists several conditions, including the MTA agreeing to buy power from his company for 20 years at the same price it currently gets. Details of the proposal were first reported in The New York Times.

Given the conditions, Mayor Michael Bloomberg dismissed the TransGas bid as not a serious offer.

"They just want to build a plant, a power plant, in a place that the city planning and economic development don't think is the right place. We think that land would be much better used for other purposes," Bloomberg said at a news conference yesterday at Silvercup Studios in Queens. "In terms of being a legitimate bidder for the rail yards, that's not a legitimate thing."

Victor said his company's proposal for the West Side rail yards should be viewed more as a power-development project rather than a real estate project.

He added that his company is "neutral" on what should be developed at the West Side yards, but he supports the efforts to bring the Olympics to town and would support a stadium.

Jets president Jay Cross said he expects his organization's bid to be competitive and said the Cablevision and TransGas proposals are not real offers.

"Now what I think we're seeing in the last couple of weeks is that we are going from the sublime to the ridiculous with one gimmick that comes out after another," Cross said.

Bidders have until March 21 to submit their plans to the MTA, which must include details on financing, project completion schedule and the $25,000 fee.

Although the West Side yards represent the potential of a huge boon for real estate developers and one MTA assessment values the land at $900 million, several of the major companies contacted declined to comment about anything related to the West Side development. Observers noted that the powerful realestate interests don't want to go against Bloomberg's support of the Jets bid for fear that they will draw the city's ire and see their own zoning approvals for other projects challenged.

In addition, others noted that even if other developers were interested, the cost of environmental cleanup, costs of building on top of rail yards and difficulties in getting zoning changes would keep major developers from bidding.

Copyright 2005, Newsday, Inc
 

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