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June 25, 2009

MTA Ignores Fiduciary Duty, Approves Revised Yards Plan

If you read the Atlantic Yards Report's account of yesterday's MTA hearing that resulted in a 10-2 vote approving the sale of the Atlantic Yards to Forest City Ratner at a drastically reduced price (in both present and expected value terms), it's hard not to come to the conclusion that either (a) the people that sit on the MTA Board ain't too bright or (b) the fix was most certainly in. Or (c) both. The heart of the MTA's fallacious position was encapsulated by board member Jeff Kay's defense of the new pricing structure: “The market is what the market is,” declared board member Jeff Kay." Um, except that the board rejected a higher price from Extell back in 2005 and has refused to either get a current independent appraisal or solicit new offers to find out what the market price really is. (In fact, at yesterday's hearing Daniel Goldstein made an offer on behalf of DDDB of $120 million for the property over 12 years—the details of the offer are posted here.) The board ignored Assemblyman Jim Brennan who tried to remind the MTA that it is legally bound not to squander its assets; he also pointed out that the Public Authorities Accountability Act requires an independent appraisal. Council Member Letitia James pointed out the irony that taxpayers bailed out the MTA and now the MTA is bailing out a private developer, adding “How can you sell off a valuable public asset without considering market value?” Goldstein also said that it's likely his group will sue the MTA for its actions. Anyway, there's no point in rehashing the entire play-by-play here. Go read the Atlantic Yards Report's detailed account and watch the video above.
MTA Approves Deal 10-2 Despite Warnings [AY Report]
Atlantic Yards Project Enters a Crucial Period [NY Times]
Bailout! State Cuts New Deal to Save Stalled Yards [NY Post]
MTA Signs Off on Sweet Atlantic Yards Deal [NY Daily News]
MTA Approves New Deal for Atlantic Yards [WNYC]

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Comments

Now this would be a valid lawsuit.

Posted by: daveinbedstuy at June 25, 2009 9:06 AM

I would not take Goldstein's offer as proof the property is worth that much. The offer seems much more like a public relations ploy than a substantive bid.

Posted by: Huhh at June 25, 2009 9:08 AM

There is nothing anyone can honestly say in defense of this ..

Posted by: werner at June 25, 2009 9:10 AM

MTA BOARD CHAIRMAN : Hemmerdinger

From AYR:

“I’ve been in the real estate business a whole long time and I agree with Doreen no deal is ever perfect,” Hemmerdinger said.

“You get what you can when you can. And I think, in this economy, jobs and an arena in Brooklyn is a public good.”

From CRAINS:

http://www.crainsnewyork.com/apps/pbcs.dll/article?AID=/20090601/FREE/906019946/1058

Looks like he gets what he can when he can. If he does that to family, what can Brooklyn expect?

And, since when are jobs a public good?

Posted by: bkn4life at June 25, 2009 9:21 AM

WOW, bkn4life, he really is some scumbag. That article also says his chairmanship of the MTA was to end last week. WTF???

Posted by: daveinbedstuy at June 25, 2009 9:27 AM

who does Ratner think will buy these bonds? there's still a considerable chance this thing will fall apart I think.

Posted by: Ringo at June 25, 2009 9:29 AM

here is what i find funny. people do nothing but bi+ch and moan about the MTA and our subway system. yet our system is GREAT! and it's relatively inexpensive. (can you believe *im* saying that?!). maybe we should just get rid of the whole system and let all the freaks bike to work, see how that works.

*rob*

Posted by: PitbullNYC at June 25, 2009 9:31 AM

And, of course, with no more "affordable housing" component...which was iffy at best.

Wonder what Acorn (the minority housing alliance that was a rah-rah cheerleader of this project) would say now? Would they still have to adhere to their contractual "no-badmouthing" Ratner clause?

Posted by: cmu at June 25, 2009 9:38 AM

DIBS:

You are being much more direct than me. It just adds to the smell.

I have been in 555 Madison Avenue countless times. Anyone controlling Real Estate in that neck of the woods is flat out lying if they claim that you should sell for what you can right now. And maybe take pennies on the dollar for the property like he is accused of trying to force his relatives to do in what looks to be an orchestrated capital call.

Would he sell his property for 25 cents on the dollar? Hell no, he'd plow through anyone and anything that kept him from his almighty dollar. But when it comes to serving a public board...not quite the same math.

The next one i hope to have some time to noodle...

Board Member Doreen M. Frasca made some interesting comments on 30 years of structuring deals like this.

How many do you think went this way?

Posted by: bkn4life at June 25, 2009 9:43 AM

The Atlantic Yards deal stunk before, now it positively reeks!! Who dares to defend it? I would like to see Ratner's apologists figure out a way to blame THIS on DDD. There isn't even a pretense of fooling the public at this point.

Posted by: Schultz at June 25, 2009 9:45 AM

rob, our system SUCKS compared to other of comparable size...Tokyo being the best example. There are few comparable in size to NYC and Tohyo but nonetheless, MOST systems are btter than in NYC.

As far as expense, the Tokyo sysytem is "pay per length of trip" It starts out around $1.25 for a trip that would be comparable to matbe 30 blocke here. Of course that would never fly here because of all the left wing liberals.

Posted by: daveinbedstuy at June 25, 2009 9:52 AM

Each member of the board of the MTA needs to be investigated for corruption and fraud. This investigation needs to be done in the light of day by a special independent office. There cannot be a state agency ran by people who embezzle money and has been PROVEN keeps two sets of books. The semi-public/semi-private immunity all NYS authorities share have to be abolished in order for these groups adhere to the rule of law.

Posted by: Joe from Brooklyn at June 25, 2009 9:55 AM

What Joe said.

Posted by: daveinbedstuy at June 25, 2009 9:59 AM

Wow...Daniel Goldstein is going to sue? Who would have ever thought that would happen? Does he get a volume discount from his attorney?

Posted by: FtGreeneCorey at June 25, 2009 10:01 AM

the whole paying as far as you go thing would be F'ed up considering that most people of modest means are forced to live way out in the middle of no where outer boroughs, dave.

i think our subway system is great. who the hells wants to be tokyo!!? they are packed like sardines in those trains. ick.

*rob*

Posted by: PitbullNYC at June 25, 2009 10:13 AM

i forgot about the two sets of books.

maybe we should start a 3rd set of books as a wiki project to see what an arms length run system would be like.

also:

looks like it was 555 5th avenue. not madison. my bad. same logic though. maybe more so.

Posted by: bkn4life at June 25, 2009 10:16 AM

Yes, Rob, but the reason they're packed like sardines is that the system is popular and cars are actively discouraged (you cannot register a car in Tokyo w/o proving you have a parking space, iirc). This does not excuse the crowding, but shows how far behind we are.

And take transit in cites like Paris, Rome, Amsterdam...the frequency is higher; the bus/trains are cleaner; there are no 'service advisories' and 'this train will not stop for the next 55 stops'; and they're better subsidised. Even Curacao in SA has a wonderful rapid bus system.

You must not travel on the weekends, as I primarily do. It's slow, unreliable and erratic then.

Posted by: cmu at June 25, 2009 10:21 AM

@rob: Even if we accept your statement that NYC subway is "great," does that mean that it's okay for the MTA to waste money in such an egregious manner? I don't think so.

Our subway is big, and convenient, and relatively cheap (for now). It's also filthy, in complete disrepair and technologically outdated. Despite those positives, it's very important that we fight for transparency and accountability- especially now.

Posted by: spnder at June 25, 2009 10:24 AM

OTOH, I've been stuck in a transit strikes in Paris, Rome and Amsterdam. Paris and Rome three times each. And I don't consider myself to be a person who really travels all that much.

I used illegal but very efficient mini buses in Curacao. Like in many second-world countries.

I dont think the NY system is bad. It would be a bargain at $1/ride if the MTA wasn't so insanely corrupt.

Posted by: Ringo at June 25, 2009 10:29 AM

Rob, the point is that the MTA is in a perpetual financial crisis and constantly has a hand out for taxpayer bailouts and fare hikes, yet is basically giving away it's assets to a developer w/o due diligence. Why would they do that if not related to corruption and/or cronyism? This debate is not so much about NY v. Tokyo's daily subway experience.

Posted by: squaredrive at June 25, 2009 10:31 AM

quote:

You must not travel on the weekends, as I primarily do. It's slow, unreliable and erratic then.

no. i do. and there's always signs up about which trains are rerouted. i dont know, im not doubting you, im sure there are some lines that probably suck bad though.

*rob*

Posted by: PitbullNYC at June 25, 2009 10:31 AM

quote:

It's also filthy

are you insane? it is far from filthy. maybe the G train is filthy but every other train ive ever been on has been very clean.

*rob*

Posted by: PitbullNYC at June 25, 2009 10:32 AM

It also gave away the store to the unions.

Posted by: daveinbedstuy at June 25, 2009 10:41 AM

I only have London to compare to, which is less reliable, more crowded, more confusing for connections, hugely more expensive and more strike prone.
Give me NYC anyday.

That said, the current MTA board does sound like a bunch of d'bags and it is unforgiveable for them not to get the best deal.

Posted by: etson at June 25, 2009 10:43 AM

Gotta agree with Rob on this one. NYC has a pretty excellent subway system, especially for the cost (which is still VERY inexpensive). I've had many more problems on the transit systems in Paris and London. And talk about filthy...ever been on the subway in Chicago? Good god it's disgusting!

With that said, I believe the MTA are crooks, and this is yet another example of that. I wish this whole AY thing would go away and we could have a nice park there. I'll keep dreaming...

Posted by: 11217 at June 25, 2009 10:47 AM

The slimy pole that never even gets wiped off, much less disinfected is the one thing that irks me the most. Most other transit lines get disinfected (or at least cleaned) daily. The only time the MTA does that is if there is vomit or feces. And you think that it's bad now they're actually laying off cleaners, I'm glad I work in BK now so that I have the option of driving.

Posted by: Joe from Brooklyn at June 25, 2009 10:49 AM

Oh well, fsrq raked me over the coals yesterday for saying the same thing. I wonder how long the MTA will try to tell us what a great deal they got before the truth gets out?

Posted by: bxgrl at June 25, 2009 10:50 AM

MTA board members are worse than crooks. They're lazy and not terribly diligent when spending other people's money. If they had to open up the whole process again, that would be SUCH A DRAG. Hearings, white papers to read, meetings with angry constituents, etc. Then there would be phone calls from angry mayors, BPs, and other interested parties.

They just want to go home (in their cars).

Posted by: Brooklyn Chicken at June 25, 2009 10:51 AM

Sorry Joe, but since they usually clean the cars at the end of each route, how exactly do you know if they are or aren't cleaning off the poles...?

The cars I've been in lately have been spotless. I understand they've been cleaning the cars like mad lately since the swine flu scare....

Posted by: 11217 at June 25, 2009 10:51 AM

The MTA is extremely corrupt and the leadership has been in cahoots with management for years. The TWU has horrible leadership but if not for unions the workers (union and non-union) would make about $10 less and hour. I don't know about you guys but I like workers having benefits and being paid well.

Posted by: Joe from Brooklyn at June 25, 2009 10:55 AM

Because my Dad works for the MTA.

Posted by: Joe from Brooklyn at June 25, 2009 10:56 AM

They do not clean the poles.

Posted by: Joe from Brooklyn at June 25, 2009 10:57 AM

On a conceptual level - if real estate assets of all types, including land, have significantly depreciated in value over the past 24 months and will most likely continue to lose value over the coming months/years why would this particular asset behave any differently? Today, sellers of real estate are constantly being berated in on-line forums such as this one for not making adjustments in their expectations (on average the Brownstoner appraisal widget indicates a 30% discount to asking). Why is everyone now suggetsing that these sellers (MTA) hold to their prior expectation?

Posted by: ITM at June 25, 2009 10:58 AM

Speaking of, this article just came out today:

***
Subway Cleanliness
The Annual ‘Shmutz’ Report
No. 7 Line Is Rated Cleanest. Don’t Ask About the R.
By Michael M. Grynbaum
subway train

Queens commuters and Mets die-hards, rejoice: the No. 7 train, which stretches west to east from Times Square in Manhattan out to Flushing, Queens (with a stop at Citi Field in between), is the cleanest line in the New York City subway system.

But if you’re headed to Bay Ridge, out to Forest Hills, or just heading down Broadway in Midtown — well, better take a Kleenex or two. The R train ranked dead last, with just 25 percent of cars considered clean. (Its sometime-companion train, the N, clocked in at a not-much-better 29 percent.)

The Straphangers Campaign, an advocacy group for riders that is part of the New York Public Interest Research Group, issues a report each year ranking the subway lines by cleanliness.

That’s according to the 10th annual “Shmutz” survey, issued on Thursday by the Straphangers Campaign, an advocacy group for riders that is part of the New York Public Interest Research Group.

While the Metropolitan Transportation Authority runs its own occasional cleanliness study, those results are not broken down by line. And the last report by the transportation authority pronounced 91 percent of the system’s cars clean — a figure some subway riders may consider a tad optimistic.

In the Straphangers’ report, 57 percent of all cars were deemed clean, up slightly from the overall 50 percent rating in 2007.

The No. 7, at 84 percent tidy, reclaimed the top spot from the L, which fell precipitously to 62 percent from an 88 percent rating last year. (The two crosstown lines are part of an initiative by the transportation authority to assign a dedicated manager to individual subway lines.)

What makes for a clean ranking? “Basically dirt free,” according to the Straphangers’ methodology, although “light dirt” and “occasional ‘ground-in’ spots” can still pass muster.

The N, despite being outfitted with those snazzy new cars with the digital readouts, suffered the year’s worst decline, falling to second-to-last on the list after recording a reasonable 63 percent rating in 2007.

The J (whose partner, the Z, narrowly avoided death this year), enjoyed the biggest improvement, up to 78 percent from 33 percent clean last year.

“It is encouraging to find an increase in clean cars,” said Gene Russianoff, the Straphangers’ staff lawyer. “But we are very concerned that cuts in cleaners will result in dirtier cars.”

Mr. Russianoff was referring to the authority’s 2010 budget, which includes a reduction of about 4 percent in the system’s cleaning staff.

The Straphangers dispatched 29 surveyors to examine 100 cars on 22 lines, excluding the 42nd Streets, Rockaway and Franklin Avenue Shuttles. The survey took place between September and December of last year.

Here’s the complete rundown:

* Nine lines improved: 4, 5, A, B, D, E, J, M and V.
* Five lines worsened: 1, G, L, N and R.
* Eight were statistically unchanged: 2, 3, 6, 7, C, F, Q and W.

Posted by: 11217 at June 25, 2009 10:59 AM

The cleaners are told to sweep, usually they only mop if there is vomit or feces. My Dad is surface not subway but they talk with the subway guys all the time. The pole thing is definitely true on buses.

Posted by: Joe from Brooklyn at June 25, 2009 11:00 AM

LOL the R train ranks dead last in cleanliness probably cuz I ride it!

*rob*

Posted by: PitbullNYC at June 25, 2009 11:05 AM

ITM- the subway system is not real estate, like a building. It's crucial infrastructure and in fact its value as an infrastructure and as a service should be higher because the need is ever greater.

The yards were lowballed for Ratner, who can't even come up with the money he promised. But at some point something will get built there- its prime RE, not a deteriorating building or part of the MREB. The MTA turned down a higher offer. More shame to them.

Posted by: bxgrl at June 25, 2009 11:06 AM

"On a conceptual level", LOL!

Posted by: werner at June 25, 2009 11:07 AM

Where are all the pro-Ratner shills who said this is a great deal because the MTA gets $200K a year to rename the Atlantic Ave. station--and lambasted anyone who disagreed?
Can you imagine if the school system decided to deal with a particular contractor even though they submitted a bid several times worse than a competitor?
Or if the NYPD wanted to buy mercedes squad cars because they decided in their wisdom that benzes were best?
Illegal, right?
Why is this any different?

Posted by: ontheparkway at June 25, 2009 11:07 AM

cuz the MTA is privately owned you dolt

*rob*

Posted by: PitbullNYC at June 25, 2009 11:10 AM

rob- the MTA is not privately owned. Wherever did you get that idea? I think you owe ontheparkway an apology for that one. NYS owns it.

ontheparkway- so ya think we scared them off yesterday? :-)

Posted by: bxgrl at June 25, 2009 11:14 AM

It's a state agency, Rob. Board members are appointed by the Governor.

Posted by: etson at June 25, 2009 11:16 AM

ITM:

i would be on the same page as you if they paid Fair Market Vaue the first time around. they are getting 22 acres. thats 1,000,000 square feet(give or take). At 100,000,000 they were paying $10 per square foot.

If you want to take that tack that the $100,000,000 is just for the yards, that 8 acres or 350,000 square feet.

that works out to $30/square foot.

if they put out an RFP that said, build us a contemporary railyard and keep 350,000 square feet to develop as you see fit i bet goldstein et al could come up with $30/square foot. i might even buy in.

and if the 100,000,000 is just for the railyards, how much is he paying for pacific and dean street? i havent seen that anywhere.

what this is is a blatant siphoning off of public assets to connected private companies/individuals/interests. the only reason they havent really started is this pesky thing called the internet. 20 years ago how much outcry would this have gotten. its a perfect storm approaching i tell ya.

Posted by: bkn4life at June 25, 2009 11:18 AM

The MTA is an authority. Semi-public/semi-private. When you have a state as corrupt as New York, these fascistic (Mussolini referred to Fascism as Estato Corporativo (The Corporate State or combining of Gov and Corp.) authorities have the equivelent of diplomatic immunity when it comes to legal/financial consquences. Despicable.

Posted by: Joe from Brooklyn at June 25, 2009 11:18 AM

Why don't Brooklynites ban together to make an offer for the yards?

Posted by: Joe from Brooklyn at June 25, 2009 11:21 AM

"Brooklynites ban together"
joe? ha ha ha ha ha- because we're Brooklynites! I think your typo was probably closer to the reality than band together is. :-)

Posted by: bxgrl at June 25, 2009 11:26 AM

We would only need a small fraction of Brooklynites. It's the 4th biggest city in the country! How do you think the gov't bankrolls public works, by selling bonds to the public. Each person could sign a contract for a reasonable amount of interest/dividends associated with an equivelent in paper.

Posted by: Joe from Brooklyn at June 25, 2009 11:30 AM

THERE IS NO MARKET VALUE OF THE SITE NOW. NO ONE CAN FINANCE DEVELOPMENT THERE BUT FCRC. THEY WOULD RECEIVE NO PLAUSIBLE BIDS READY TO CLOSE FROM ANYONE. LARGE SCALE DEVELOPMENT MARKET IN BK IS DEAD DYING DEATH DEAD DYING

Posted by: BK realestate veteran at June 25, 2009 11:31 AM

Even in Hong Kong, (EVERY project here is a backroom handshake deal with mega-developers and the government), the MTA capitulation is just outrageous. The Hong Kong government would never let any property go without squeezing big bucks from the tycoon-developers!

Also, our public transit rail system is the best in the world. It is newer and less crowded than Tokyo's too. Twenty minutes, door to door, from WonTon's Hong Kong apartment to the airport!. We use rechargeable smart cards embedded with chips--you just pass them over a sensor to enter. You don't even have to take them out of your wallet!

When I come back to New York, I feel like I have returned to the 19th century.

Posted by: WonTon at June 25, 2009 11:35 AM

Hey, BK, please don't shout.

But this is not a deal. It's negative income for taxpayers. If large-scale development is dead (and who am I to argue), then maybe this one should go into a financially-induced coma for a while.

Posted by: Brooklyn Chicken at June 25, 2009 11:37 AM

oops sorry ontheparkway.

seriously, where did i get the idea that it was privately owned?!

*rob*

Posted by: PitbullNYC at June 25, 2009 11:40 AM

FCRC couldn't finance it either- isn't that why they got public financing? ANd maybe large scale development is not the way to go- except for ratner and the construction industry, most people (the ones who would actually live there) probably would find the size and scale a turnoff. I don't know for sure-no one does but I lived in some pretty huge scale apartment buildings in the past and I can tell you they have very little appeal, compared to the brownstone neighborhoods. But that's just my opinion, in any case.

Joe - I love dreamers. Where do I sign? :-)

Posted by: bxgrl at June 25, 2009 11:43 AM

mr CAPITALS:

maybe thats why mr goldsteins proposal of aggregate smaller developments is worthy of more than the disdain the board showed him.

open up a legit RFP. see what you get. otherwise your piehole is spouting some form of unsubstantiated wisdom. the shortcut your "wisdom" espouses isnt worth the future of that railyards. they have been a railyard for 100 years. a few more wont hurt them.

till then, i laugh at you real estate veterans.

Posted by: bkn4life at June 25, 2009 11:46 AM

The MTA is a public agency. Even most of Ratner's paid shills know that.
Bxgirl, it's possible that it's getting tougher to defend this deal as it gets worse and worse.
Remember, when Ratner started this thing, it was supposed to
1>be the best deal for the MTA (turned out to be $250M worse than the Extell deal)
2>create a huge financial boon for NYC (city budget guys now say it's a loss)
3>bring world class architecture to Bklyn (I didn't like Gehry's design, but the new arena is way worse. even backers say it's a barn)
4>create tons of affordable housing (wanna bet this'll ever get built?)
5<line bruce ratner's pockets and he spreads the wealth to his pals and "community partners" (still on target with that).
I could deal with any of this except giving away public property for pennies.

Posted by: ontheparkway at June 25, 2009 11:47 AM

bxgrl has it. The high-rise, Co-op city (or even Trump Tower) model is dead--take a look at what is selling big in Manhattan, not to mention Brooklyn. People who spend $$$ for luxury housing in Brooklyn don't want to live in skyscraper mega-complexes, they want to live in architecturally cool boutique buildings (like the Maier on GAP, or the buildings going up on the High Line) or in classic old brownstone/limestone houses and pre-war buildings.

The only way they could have sold the high-rises in AY is if they had the "Gehry" brand.

Posted by: WonTon at June 25, 2009 11:49 AM

ontheparkway- I agree with you. When they turned down the higher rail yards bid that was it. You knew they had backdoor deals going on and ratner already had it. It sucked big time and still does. I'd like to see how the MTA tries to justify this- and I bet they get a lot of public flak over it too. Hopefully heads will roll.

Posted by: bxgrl at June 25, 2009 11:51 AM

As BK RE Vet points out - no demand. No demand, lower price. MTA probably does not want to even see the value an appraisal would yield as there is a high probability that it MIGHT be lower than the deal that is on the table.

BXGRL - I am only refering to the Atlantic Yards real estate.

bkn4life - I think your math is wrong - $100 psf not $10. That said, the comparable measure is buildable sf, not the property's two dimesional size.

Posted by: ITM at June 25, 2009 11:51 AM

ITM- but the rail yards are not the kind of real estate you hold or sell for investment. The railyards are part of the infrastructure so in one sense you could say they are priceless. It wouldn't matter if something was built over them or not- they are there because they are integral and necessary to the subway and rail system. If they never sold the air rights, the MTA would still have to hold on to them.

The MTA didn't want an appraisal because they never intended to have competitive bids. They paid it lip service but they had already decided to give it to ratner. Selling air rights was basically an icing on the cake deal- and as a public agency, their responsibility was to the public. But they decided they should do a favor for Ratner. The whole thing is wrong on all counts.

Posted by: bxgrl at June 25, 2009 12:00 PM

ITM:

yes my quick math sucks, just like my typing. in my head i was thinking 10 stories on average across the property. that gets you to $10 per buildable square foot. i think that that goes for at least $100, if not $150 nowadays.

so it is still at 7-10% of the FMV.

and how much infrastructure will be necesary to build the yards over and above what as to be necessary to build the skyscrapers?

when i see a legitimate public document that identifies this then the MTA will have information to do its job.

declaring there is no market isnt enough. again, count me in with the privately funded arena with reasonable housing/office/open space. just like the packers.

Posted by: bkn4life at June 25, 2009 12:07 PM

Extell bid twice what Ratner bid but the MTA passed up the money and raised our fares!

Posted by: werner at June 25, 2009 12:49 PM

"Why don't Brooklynites ban together to make an offer for the yards?"

They did and the MTA paid no attention, just like they did when Extell outbid Ratner in 2005.

The DDDB offer for the yards to build a project using the UNITY Plan framework was firm offer and still stands. The details presented to the MTA Board are here:

http://dddb.net/php/latestnews_Linked.php?id=2145

Posted by: DDDB at June 25, 2009 1:09 PM

I am all for transparency and credibility, it is one of the few equations that can solve the confidence issue. And I believe both of those important variables are not very real at the moment as it pertains to the process that has taken place. That said, the impression I walk away with after reading the posts above is that the seller, which is effectively the MTA, the public and the majority of posters on this piece did not get enough in exchange for giving FCRC the right to build over the rail road tracks. Even though Extell may have offered more total $s does anyone actually know enough about the particulars of their offer so a conclusion about what the comparable value to the public might be? What I find interesting with this episode, considerate of the market transformation that is occuring, is that the "public" (represented here by the majority of posters) thinks their asset (the rail yard) is worth more than the buyer does. This is obviously counter to the position the majority of posteres take when it comes to the evaluation of the privately owned condos, co-ops and townhouses that appear on this site and are subjected to the "reader appraisal" test. That's all I am saying.

Posted by: ITM at June 25, 2009 2:41 PM

ITM- this is true but then you're equating essentially public property with condos, coops and townhouses which aren't just privately owned, they aren't part of infrastructure and their value rests on the market and their perceived desirablity, location and condition.As a public agency the MTA is supposed to follow a number of procedures, overviews, reports, etc. as well as go for the best price. they did little to none of that. DDDB posted a lot of information and certainly enough for anyone to evaluate prior to actually building. Evaluation after the fact is rather pointless.

All things considered, including the fact of public financing for FCR, it becomes pretty obvious that there was a back room deal for a project of this size and purported importance. 100 million isn't even close to what they wanted to buy the air rights for in Manhattan when they were considering a truly misbegotten stadium on the West side a few years ago.

Posted by: bxgrl at June 25, 2009 3:00 PM

ITM:

thing is, no property flipper here would have sold it for less than 1/2 someone else was offering. and when that half off bid came up for renegotiation, they sure wouldn't hold paper with 20% down.

other than that, your point is interesting, but not on point.

Posted by: bkn4life at June 25, 2009 3:02 PM

If they don't take the offer, the NYS's responsibility to get the best price for the tax payer is def. grounds for a law suit. Good luck suing a slick group like the MTA but hey that's what they told Ghandi about the British Empire.

Posted by: Joe from Brooklyn at June 25, 2009 3:19 PM

I just did a quick calculation. For someone who really knows how to crunch numbers, my apologies. But here's a napkin calculation.

Vanderbilt railyards = 8.4 acres = 365,904 sq. ft.
210 Prospect Place = 3,633 sq ft sold recently for $619/sqft
365,904 x $619 = $226,494,576

210 Prospect Place is less than a half mile from Vanderbilt Yards. While 210 is a nice one-family property, it obviously doesn't have the challenges of building over a working railyard. On the other hand, it doesn't have the zoning to build a forty+ story building.

Ratner's $20 Million initial payment for the Vanderbilt Railyards is 8.9 times the value of 210 Prospect Place, which sold for $2,250,000. Ratner's yearly payments over the next 22 years would be a little less than the value of 210 Prospect Place.

I'm just trying to put some of these numbers in perspective. So even if the lowball valuation of the Vanderbilt Yards in 2006 was $214.5 million, Ratner got a very good deal. MTA riders got a very bad deal.

Posted by: harriet at June 25, 2009 4:54 PM

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June 25, 2009

MTA Ignores Fiduciary Duty, Approves Revised Yards Plan

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