Sweetening a sweetheart dealBy
While this morning, I wrote about the naming rights aspect for the MTA’s restructured deal with Bruce Ratner for the Vanderbilt Yards land. For posterity’s sake, let’s go over just how much sweeter the MTA has made this sweetheart deal.
The short of the backstory is that Bruce Ratner doesn’t have the money to build much of what he wanted to build at Atlantic Yards and can no longer afford the below-market rate of $100 million for the Vanderbilt Yard land rights. He also can’t afford the $225 million state-of-the-art train facility he originally promised.
So what did the MTA do? Well, instead of opening up the process to a new round of bidders and requests for proposals, the agency has simply sweetened the deal for Ratner. Instead of a lump sum payment of $100 million, he will pay just $20 million upfront and cover his purchase in installments totaling $80 million over the next 22 years. He will pay $2 million a year from 2012-2016 and then $11 million a year for the following 15 years. Instead of a $225 million rail facility, he will supply one with three-quarters of the original plan capacity for $150 million instead.
As you can imagine, reaction from the MTA Board members and Atlantic Yards critics bordered on the incredulous. Whether the full board supports this project tomorrow remains to be seen.
“It is one month shy of four years since the board accepted Forest City Ratner, and this committee is being given less than 48 hours to understand a complex transaction,” MTA Board member Doreen M. Frasca, said. “I think that’s pretty outrageous.”
Various groups are planning to file suits to stop this new deal from going through. They probably face an uphill battle, but then again, so does the MTA. During an economic crisis, they’re relinquishing land and a rail facility for a below-market payment. The trains might run on time, but public opinion will not smile upon this sweeter sweetheart deal.
In the end, as some critics called it a “bait and switch” by Ratner, MTA CFO Gary Dellaverson had the final, understated word: “It’s not quite as good as we hoped.” And that was a choice made by the MTA with which it will have to live for a long time.