development deal

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As GlobeSt.com reported on Monday, the deal is essentially thesame as the one which had collapsed a weekearlier, after MTA and Tishman Speyer reached an impasse over theWestern Rail Yard, which still needs to go through the fullrezoning process. At a news conference on Monday, Elliot G. Sander,MTA's executive director, noted that the need to rezone the WesternRail Yard was not an issue for Related as it had been for Tishman,"so we were able to proceed at the point where we had leftoff."

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Stephen Ross, chairman of Related, said at Monday's newsconference that his company was so enthusiastic about a secondchance at the Hudson Yards project that it stepped up to the plateeven without an anchor tenant to replace News Corp., which walkedaway from the project 24 hours before final bids were due. "When wegot a second opportunity, we didn't waste any time," Ross said. "Wejumped on it."

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At the conference, Ross said his company's eagerness to get backinto the Hudson Yards project had nothing to do with the uncertainfuture of the Moynihan Station project, on which it is a partnerwith Vornado Realty Trust. He noted that Related has "a great trackrecord" with MTA, having bought the parcel of what became the TimeWarner Center from the authority.

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Before construction of any buildings can begin, Related andGoldman Sachs will first have to construct a platform over theexisting rail yards, which are in active use by MTA's Long IslandRail Road. Cost estimates on constructing the platform have rangedup to $1 billion. Jeffrey Blau, president of Related, said at theconference that financing of constructing the initial platform willbe done "with equity. Goldman Sachs is really our financial partnerhere, but we will bring in additional limited partners throughoutthe process."

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Another key component of Far West Side progress is completion ofthe long-planned extension of MTA's No. 7 subway line, which willnow terminate near the Hudson Yards development. Ross at theconference said his company has been assured that the 7 line andother infrastructure will be completed in time, "and we feelcomfortable with that."

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According to a statement from MTA, the current timetable callsfor the authority to enter into a contract with the Related andGoldman Sachs "within the next few months." The environmental andpublic review for the Western Rail Yard was expected to becompleted "by the end of 2009." Construction on the Western RailYard component of the project could then begin; the Eastern RailYard was rezoned in Jan. 2005.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.