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New York Post.

Robbing the MTA

March 21, 2005

By Julia Vitullo-Martin

BIDS are due today for developers who want to use the MTA's West Side rail yards - because a public outcry forced the opening of a once-closed bidding process. Here's hoping the changes are just beginning.

The Metropolitan Transportation Authority has often seemed bizarrely indifferent to the market value of its property - ready to sign away valuable real estate at deep discounts, even while demanding subsidies from Washington and Albany - and higher fares from hard-working New Yorkers.

What if the MTA started to run itself like a business - insisting on market value for all real-estate and air rights, selling off surplus assets, maximizing (and even creating) revenues from underused properties?

Such sources won't produce the full $22 billion the MTA says it needs for capital, but they could give it a healthy start.

The two most spectacular parcels on the table are the Hudson rail yards site, where the Jets want to build a football stadium, and the Atlantic rail yards in downtown Brooklyn, where developer Forest City Ratner intends to build an arena for the Nets.

Estimates on the value of the Manhattan site have ranged from $70 million to $900 million. In New York magazine last year, MTA Chairman Peter Kalikow put it at $400 million to $600 million. Richard Ravitch - who is credited with rebuilding the MTA in the 1980s, when he held Kalikow's job - says that if the yards were rezoned to R-10, permitting high-density development, the air rights would easily be worth $900 million.

The public debate over the proposed Jets deal has only skirted the zoning issue. Yet, as New York now operates, zoning changes on this scale typically require real political pull - so even the "open" bidding may not yield fair value.

And no similar public debate on value has occurred over the Brooklyn site, which the Bloomberg administration is willing to turn over to Forest City Ratner at no charge. Developer Henry Weinstein, a principal with Pacific Carlton Development Corp. and a downtown property owner, says a value of $100 per buildable square foot is standard for the area. Using a more conservative $80 a square foot, and Ratner's projection that the site will produce 6.8 million square feet of buildable space, Weinstein suggests a value of at least $500 million.

The MTA needs this money - and it's in every New Yorker's interest that it gets it.

Without its subways, New York City, in all its grandeur and complexity, would be unthinkable. The concentration of wealth and population that distinguish New York from other cities would never have been created had the subways' great tentacles not plunged deeply into the boroughs in the early 20th century, opening up once rural neighborhoods for development and permitting hundreds of thousands of New Yorkers to commute back to the city. Today's astonishing rebirth of even far-flung neighborhoods depends on the reliability of public transportation.

Yet the subways are not ours to control. They are owned and managed by the colossal, independent MTA, whose empire also includes the Long Island Rail Road and Metro-North, which serve the suburbs.

When I asked Dick Ravitch about underused MTA resources, his thoughts turned to the reconstruction of Grand Central Terminal and then to the suburbs and their many utilitarian, sometimes downright ugly, commuter stations.

Grand Central is, of course, the MTA's most valuable single piece of property. Yet it had grown so grim that architect Hugh Hardy described it in 1978 as "bedecked with jarring commercial displays, its corridors made into urinals, its roof in disrepair." The splendid '90s reconstruction made life far more pleasant for millions of commuters and doubled retail revenues to the MTA.

What if the MTA applied the Grand Central model to a systematic reconstruction and enhancement of commuter stations, providing excellent retail and restaurants in place of shabby newsstands and snack shops? The MTA, says Ravitch, would get brand-new revenues and the communities would get good, productive uses instead of dead space and blight.

Daniel Biederman, the founding president of the Grand Central Partnership, says the MTA should start with the best and busiest stations. White Plains, for one, is a very busy station near a downtown that has very little retail - but which is starting to come back. Scarsdale's station is huge and patronized by wealthy commuters, but offers minimal shopping. Mt. Kisco already has a superb restaurant, The Flying Pig, that demonstrates the success of the strategy.

"You would seek the real-estate guys who really know what they're doing," says Biederman. "They would become the agents of the MTA in redeveloping the station. They would choose five to 10 of the most promising stations and group them . . . It would be very glamorous and you would get strong bids in response."

Airports used to be total wastelands - pathetic restaurants and retail, which didn't even bring in much revenue despite exorbitant prices. Now airports all over the world are jumping.

Gene Russianoff of the Straphangers Campaign says the MTA has tentatively embarked on a strategy like this for a few outer-borough hubs, such as the Coney Island head house, which is supposed to open in May, and the Roosevelt-Jackson Heights station in Queens. But MTA spokesman Tom Kelly says the agency doesn't anticipate increased revenues from the reconstruction.

Yet revenues could be pouring in. " 'Free market' is the whole point of New York," as Russianoff puts it, "If you're going to set fares at levels that will still give you customers, then you can't give away the store."

New Yorkers have become so accustomed to the new Grand Central that we forget what a revolution it represented - the idea that businesses and citizens didn't have to just sit back and let blight take over the area anchored by a great railroad station.

The public anger that forced open the Hudson Yards bidding could be the start of a wider revolution - revitalizing the whole MTA.

Julia Vitullo-Martin is a senior fellow at the Manhattan Institute.

Copyright © 2005 New York Post

 


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