$1B deal in NYC to develop West Side rail yards collapses

On Thursday, deputy mayor for economic rebuilding Bob Lieber called the collapse "very disappointing" but said the city was committed to helping redevelop the land.

Tishman Speyer had made a preliminary payment of $11 million for rights to the land while final terms were negotiated, the MTA said.

The developer then sought to change a major point of the deal, which would postpone payments on the section of yards east of 11th Avenue until the western side of the yards was rezoned, the MTA said. The agency, which operates the nation's largest mass transit system, had said it needed immediate payments for the land to help plug its own budget holes.

Several other obstacles had threatened the development. Tishman Speyer had the right to walk away if the MTA didn't go through with a promised extension of a subway line to the river. Tishman Speyer also hadn't said how it would finance over $2 billion it would need to build a platform over the yards, where Long Island Rail Road trains are parked near Penn Station. And the developers had no anchor tenant for the proposed office towers.

The MTA didn't say whether it would reopen discussions with the other developers that had bid on the property last fall, including Related Cos. and a joint venture of The Durst Organization and Vornado Realty Trust.