A real estate deal that the Metropolitan Transportation Authority expected to bring in $700 million for capital spending is on hold, the New York agency announced last week.

A partnership between real estate developer Related Cos. and Goldman, Sachs & Co. to develop the 26-acre East and West Side Rail Yards in Manhattan — also known as the Hudson Yards — was unable to agree with the MTA on contractual terms by a Jan. 31 deadline due to the economic downturn and the credit crunch, the authority said.

The deadline to negotiate an agreement under which the development partners would lease the land and have the option to purchase individual parcels has been extended for an additional year. The MTA will receive an $8.6 million penalty payment from the partners.

The MTA had counted on the development to bring in $700 million over several years and would have the option to bond against the lease if they chose to do so. The development partners plan to build a platform over the rail yards on which they would build commercial and residential buildings, pending certain approvals from the city.

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