Tower Planned Atop Port Authority Bus Terminal in New Wave of Development

The Port Authority of New York and New Jersey has revived plans to build a sleek 40-story office tower over the north wing of the West Side bus terminal at the suddenly hot intersection of Eighth Avenue and 42nd Street.  Under the terms of a deal worth as much as half a billion dollars, which will be announced this morning, officials and real estate executives say a joint venture of Vornado Realty Trust and the Lawrence Ruben Company will erect a deck over the existing four-story bus terminal on which they will build the 1.3-million-square-foot office tower.

Much of the money from the sale of the development rights would be used to refurbish the entire Port Authority Bus Terminal, an aging and gloomy structure that stretches from 40th to 42nd Street between Eighth and Ninth Avenues. The terminal’s exterior would be given a major face-lift and 18 bus platforms would be added, along with retail space and improved interior circulation for the 200,000 commuters who use the building daily.  The Port Authority, Gov. Eliot Spitzer and the developer will attend a news
conference at the bus terminal today to unveil the deal. Officials were reluctant to provide details before then.

“We’ve been working very hard to reach an agreement that leverages substantial private money to reinvest for the benefit of our customers, the neighborhood and the region,” said Stephen Sigmund, a spokesman for the Port Authority.

There is certainly plenty going on at this once sleepy crossroad. Across Eighth Avenue from the terminal’s north wing, SJP Properties is building a 40-story office tower. Another tower is in the works on the north side of 42nd Street, just west of Eighth Avenue, where 1199 S.E.I.U. United Healthcare Workers East, the hospital workers’ union, is close to selecting a developer for its property, which comprises three adjoining parcels that extend to 43rd Street.

And farther north, Local 6 of the Hotel Employees and Restaurant Employees International Union is about to put its property — the entire blockfront between 44th and 45th Streets, on the west side of Eighth Avenue — on the market. Like 1199, that union wants to remain in place but take advantage of the real estate market to raise money.  The New York Times recently completed its new tower on Eighth Avenue, opposite the bus terminal’s south wing.  A number of residential buildings are being built on Eighth Avenue north of 42nd Street.

The plan to build over the bus terminal first emerged nearly a decade ago.  At that time, the construction boom was one block east, in then-dowdy Times Square, where Broadway intersects Seventh Avenue and 42nd Street. The Condé Nast tower, at 4 Times Square, was followed by the Reuters Building, two other office towers, new restaurants, movie theaters and nightclubs.  By 1999, the Port Authority offered to sell the development rights over the bus terminal and eventually selected Vornado and the Ruben Company to build a 37-story tower and renovate the north wing in an attempt to smooth commuters’ passage. In return, the developer was to pay more than $110 million.

There was a tentative deal to build a headquarters for Cisco Systems, but the dot-com boom collapsed in 2000, along with plans for the tower.  Litigation ensued between the developer and the Port Authority.  Nevertheless, residential developers began pushing westward to 12th Avenue with rental apartments and even condominiums, which would have been unthinkable only five years earlier.

Last year, Anthony Coscia, the chairman of the Port Authority, revived discussions with Steven Roth, the chairman of Vornado, about the project, which is subject to approval at the Port Authority’s Dec. 18 board meeting.  Under the terms of the deal, the developer would get the development rights under a 99-year lease in return for providing the Port Authority with annual rent payments, a percentage of the revenue and a small stake in the project.  Two executives who have been briefed on the terms said the deal was worth $400 million to $500 million.

The developer plans to hold an architectural competition for the building’s design, an official said.  Vornado and the Ruben Company have a year to complete their plans and four years to build the tower, according to officials. Vornado, in partnership with the Durst Organization, is also bidding for the 26-acre development over the West Side railyards, and in a separate partnership with the Related Companies is proposing the $14 billion transformation of the Penn Station area, which includes building a new Penn Station, demolishing Madison Square Garden and building a ring of office towers on the surrounding land.

Copyright © 2006 The New York Times