UPDATE 2-NY MTA, Hudson Yards developer at an impasse

(Adds comment from Tishman in 7th graf)

By Joan Gralla

NEW YORK, May 8 (Reuters) - Talks between New York's Metropolitan Transportation Authority and Hudson Yards developer Tishman Speyer hit an impasse because the firm tried to delay the deal until all of the site was re-zoned, an agency spokesman said on Thursday.

"This demand changed the economics of the proposed deals and the certainty of payments to the Metropolitan Transportation Authority," spokesman Jeremy Soffin said in a statement.

Economists have predicted that several of the $51 billion dollars of public and private projects planned for the city over the next few years will be delayed, reduced or abandoned.

The subprime mortgage crisis has sliced Wall Street's profits, imperiling the city's tax collections and curbing banks' willingness to lend to developers.

Earlier, the biggest U.S. mass transit agency, whose midtown rail yards is one of the last under-developed tracts of prime Manhattan real estate, said it "stopped the clock" at 4:59 p.m. on Wednesday after negotiators missed the seven-day deadline.

Tishman Speyer had preliminarily agreed to pay the authority $1 billion for the 26-acre Hudson Yards site, where it planned to build giant office and apartment towers after first erecting a platform over the yards.

"This is a highly complicated deal and we have been negotiating in good faith with the MTA for several weeks. We share the same goal as the MTA and (New York City) to transform Hudson Yards into a successful and vibrant community," said Robert Lawson, spokesman for Tishman Speyer.

"We still hope to be able to complete this deal and reach an agreement that satisfies the needs of everyone," Lawson said.

The city missed the same seven-day deadline for its accord with the developer for $3 billion of improvements for the site. Those projects include extending the No. 7 subway west from where it now ends at Times Square, to raising 33rd St., which now stops at the yards, to adding water and sewer lines.

John Gallagher, a spokesman for Mayor Michael Bloomberg who saw the state Assembly kill his first plan to transform the rail yards with an Olympics stadium, said: "Talks with all three parties are ongoing and we cannot comment beyond that."

While the eastern 13-acre half of the Hudson Yards has already been re-zoned, the western 13 acres still must go through the often arduous process.

"The cause of the impasse was Tishman Speyer's attempt to change a central deal term in an effort to postpone the closing on the Eastern Yard until the Western Yard was satisfactorily re-zoned," Soffin explained.

The impasse could worsen the $2 to $3 billion hole in the authority's capital plan, perhaps delaying work on projects such as the new Second Ave. subway and an East River tunnel linking the Long Island Rail Road with Grand Central Terminal.

(Editing by Kim Coghill)