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Yesterday, New York Gov. David Paterson, New York City Mayor Michael Bloommberg and New York Metropolitan Transportation Authority (MTA) officials announced they selected real estate firm Related Companies and financial firm Goldman Sachs to develop the air space above the Western and Eastern rail yards — part of the John D. Caemmerer Rail Yard, or the Hudson Yards.

The Related Companies/Goldman Sachs proposal calls for building a mixed-use neighborhood that features streets lined with shops, restaurants, galleries, and art and cultural attractions. The sustainable community also will feature affordable housing centered around a large public space. The deal will net more than $1 billion for MTA.

If MTA’s board approves the selection of Related Companies/Goldman Sachs later this week, MTA could award a contract to the developer within the next few months.

Last July, the MTA issued two separate requests for proposals for the sale and/or long-term lease of air space and related property interests for the rail yards. In October, the authority received five proposals and in March, an MTA selection committee recommended a plan developed by Tishman Speyer. However, negotiations with the developer recently reached an impasse.