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NEW YORK, NY May 09, 2008 —The Metropolitan Transportation Authority says its agreement with a company to develop the West Side Rail Yards has collapsed.

But the developer says it still wants to keep the sale together. WNYC's Matthew Schuerman has more.

Instead of closing on half of the property now, the MTA says Tishman Speyer insisted on waiting until the other half finishes a potentially time consuming rezoning process.

Chairman Jerry Speyer flew from Italy to London today to meet Mayor Michael Bloomberg, who is in the British capital on a pre-arranged visit. The development team has also scheduled a meeting Monday with the MTA to salvage the deal.

The MTA says the deal "reached an impasse" when the developer wanted to postpone making payments for part of the 26-acre site until the other half was rezoned.

MTA spokesman Jeremy Soffin says the agency will reassess its options for the site.

SOFFIN: We're committed to developing these extremely valuable parcels of land and we're looking at what out options are and that may include going back to the other bidders.

But the last minute change in terms that Tishman Speyer is seeking has many observers worried that the problems are much deeper than issues of timing, and have to do with the enormous risk any developer faces in constructing a $2 billion platform over the rail yards before it could even start on the buildings.

For WNYC, I'm Matthew Schuerman.