Finally! After realizing that a city offer of $500 million for the West Side Railyards is too low when the railyards are worth $1.5 billion (at least!), the MTA has come up with a plan to develop the West Side. They are selling rights to the eastern part of yards to the city for $200 million, while putting the other western part (as of yet not zoned for development use) up for sale via a bidding process. The eastern yards were valued at $300 million, while the western part was tagged at $1.2 billion, and the MTA hopes to use money to extend the 7 line, a project that will cost over $2 billion. The NY Times has details on how the deal went down:

The two railyards were at the heart of a major political setback last year for Mayor Michael R. Bloomberg, who had waged a titanic but unsuccessful battle to build the world’s most expensive football stadium there, for the Jets. The city’s proposal in July to buy the railyards also came under fire from transit advocates and members of the State Assembly who said it was trying to buy it on the cheap. Attorney General Eliot Spitzer, the Democratic candidate for governor, said the city’s offer was “woefully inadequate.”

The new proposal grew out of talks in recent days between Peter J. Kalikow, the authority’s chairman; Christine C. Quinn, the speaker of the City Council; and [Deputy Mayor Daniel] Doctoroff. The sometimes-tense discussions nearly broke down after Mr. Doctoroff and Mr. Kalikow had a heated exchange, according to two people involved in the talks Mayor Bloomberg called Mr. Kalikow on Monday to get the deal back on track.

Mr. Spitzer was also consulted and, according to a key official in his campaign, endorsed the plan.

We think it's pretty clear who the city thinks will win the gubernatorial election this fall - attorney generals are powerful, but not this powerful.

Here's the MTA's project description of the 7 Subway Extension.