The MTA was playing favorites with Apple for real estate for prime real estate, according to an audit from the state comptroller's office.
The MTA worked behind the scenes with Apple on a deal to lease space in Grand Central Terminal more than a year before issuing a request for proposals on the space, the audit found.
"While Apple may turn out to be a good tenant, the MTA set a troubling precedent when it played favorites and gave Apple a competitive edge over others for the Grand Central space," DiNapoli said in a statement.
According to the audit timeline, Apple and the MTA Real Estate Department began discussing the space in November of 2008. Metrazur, the restaurant that owned the space, then approached Apple in July, 2009 about a buyout. Apple? paid agreed to a $2 million advance on the buy out five days before the space was publicly advertised in 2011.
A 2010 audit by the comptroller's office revealed issues with the MTA's real estate practices, and a second audit revealed that only two of 12 recommendations had been implemented, according to the comptroller's office.
"Apple was directly involved in setting the terms of the lease and given exclusive access to information more than a year before any other vendor knew the Grand Central location was available," DiNapoli said. "Our prior audit revealed problems with how the MTA managed and leased out its vast real estate portfolio. It is clear that more scrutiny is needed to ensure the best deal is struck."
Jeffrey Rosen, the MTA's director of real estate, issued a letter to the audit director saying that the MTA disagreed strongly with the results of the audit.
"The central premise of the critique contained in the Draft Report is that the fairness of the MTA's competitive process was compromised by MTA's knowledge of negotiations between Apple and Metrazur, and by the MTA's participation in concurrent discussions with each of such parties preceding the issuance of the RFT," Rosen wrote. "The MTA sharply disputes this premise, and we are confident that we scrupulously observed not only the letter, but also the spirit of the Public Authorities Law and our published leasing guidelines."
Rosen also suggested that "no buyout of Metrazur's lease would have been possible" without discussions between the restaurant and Apple prior to the RFP release.
DiNapoli is recommending more oversight of public authority contracts of more than $1 million. Currently, only non-completive contracts more than $1 million can be reviewed by the State Comptroller, but this change would make all contracts reviewable prior to being finalized.
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Source: http://www.nydailynews.com/blogs/dailypolitics/2012/07/dinapoli-mta-favored-apple-in-real-estate-bid
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