MTA Gets Screwed In Real Estate Deal
THE COMMUTE: Folks it’s been a busy transit news week. Issue 1 — (Wait — that’s the McLaughlin Report)
1. The MTA Board finally votes to dispose of 370 Street, but not everyone is happy.
2. Former Governor Paterson was appointed to the MTA Board.
3. Bus riders spoke up at the Transit Riders Council’s Bus Forum.
4. Quarterly routine “bus service adjustments” were announced for July 1, 2012.
(We’ll cover the first two items today and the last two tomorrow.)
Disposal Of 370 Jay Street
The city will give away prime city real estate built in the late 1940s to NYU for use as an urban science center. It originally housed city department, the Board of Transportation.
While the building, which the city owns, will not be sold to NYU, the city will be allowing NYU to use the building for the same price currently paid by the MTA: $1 a year. Additionally, the city is also paying NYU $15 million in tax relief and funding to take over the property. The building, consisting of 459,000 square feet, will be worth close to one billion dollars a half a billion dollars or more after the $345 million in renovations NYU intends to make. Giving the building away could possibly be justified if NYU were part of the City University, but NYU is a private institution.
The move by the city is being hailed as a major achievement. I believe it is an outrage. Everyone is happy that this eyesore abandoned for the past 10 years will now become productive real estate, but should that be the only concern here? What about the city’s needs regarding transportation? Only TWU local 100 believes that this is a poor decision by the mayor:
“Before the MTA gets into the business of using its public assets that belong to New York City transit riders to create an epicenter of technology in academia, the MTA should use that public asset to create an epicenter of excellent transit service in New York City,” said TWU President John Samuelsen.
The union believes the MTA should reoccupy 370 Jay and sublease part of 2 Broadway, which is costing taxpayers and the MTA $23 million a year. The lease for Jay Street, $1 per year, was part of a larger agreement leasing the entire subway system to the New York City Transit Authority and later the MTA to operate the subways.
Business As Usual
When Joe Lhota took over as MTA Chairman, I stated that, when the fate of 370 Jay Street is determined, we will know if he will make a difference or if it will be business as usual. At that time, I asked if the MTA will make a good deal or will be screwed like they were with Hudson Yards and the Atlantic Yards since the press was giving the wrong impression that the MTA owned the property.
We do not know how much of a say Lhota had in this decision. All we know is that the MTA rejected NYU’s initial offer to pay the MTA $20 million to move its communications equipment. The MTA held out for $50 million. They could not stay in the building any longer because they could not afford to renovate it after bungling the renovation of 2 Broadway, but will remain in the basement. On the record, Lhota is satisfied with the deal.
If the renovations are more expensive than NYU expects after inspecting the building, they could instead decide to demolish 370 Jay if the city does not object. They can then erect a high-rise similar to the Marriott next door since they have plans for additional buildings in Downtown Brooklyn anyway. The property could then be worth several billion dollars a billion dollars or more. No money for the MTA and no money to improve transportation. Yet, politicians such as Borough President Marty Markowitz, who is always criticizing the MTA for providing inadequate service and cutting service, are praising this deal as great for the city. Perhaps great for the city, but not great for the MTA.
A Better Deal?
Most likely the first floor will be used for retail. Doing otherwise would not be wise since the neighboring area is being redeveloped and prime retail space could fetch a mighty buck. Who will benefit from this — the city or NYU? Since the building is not being sold, the city should retain rights to the first floor if it will indeed be used for retail purposes. If Mayor Bloomberg cared about improving transportation, he would allow the cash-strapped MTA to profit from this retail space by receiving the rents generated so that they see income year after year. Another alternative would have been to have sold the building outright to NYU, giving a portion of the proceeds to the MTA.
Cuomo Appoints Paterson To MTA Board
In other news this week, Governor Cuomo appointed former Governor Paterson to the MTA Board to replace departing member Nancy Shevell. Paterson was largely responsible for the MTA’s largest service cuts in history by severely cutting transit funding and Cuomo is being criticized for his choice. I’m not going along with the pack on this one. Although it was a political choice and choosing someone with more transit knowledge would have been preferable, Paterson has a chance to redeem himself. As governor, he had other concerns, such as balancing the state’s budget. As a board member, improving transportation will be his only priority.
Shevell had trucking experience, as did former board member James Simpson in the 1990s. I attended board meetings every month back then when I was in New York City Transit’s executive offices. I was not at all impressed with Simpson, and Shevell was not in the news for challenging any of the board’s decisions like board member Capelli often does. There is a big difference between operating a trucking firm that moves goods and a passenger transportation system. Paterson has the opportunity to ask tough questions of the MTA. Let us hope he surprises us and his critics are proven wrong.
The Commute is a weekly feature highlighting news and information about the city’s mass transit system and transportation infrastructure. It is written by Allan Rosen, a Manhattan Beach resident and former Director of MTA/NYC Transit Bus Planning (1981).