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DiNapoli: MTA tipped Apple bid on Grand Central space
July 30th, 2012

The Apple store’s arrival in Grand Central Station was greeted with much ballyhoo, its unveiling like something out of a science fiction novel appearing out of nowhere to stun the masses.

Well, according to State Comptroller Tom DiNapoli, there was something extraordinary about the Apple store’s arrival in Grand Central.

He says Apple had an unfair advantage in the bidding process for the space thanks to help from the Metropolitan Transportation Authority. According an audit by DiNapoli, the MTA worked with Apple for a year before issuing an RFP for the bidding on the space.

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. 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. The company even signed a $2 million agreement with
the current tenant to vacate its space five days before the MTA issued the
RFP.

While Apple may turn out to be a good tenant, the MTA set a troublingprecedent when it played favorites and gave Apple a competitive edge overothers for the Grand Central space, DiNapoli said. Apple was directlyinvolved in setting the terms of the lease and given exclusive access toinformation more than a year before any other vendor knew the Grand Centrallocation was available. The company even signed a $2 million agreement withthe current tenant to vacate its space five days before the MTA issued theRFP.”

DiNapoli is recommending changes to the Public Authorities Law to allow for a more transparent bidding process.

The current law only calls for certain contracts to be reviewed by the state Comptroller’s office. DiNapoli’s proposed change would make all contracts over one million dollars eligible for review. DiNapoli’s office was not allow to review the process that led to the Apple lease before it was finalized because it was allegedly a competitive process.

MTA chairman Jay Lhota is a Cuomo ally and DiNapoli has a contentious relationship with the governor.

Cuomo never endorsed DiNapoli in 2010 and DiNapoli has been working with another one of Cuomo’s rumored political rivals Attorney General Eric Schneiderman.

Here is a timeline of events provided by DiNapoli’s office:

A general timeline of how the process unfolded:

November 2008 – Discussions began between MTAs RED and Apple

regarding the potential to lease space in GCT.

April 2009 – MTA approached Metrazur, occupants of the space on the

East Balcony of GCT, about a buy-out for the term of its lease, which

had ten and one half years remaining.

July 2009 – Metrazur approached Apple about the buy-out. Negotiations

between pairs of parties among the MTA, Apple and Metrazur commenced,

with an eventual $5 million buy-out agreement reached between Apple

and Metrazur. This amount later became the required upfront payment

amount in the RFP process.

May 18, 2011 – Five days before the RFP was issued, Apple and

Metrazur entered into a separate agreement in which Apple would

advance $2 million of the buy-out amount to spur Metrazur to vacate

the premises early. MTA solicited a letter from Apple stating that

the agreement did not bind them and that the lease would be pursuant

to a competitive RFP.

May 19, 2011 – MTA signed an agreement with Metrazur to terminate its

lease for $5 million.

May 23, 2011 – MTA advertised the RFP for the GCT space. Among the

RFP requirements were an upfront payment of $5 million as prepayment

of rent to fund the Metrazur termination agreement. On the same day

that the MTA publicly released its competitive RFP for bidders to

apply, Apple paid $2 million to Metrazur.

June 27, 2011 – Responses for the RFP were due; only Apple responded.

August 10, 2011 – MTA and Apple signed a lease for the GCT space and

Apple wired the remaining $3 million to a closing agent.

March 19, 2012 – The lease provided for Apple to make infrastructure

improvements. MTA indicated these improvements would cost about $2.5

million. However, about $1.6 million of the improvements were not

yet completed and it is uncertain when they will be done. In

addition, by this date, Apple had not yet paid $414,142 for work done

by MTA to enable the infrastructure improvements.

By on July 30, 2012, 12:30 pm
In category: Albany,Eye on Albany,Land Use | 1 Comment »

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One Response to “DiNapoli: MTA tipped Apple bid on Grand Central space”

  1. Jessenia Huffine Says:
    August 5th, 2012 at 12:48 pm

    this is a really cool tutorial, can you make one on youtube backgrounds?

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