The MTA must close a $100 million budget gap before the end of the year, and CEO and Chairman Jay Walder has pledged to avoid fare hikes or service cuts. Thus, the agency is turning to its real estate holdings to see if it can eke enough money out of sales to help close that gap, The Wall Street Journal reported this morning.
Andrew Grossman has more:
Since the end of 2009, the MTA has slashed administrative staff by 18%. That has left it with thousands of empty desks throughout the city. Late last month, the authority issued a request for proposals seeking a real-estate firm to help it figure out how to wring more money out of its office space. The MTA owns or leases offices in every New York City borough and in White Plains. It spends nearly $89 million each year on rent, taxes and operating costs for that space, according to the request for proposals. Meanwhile, it’s trying to close the gap in its $13.4 billion budget by the end of the year without raising fares or cutting service…
The 277,000-square-foot MTA headquarters site [at 347 Madison Ave.] could be worth a lot…Properties in the area have fetched about $300 a square foot in recent months, according to real-estate website PropertyShark. The headquarters occupies three adjoining buildings that make up the entire west side of Madison Avenue between 44th and 45th streets. The buildings are connected to Grand Central Terminal by an underground passageway.
While the buildings themselves are cramped and outdated, they could fetch a high price because of an invisible advantage that comes with them: air rights from Grand Central. Because developers can’t build on top of the historic terminal, its air rights can be purchased by the owners of neighboring sites who want to build higher than regulations would otherwise allow. A large chunk of those rights went to now-defunct Bear Stearns when it built its headquarters on Madison between 46th and 47th streets in 1999.
The MTA’s real estate holdings have often come under scrutiny from politicians. The decrepit building at 370 Jay St. in Downtown Brooklyn has long incurred the wrath of local representatives, but the MTA has been hesitant to sell anything because it had needed the space. Now that staffing levels are down significantly, the MTA should be able to consolidate operations and begin to sell off some unnecessary assets.
Of course, the only problem with selling off real estate assets is that it’s a short-term fix for a long-term problem. The MTA can placate politicians by dumping its properties, and it can close its 2011 budget gap by doing so. But it’s not going to help the 2012 budget, and it won’t help restore sanity to the way the MTA is funded. By all means, the MTA should operate efficiently, but the politicians who grandstand on these issues must be willing to meet the agency halfway.