DiNapoli: MTA could beef up real estate dollars

For years, critics of the MTA have accused the authority of underselling its real estate offerings and not maximizing potential profits from its property holdings. In a report issued today, New York State Comptroller Thomas DiNapoli accused the MTA of doing just that. The authority, he says, doesn’t need to rent some spaces it does and hasn’t made all of its potential spaces available to rent.

Although DiNapoli used this platform to bash the MTA on service cuts, his report lacks a knockout punch.“Millions of New Yorkers rely on the MTA,” DiNapoli said. “Those New Yorkers can’t afford to pay more while the MTA ignores potential cost savings. But that’s exactly what has happened here. Before making drastic service cuts and talking about fare hikes, the MTA has to maximize the value of its real estate holdings by advertising their availability and ensuring that it’s receiving market-rate rents for prime properties. The MTA should also publish a full list of its real estate holdings as required by law and let New Yorkers know how it’s going to capitalize on these assets.”

The Comptroller’s audit (PDF), which covers a four-year period beginning in 2005, found that the MTA generates nearly $200 million in real estate revenues per year but could do more. It accused the agency of leaving its properties, such as 370 Jay St. in Brooklyn, vacant while allowing not charging interest or late fees on missed rent payments. He bulleted his findings:

• Non-government tenants owed the MTA a total of $9 million in rent during the audit period;
• The MTA did not effectively market the space above certain properties (known as ‘air rights’), despite estimates that the rights could generate more than $12 million in revenue;
• Six large rental units in the 42nd Street/Sixth Avenue subway station at Bryant Park had been vacant since 2004;
• The MTA does not ensure its rents are competitive with market values and does not charge interest and late fees when appropriate;
• Two of the agency’s buildings—one vacant and one nearly-vacant—cost more than $6 million to maintain; and
• More than one-quarter of the MTA’s occupied rental units sampled were not rented through the required competitive rental processes.

As far as recommendations go, DiNapoli’s were fairly tame. He wants the MTA to streamline its real estate databases and portfolio management system; he wants to see a “strategic marketing plan” to make sure empty spaces are being promoted; and he would like the MTA to collect interest and late fees on missed rent payments. Considering the field day The Post had with this report, nothing DiNapoli said or recommended came as a big surprise. Left unsaid by DiNapoli as well were any details as to the city as the ultimate landlord in many cases hamstrings the MTA’s ability to administer its property with any flexibility.

For its part, the MTA acknowledged DiNapoli’s conclusions. “While MTA real estate generates nearly $200 million each year to support the transit system, our ongoing financial issues demand that we think creatively and do more,” the authority said in a statement. “We are trying new technology to increase advertising revenues, working to change regulations that limit our ability to develop our assets, and better utilizing space as we downsize. No stone can be left unturned to maximize revenues and reduce costs, and we are actively pursuing each of these initiatives.”