Home MTA Absurdity Much ado about Apple, Day 2

Much ado about Apple, Day 2

by Benjamin Kabak

Controversy over the Apple Store show how intricacies of historic preservation are lost on our elected officials.

Last night, I took a quick look at the burgeoning brouhaha over Apple’s Grand Central lease. According to some source dug up by The Post, a few real estate folk believed the MTA didn’t get as good a deal as it might have for a space that’s tough to lease. Today, the story has exploded, and I am reminded once again how difficult it is to find comprehensive coverage of actual transit issues in the New York media.

As we join this story already in progress, as The Post report spread yesterday, everyone grew agitated. In the evening hours, Assemblymember Linda B. Rosenthal’s office sent out a press release. The Manhattan representative is outraged — OUTRAGED! — by the lease. She wants a hearing.

“It is totally unacceptable that the MTA would essentially give away some of the City’s most coveted and expensive retail space in Grand Central Terminal to this new Apple store. The cash-strapped MTA has the potential to receive millions of dollars in revenue, which would help to reduce the burden on beleaguered straphangers who have seen fares increase and services decrease over the last several years,” Assemblymember Rosenthal said. “Given the potential infusion of capital, I cannot fathom that the MTA would allow the Apple store to take such a large bite out of the Big Apples’ coffers.”

Rosenthal didn’t stop there. She had even more to add. “The State has a vested interest in the MTA’s revenue streams,” she said. “As a member of the New York State Assembly Corporations, Authorities, and Commissions Committee, I call upon the committee to hold a hearing to investigate any impropriety that may be involved with this deal. If the MTA passed on an opportunity to make much-needed capital in a year when they have a projected $6 billion budget shortfall, the State and the public have a right to know.”

Who votes for these people anyway? Of course, she’s not the only one making a mockery of the process. New York State Comptroller Thomas DiNapoli expressed similar sentiments and pledged yet another investigation. “This is a prime property and I intend to make sure that the MTA hasn’t given away the store,” he said in a statement.

It would probably pain DiNapoli and Rosenthal to look into this before opening their mouths, but this is a ridiculous situation over which these two should not get bent out of shape. In economic terms, the MTA doubled the revenue they’re getting from the Grand Central balcony space. Metrazur’s lease, which ran until 2019, called for $250,000 in rent. Apple paid $5 million to the restaurant and is paying $2.5 million for structural accessibility improvements and at least $1 million a year for the next ten years.

Meanwhile, the space itself is hardly “prime property,” and it certainly isn’t the city’s “most coveted and expensive retail space.” Since it is in Grand Central, it is subject to stringent historic preservation regulations. Thus, it is ideal only for a restaurant or a retail space such as an Apple Store that requires minimal work or branding above the sightlines. That is, after all, why the MTA received just one bid for the space during the RFP process. Considering the up-front costs of buying out the lease and the need to spend on infrastructure, no one else would have been willing to front the dough while paying the rent.

It sure would have been nice to secure a percentage deal on the space, but the MTA wasn’t earning revenue from Metrazur in such a fashion either. When all is said and done, the authority anticipates drawing in $180 per usable square foot from Apple while much of the space will sit idle due to the space and preservation limitations. If only our politicians could understand that.

Still, reality has never interfered with Albany. As the state siphons off transit funds and refuses to address a capital budget gap, Rosenthal and her colleagues are content with cheap shots and faulty inferences. “At a time when the MTA is cutting service, rolling back the maintenance of its subway stations and worst of all predicting a new fare hike, it is outrageous that they did not make the most of this opportunity,” Rosenthal said yesterday.

Earning more money from a new lease — albeit less than many would prefer — has nothing to do with rolling back maintenance or pre-planned fare hikes that are designed to track cost-of-living and inflation increases. The MTA made a lot out of a tough situation. Nothing that happened in Grand Central is as outrageous as Rosenthal claims, and if she spent as much effort and spilled as much ink worrying about the city’s true transit problems instead of this farce of an issue, straphangers would be better off for it.

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Alex C December 2, 2011 - 12:56 am

Can NYC just be its own state? Pretty please? I can’t stand these clowns in Albany and the suburban entitled, ignorant halfwits that encourage and elect them. This is insanity.

Bolwerk December 2, 2011 - 1:39 am

The populace may be generally less obnoxious, but NYC’s politicians aren’t exactly something to hoot about. 😐

Larry Littlefield December 2, 2011 - 9:04 am

The crowd that wrecked New York City by pillaging it years ago and moved out to the suburbs still controls the state legislative offices and many of the government jobs in New York City.

They call themselves Republicans in Nassau and Democrats in NYC, but they are the same people. And they don’t ride subways. The serfs do.

David in Astoria December 2, 2011 - 1:11 pm

Hey Larry! Bloomy is sure to get photographed occasionally riding the subway.
Between private jet flights to his compound in Bermuda.
VIP means Very Important Polluter.

Christopher December 2, 2011 - 10:09 am

In Japan several years ago they separated out the cities from the prefectures. They had to meet certain size requirements. (This led to a wave of cities consolidating.) It’s definitely changed the balance of power in Japan. (Maybe not for the best as they’ve had 6 prime ministers in 5 years. I believe.) Anyway, it still is an interesting model it helped balance out the rural – urban divide and encourage cities to consolidate thus lowering costs.

Tsuyoshi December 3, 2011 - 10:34 pm

I think you are confused here. They did not separate the cities from the prefectures. Yokohama city is still part of Kanagawa prefecture, Osaka city is still part of Osaka prefecture, Nagoya city is still part of Nagoya prefecture, etc. (Tokyo is another animal altogether: there is legally no such thing as “Tokyo city”)

What they did was change the national subsidy formula for cities, which made it imperative for smaller cities to consolidate to preserve their funding. So many small cities (primarily suburban, but also some rural towns) have merged into larger cities. There was at least one case where the mayor of one of the small cities refused to merge with its neighbors, and lost reelection due to voter anger over the loss of funding. Under the new mayor, that city did merge.

The way representation is determined in the Diet is under flux right now. It used to be extremely lopsided in giving rural areas more power than urban areas; now it is less so. But there was recently a Supreme Court decision declaring that even the current system is unacceptable, so it is due to change before the next election.

I don’t think the short terms of prime ministers in recent years can be ascribed to the electoral system per se; I think it has more to do with the poor Japanese economy over the past 20 years. I believe we here in the US can now expect the fixed-term equivalent. Obama is a one-termer, and whoever replaces him will also be.

Anyway, I don’t think it would be necessary for New York City to separate from New York State (although it would be nice). If the city could merely acquire home rule over transportation policy (among other things) it would be a big improvement. Of course we would still be stuck with a lot of knuckleheads on the city council… but I have no idea what to do about that.

drosejr December 2, 2011 - 12:29 pm

Unfortunately, Rosenthal is a UWS assemblymember who should know better. I had hopes for her when she first ran to replace Stringer a number of years ago, but she has become just another annoying member of Silver’s majority who will be a lifer. Like Ben said, these people talk first and rarely read later. It’s not like they have to face a real election in NYC.

David W December 2, 2011 - 1:19 pm

There’s a reason NYC no longer gets to run the show. Boss Tweed?
The Crackers in Albany will never give up their NYC Gravy Train. Who else will pay for all that Upstate Decay?
So maybe, if a fantasy world, NYC Council members are allowed to overturn Albany legislation by super-majority? It would finally create a check to Small-Mind tampering.
It will never happen.

Bolwerk December 2, 2011 - 1:38 am

Agreed with this article. A million dollars a year is a rounding error in the MTA budget.

WilletsPoint-SheaStadium December 2, 2011 - 2:25 am

Haha, nice. Hope tonight was fun – wish I coulda’ made it!

Chet December 2, 2011 - 6:25 am

Ben, if there are hearings in Albany, can you please go and testify? Seriously, maybe you could expose Albany’s ignorance and hypocrisy in person.

SpendmorWastemor December 2, 2011 - 7:46 am

Pols need help in distinguishing fact from BS. Let’s help them with a lesson.

My vote is that we require DiNapoli and Rosenthal be required to
i) Bid 10% above Apple’s terms,including all concessions and buyouts
ii) Establish and operate a business that brings 10% more shopper traffic, visibility and reputation enhancement to GC.
This will help them understand how jobs, revenue and multi-use public spaces work.

Let’s also preemptively decide in Apple’s favor should the company sue for libel. Heck, in the interest of justice, the nnn Retirement Fund, which most likely owns a share or three of APPL, can be the planitiff. The judge will be Mitt Rommney.
If this is a first offense, let them off easy with a penalty of 1% of just one year’s worth of Apple’s gross revenues.

Streetsblog New York City » Today’s Headlines December 2, 2011 - 9:00 am

[…] Pols Never Let a Chance to Play the MTA Blame Game Go to Waste (2nd Ave Sagas) […]

Al D December 2, 2011 - 9:06 am

I would recommend that Ms. Rosenthal first investigate her own governing body (NY State government) to determine how to restore monies to MTA that were promised and not delivered by the state. Furthermore, Ms. Rosenthal should investigate ways to establish a permament, dependable, and size-appropriate funding package that the state can commit to each and evey year. This funding should be further contingent upon reasonable reforms to be undertaken by the MTA to provide, promote and grow mass transit in the area and to improve upon the existing infrastructure. And the MTA must reform itself to be a more functional agency. It cannot purport to operate like a business and function like a bureaucracy. Additional funding levels can be provided with additional levels of innovation.

If Mr. DiNapoli is so intent on exposing poor management practices at MTA, perhaps instead, he should do something good like undertake a comprehensive study as to how to structurally remake the MTA so that it is more efficient and cost effective. The savings from this effort would most likely far exceed these goofy audits he does.

Stu Sutcliffe December 2, 2011 - 4:04 pm

Well said, Ben. Would Rosenthal have the nerve to respond to you?

Chris December 2, 2011 - 4:10 pm

Yet when Ms. Rosenthal is sent back for another term at the next election, nobody will really be able to say she wasn’t doing her job well. She’s accountable to her constituents, not reality, and so well thought of among them that at last election she ran without opposition.

Linda Rosenthal is just a messenger, and she’s doing a solid job from all I can tell. If you have a problem with this situation, take it up with the West Siders she’s representing.

JP December 3, 2011 - 1:16 am

As Larry Littlefield commented in the last post on this topic, it’s called an anchor store. Big stores get cheap deals because they draw huge traffic, and the little shops pay big bucks for the overflow. High School economics.

jj December 4, 2011 - 11:36 am

Rosenthal is a moron- – – – – –

Has no clue about how a business is run , and only cares about spending taxpayer money on idiotic pork barrel programs

Al D December 7, 2011 - 1:21 pm

UPDATE: The wraps are off the Apple Store and it looks great!

Video: Inside the GCT Apple Store :: Second Ave. Sagas December 12, 2011 - 11:32 am

[…] MTA, though, in an effort to highlight the new store and combat some lunacy from our politicians, can take you on a tour. On Friday afternoon, the authority released the above video on YouTube. It […]

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