Metropolitan Transportation Authority
New York City Transit: Asset Sale-Leaseback Program In a transaction known as a defeased sale-leaseback, the Metropolitan Transportation Authority sells assets such as trains and buses to private investors, and leases the assets back from the investors. In this type of transaction, the MTA generates additional funds for its capital program and the investor realizes tax benefits from the depreciation of the assets. We attempted to determine whether the MTA has benefitted from these transactions, but were unable to determine whether the costs incurred in negotiating these complex leases were justified by the revenue generated from the leases, because the costs were not determined and the use of the revenue was not separately accounted for. We recommend that a separate accounting be maintained for these transactions. We also recommend that a competitive process be followed; we determined that such a process was not always followed in past transactions of this kind.
For a complete copy of Report 97-S-57 click here.