Metropolitan Transportation Authority
Real Estate Portfolio (Follow-Up)
Issued: July 27, 2012
Link to full audit report 2011-F-30
Purpose
To determine the extent of implementation of the twelve recommendations included in our initial audit report, Real Estate Portfolio (Report 2009-S-10).
Background
Our initial audit report, which was issued on September 23, 2010, examined whether the Metropolitan Transportation Authority (MTA) fully and accurately accounts for its real estate holdings, has established a value for those holdings, and manages the holdings in a manner that maximizes revenue opportunities. We found that MTA could not produce complete listings of its property holdings due to fragmented data systems, and did not routinely attempt to estimate the value of its holdings. While MTA earned over $199 million annually from leasing and licensing space in its buildings and other properties and from selling advertising space in its buildings and trains, we identified opportunities for MTA to increase its net income from real estate. These included more active marketing of vacant rental units, development of a strategic marketing plan, use of competitive processes to market units, and the assessment of interest and fees when rent payments are late. MTA had not actively marketed air rights valued at more than $12 million, and was spending over $3 million per year to maintain vacant office buildings it owned. MTA leased space from others at an annual cost of $25 million, including paying property taxes on leased space without trying to exercise its status as being exempt from such taxes.
As part of our follow-up, we closely examined the leasing of space in Grand Central Terminal to Apple, Inc. since this transaction drew considerable public attention and was relevant to our prior audit recommendation to market rental properties through competitive processes.
Key Findings
- Department officials have made limited progress in correcting the problems we identified in the initial report. Of the twelve prior audit recommendations, two have been implemented, seven were partially implemented, and three were not implemented.
- With respect to MTA's leasing of space in Grand Central Terminal to Apple, we concluded that the competitive process that was undertaken was not a level playing field, was not fair to all potential bidders, and was significantly slanted in Apple's favor.
Key Recommendations
- None
Other Related Audits/Reports of Interest
Metropolitan Transportation Authority: Real Estate Portfolio Report 2009-S-10
Department of Transportation: Review of Real Property Holdings for Disposa Report 2010-S-48
State Government Accountability Contact Information:
Audit Director: Carmen Maldonado
Phone:(212) 417-5200; Email: StateGovernmentAccountability@osc.state.ny.us
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236
