New York State Audit: MTA Unfairly Gave Apple The Advantage In Grand Central Bidding

New York State Audit: MTA Unfairly Gave Apple The Advantage In Grand Central Bidding

In 2012, there’s nothing that lends prestige, luxury and credibility to a shopping space like an Apple Store. From that perspective, it’s the Tiffany’s or Sak’s of the 21st Century.

In fact, it looks as if the Apple Store was considered to be such a prestigious draw that the Metropolitan Transportation Authority bent over backwards to make sure it could get Apple to lease a space in the famous Grand Central Terminal… at the expense of other applicants.

A new audit by New York State comptroller Thomas DiNapoli says the MTA basically gamed the system to make sure that Apple was able to set up shop in Grand Central.

“The competitive process followed by MTA . . . was at a minimum severely slanted toward Apple,” reads the report.

According to the report, the MTA not only allowed Apple to set terms for applications for rental of the space — including the provision that any applicant pony up $5 million in cash within a “tight” 30 day window — but Apple even tried to get New York taxpayers to reimburse them for the $2 million it ponied up to previous tenant Metrazur to vacate the balcony hub the Grand Central Apple Store now resides upon.

The MTA is blasting the state comptroller’s office over the audit.

“This audit is not fact-based, and, accordingly, their opinion is worthless,” MTA Chairman and CEO Joseph Lhota said in a statement. “The MTA’s lease process with Apple was open, transparent and followed both the spirit and letter of the law.”

To be fair, Apple is paying $1.1 million a month in rent for the space, which is four times what Metrazur was paying. However, it’s possible that’s a worse deal for the MTA, as it doesn’t collect a share of the sales made by Apple in Grand Central… a deal unique to the one it has in place with all other Grand Central shops and stores. According to real-estate insiders, that’s costing the MTA tens of millions of dollars annually… all because of the Apple Store.

What do you think? Is the Grand Central Apple Store worth all of these compromises and fuss? Is it ultimately more of a boon to the city than it is a burden? Let us know what you think in the comments.

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About the author

John BrownleeJohn Brownlee is a Contributing Editor. He has also written for Wired, Playboy, Boing Boing, Popular Mechanics, VentureBeat, and Gizmodo. He lives in Boston with his girlfriend and two parakeets. You can follow him here on Twitter.

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