updated 01:27 pm EDT, Mon July 30, 2012
Bidding 'severely slanted toward Apple'
New York City's Metropolitan Transportation Authority gave Apple an unfair advantage in bidding for the retail space it now occupies in Grand Central Terminal, according to a newly-completed audit by state Comptroller Thomas DiNapoli. The report says that last May, the MTA allowed Apple to put forward an offer including $5 million in cash, which other parties had just 30 days to attempt to beat. "The competitive process followed by MTA...was at a minimum severely slanted toward Apple," the document reads.
The MTA is moreover said to have been in talks with Apple for over two years leading up to the bid. It did, however, refuse one Apple effort to get taxpayer funds in compensation for the $2 million the company paid a restaurant, Metrazur, to leave the location now home to the Grand Central Apple Store.
The MTA has already responded to the audit, insisting that it has "overt bias against the MTA and Apple." The organization's CEO, Joseph Lhota, is in fact saying that the audit "is not fact-based, and accordingly their [the Comptroller's] opinion is worthless." He adds that the leasing process was "open, transparent and followed both the spirit and letter of the law;" other MTA officials comment that Apple is paying $1.1 million in rent this year, four times what Metrazur was last paying on its 12-year-old lease.
Officials with the Comptroller's office take issue with that though, pointing out that Metrazur was paying rates well below market value, and at one point earned an extra $2.4 million in lease concessions because of earlier mistakes made by the MTA.
Making Apple's bid more lopsided is that on top of higher rent and a $5 million payout, the company isn't sharing a percentage of sales with the MTA. That's unique among the over 100 retailers based in Grand Central, and could deprive the MTA of millions of dollars. The MTA has said, though, that it expects the increased foot traffic from Apple Store visitors to increase the revenue pulled from other stores.