Audit Claims Apple Received Favorable Treatment in Grand Central Terminal Lease Talks

[ardent73]

Vampire State indeed...

If the "rules" had been "followed" nothing would've changed because nobody would outbid Apple - the process just would've taken longer than NASA returning to the moon - time is money and Apple doesn't want to wait and lose money, unlike NYS which has perfected losing money to an art form. The geniuses passed another millionaire tax and are surprised that tax revenue is going down. All the millionaires are going to Florida, Texas, etc.

 

[samcraig]

If the "rules" had been "followed" nothing would've changed because nobody would outbid Apple - the process just would've taken longer than NASA returning to the moon - time is money and Apple doesn't want to wait and lose money, unlike NYS which has perfected losing money to an art form. The geniuses passed another millionaire tax and are surprised that tax revenue is going down. All the millionaires are going to Florida, Texas, etc.

And your proof points are what? Are you just pulling these facts from out of the air. I'm genuinely curious how you know who was (or would have) been bidding.

 

[everything-i]

So apple want to move into this station and they buy out the lease of an existing tenant. This only has a couple of years to run so apple then request the lease to be extended. At this point the owners have to start a bidding process to allow others the opportunity to take over the lease after it expires. So now any other company could have come along and produced a better bid but that didn't happen. Now apple will have been lobbying behind the scenes to make sure that the owners favored their bid, nothing wrong with that, it happens all the time in business and politics and any other potential bidder could have done the same thing. My point is that no other company was willing to throw down the cash necessary to better apples offer. After all its not just the cash that is the issue for the owners. Apple also pored considerable amount of money into renovating that part of the station and it was very well done from what I have seen. Also the owners have to consider the extra people that the store will bring into their premises. When this all happened it was the height of the economic crisis so no other businesses thought it was worth going for. Apple are one of the few companies at that time with pockets deep enough to go for this type of expensive project. I don't recall any other bidder crying foul on this a that time. Maybe because no one else cared.

 

[ixodes]

Nothing new. Walmart & Apple. It's all the same. Sweetheart deals for the mass marketing wizards.

 

[mrxak]

People outside New York probably don't have a clue, but they're all a bunch of idiots in Albany. Getting upset about higher rent, higher tax revenue, and free renovations, all in a space nobody else could use, it just doesn't surprise me anymore.

JBunkers is right. This is just a made-up controversy in order for the Comptroller to grab more power for himself.

Show me one wronged party in this whole deal. As a taxpayer, I think this is great. The MTA thinks it's great. The restaurant probably thought it was great. The other shops in the area think it's great. Where's the unable-to-bid company that wanted the space and was willing to pay for it and do the renovations?

 

[mixel]

Is a comptroller actually a real thing? I assumed it was a typo.

Just looked it up.. Fair enough - how weird!

It is a very pretty looking Apple Store at least. I can't think who I'd rather have as a tenant.

 

[mojohanna]

So Apple was given exclusive knowledge 1 year in advance of the upcoming vacancy and already paid off the current tenant BEFORE the MTA opens up the bidding process?
I don't care how much additional foot traffic is generated having an Apple store there, the process was unethical.
Anyone making excuses for Apple or the MTA should be ashamed of themselves.

I'll defend them, I am won't be ashamed. I don't agree with your notion that Apple had "exclusive" knowledge of an upcoming vacancy. My understanding is that they paid the restaurant a handsome amount to vacate the space before their lease was up. Apple forced the opening of the space. They put a package together that made sense for the current tenant and MTA. MTA turned over the space quickly and to a much more stable tenant that will provide long term revenue for them. All of this taking place in a huge downturn in the economy. Sounds kind of like a no brainer. You big corporation conspiracy theorists need to give it a break sometimes.

 

[everything-i]

A fresh audit by state Comptroller Thomas DiNapoli says the MTA last May allowed the California-based tech giant to set a daunting hurdle for rival bidders to clear in a tight, 30-day window -- namely, that they be willing to front $5 million in cash.

Is this guy for real, any company that would have been in the running to take over that space would have had no problem fronting $5 million. In the economic climate at that time, there were just no other companies that thought it was worth it. This is not a corner store, its a huge part of a major rail station, who does he think would have been willing to go up against Apple even if they didn't have to find $5million plus all the cost of renovations and refitting. Apple took a chance in paying off the previous tenant and it paid off. Any other company could have done exactly the same thing, but some how there didn't seem to be a huge queue of others willing to fight for that space, in fact there were none.

 

[samcraig]

I don't recall any other bidder crying foul on this a that time. Maybe because no one else cared.

Show me one wronged party in this whole deal. As a taxpayer, I think this is great. The MTA thinks it's great. The restaurant probably thought it was great. The other shops in the area think it's great. Where's the unable-to-bid company that wanted the space and was willing to pay for it and do the renovations?

You might not find any. You know. Because no one probably knew they never had a chance and that Apple had already secured the space. It's possible that some company might come forward now since the audit has taken place... I guess we'll see.

 

[everything-i]

You might not find any. You know. Because no one probably knew they never had a chance and that Apple had already secured the space. It's possible that some company might come forward now since the audit has taken place... I guess we'll see.

That's difficult to argue given that there was an open tender process to secure the lease. If any other company had really been interested in that space they would have been all over this. As a land lord you don't always go with the biggest money, you go with the safest. That's what happened here, they knew Apple was a safe bet and would be a high profile tenant.

 

[samcraig]

That's difficult to argue given that there was an open tender process to secure the lease. If any other company had really been interested in that space they would have been all over this. As a land lord you don't always go with the biggest money, you go with the safest. That's what happened here, they knew Apple was a safe bet and would be a high profile tenant.

How open was the tender process given that Apple (before there was even an RFP) had pretty much locked up the space with a financial deal in place with the previous tenant.

Since the audit just occurred - who really can say for certainty that other companies didn't complain (just not to the press) and/or won't now that it's public knowledge.

Ultimately I think Apple is a great tenant. But that doesn't mean they didn't get the deal above board. You can argue all you want how great it is to have Apple there - what a boon for business, etc. But to suggest that things weren't shady (and yes - many times deals like this are) is dis genuine. It was without a doubt shady.

 

[vaprea]

Wait… So you are telling us that the MTA really wanted Apple in Grand Central Station, while Apple also really wanted to be in Grand Central Station; and now Apple really is in GCS. Yep, you're right something just isn't adding up.

Hemmm….

In America we call this making ***** happen, especially in the BIG APPLE...

What this article really should state is…. "Man angry over favorite restaurant being replaced by Apple Store, makes false accusations against MTA"

LEAVE APPLE OUT OF THIS!!

 

[samcraig]

So you believe that Apple and the MTA were completely above board. I'm not asking if it's good business. I'm asking you if you sincerely believe there was NOTHING shady at all about how it went down. Say that with a straight face.

Wait… So you are telling us that the MTA really wanted Apple in Grand Central Station, while Apple also really wanted to be in Grand Central Station; and now Apple really is in GCS. Yep, you're right something just isn't adding up.

Hemmm….

In America we call this making ***** happen, especially in the BIG APPLE...

What this article really should state is…. "Man angry over favorite restaurant being replaced by Apple Store, makes false accusations against MTA"

LEAVE APPLE OUT OF THIS!!

 

[vaprea]

In my opinion this exemplifies some real-world negotiating skills. We are talking about the largest Transit Agency in America, and the third largest Computer corp.

I don't know if foul-play is indeed a fact.

 

[iheartmacs]

Gee if I were a merchant at Grand Central terminal, who would I want to have occupy that space? An Apple Store? Or some other merchant? Hmmm...who would say no to an Apple Store?
What a waste of money (ours!) to audit this transaction! Its a win for Grand Central and a win for NYS (increased tax revenue) and a win for NYC!

 

[samcraig]

Gee if I were a merchant at Grand Central terminal, who would I want to have occupy that space? An Apple Store? Or some other merchant? Hmmm...who would say no to an Apple Store?
What a waste of money (ours!) to audit this transaction! Its a win for Grand Central and a win for NYS (increased tax revenue) and a win for NYC!

I don't know how much money it cost to audit. I'm pretty sure the only reason there was an audit was because it was Apple. And things didn't add up.

And if this were Samsung who wanted the space - I think everyone would be crying foul here. Point is - it doesn't matter what company this was - if the deal was shady - it was shady. And deserved an audit. That has nothing to do with my opinion on whether I think an Apple store is good for business, the MTA, etc.

 

[mabhatter]

So... the first responder claims that it's only a free market if the quasi-government agency is allowed to choose the tenant in advance?

I agree that Apple's foot traffic and prestige should have been a factor, but I disagree that it's okay to choose a store in advance and not open the space to anyone.

Our impressions of "free markets" are different -- and irrelevant since the MTA is not a private company.

Except that the space wasn't TECHNICALLY open for two more years. Apple was willing to front $5m to the tenant to have them move EARLY. Anybody else wanting the space would have had to make the tenant the same offer or wait till the lease was up.

Yes, the deal was structured "for Apple" but obviously nobody ELSE was willing to pay the UP FRONT money Apple DID PAY to get the space. It would have been more unfair if the MTA specified that the space was already considered by Apple.

I think the controller is complaining that there wasn't a "bidding war" specifically because the big player was Apple and they could have had trolls jumping up the cost in the press... Like that's any more "legal". It's certainly not how you do business.

 

[Thunderhawks]

I don't know how much money it cost to audit. I'm pretty sure the only reason there was an audit was because it was Apple. And things didn't add up.

And if this were Samsung who wanted the space - I think everyone would be crying foul here. Point is - it doesn't matter what company this was - if the deal was shady - it was shady. And deserved an audit. That has nothing to do with my opinion on whether I think an Apple store is good for business, the MTA, etc.

Wondering about your intensity about this subject. You want morals and ethics from politicians?

For starters: no other company was creative enough to figure out to pay off the existing lessee.

Next, Apple could have just taken that lease and kept the pricing for two years, but they didn't.

So, they approached the MTA for an extension, throwing in more money, plus renovation.

How is that a sweetheart deal as some post? The only sweetheart thing that happened was that they got to extend the lease and Apple paid $ 5 million upfront.

The end result is that this is a good deal for NYC and if there really was another party interested:

1) They didn't have the buy out idea
2) They didn't offer 5 million

And, when it first became public there was no outcry by any company that we heard of.

As a NY taxpayer you should be happy and if you really need to crucify anything , it's the way government and NYC does business. Just because it's Apple doesn't make a difference.

As they say one of the two biggest lies is:

I am from the government and I am here to help!

 

[NY Guitarist]

You had me until I read the words "New York Post".

A roll of toilet paper is worth more.

----------

As they say one of the two biggest lies is:

I am from the government and I am here to help!

Looks like another foot soldier blindly following orders without using critical thinking skills.

----------

People outside New York probably don't have a clue, but they're all a bunch of idiots in Albany. Getting upset about higher rent, higher tax revenue, and free renovations, all in a space nobody else could use, it just doesn't surprise me anymore.

JBunkers is right. This is just a made-up controversy in order for the Comptroller to grab more power for himself.

Show me one wronged party in this whole deal. As a taxpayer, I think this is great. The MTA thinks it's great. The restaurant probably thought it was great. The other shops in the area think it's great. Where's the unable-to-bid company that wanted the space and was willing to pay for it and do the renovations?

Bingo.

 

[nastebu]

In my opinion this exemplifies some real-world negotiating skills. We are talking about the largest Transit Agency in America, and the third largest Computer corp.

I don't know if foul-play is indeed a fact.

We do know that there was foul play. The person in charge of determining whether it was done wrongly investigated and determined that it was foul. That's the comptroller's job and what we pay him to do. If you don't like the determination, that's one thing. But it is his call to make.

As a NY taxpayer you should be happy and if you really need to crucify anything , it's the way government and NYC does business. Just because it's Apple doesn't make a difference.

Nobody's getting crucified. The recommendations for rectification are quite mild and don't even penalize Apple. But the point here is, this *isn't* the way that government and NYC does business. It was a violation of the law for awarding bids, which is cumbersome and time consuming, but the law. And it is law because we need something in place to protect taxpayer money.

Maybe this was a good deal, and maybe it would have sailed right through if the bid had been handled properly. But it wasn't handled properly and that's a problem.

Further, if we're willing to turn a blind eye to this case, what about the next case? What about when the company who gets the inside edge does so because it's an MTA official's best friend? or because they bought everyone pizza? Would that also be "the way the government and NYC does business," and so okay?

 

[NY Guitarist]

As a land lord you don't always go with the biggest money, you go with the safest. That's what happened here, they knew Apple was a safe bet and would be a high profile tenant.

Exactly. It was a VERY smart move. You don't want a tenant, you want a GREAT tenant. Honestly, who wouldn't want an Apple store as a tenant?

It's a no win apparently for some. Damned if you do, damned if you don't. People would have ripped the MTA a new one if the lease went to someone else and it was discovered that they could have had an Apple store there.

 

[samcraig]

Except that the space wasn't TECHNICALLY open for two more years. Apple was willing to front $5m to the tenant to have them move EARLY. Anybody else wanting the space would have had to make the tenant the same offer or wait till the lease was up.

Yes, the deal was structured "for Apple" but obviously nobody ELSE was willing to pay the UP FRONT money Apple DID PAY to get the space. It would have been more unfair if the MTA specified that the space was already considered by Apple.

I think the controller is complaining that there wasn't a "bidding war" specifically because the big player was Apple and they could have had trolls jumping up the cost in the press... Like that's any more "legal". It's certainly not how you do business.

Are you familiar with how things work when it comes to these leases? I am not suggesting I do. But let's suppose - just suppose - that buying someone out of their lease isn't an option. For example - I own an apartment. It's a co-op. If I want to sell the apartment to someone there's a board that needs to approve the transaction.

Let's suppose shall we (which I don't think is a stretch) that in order to achieve a space at a property owned by the MTA - there must be an RFP process. Now suppose a company either knows this or doesn't know this and puts up some front money. That's not only against policy - but also not something any/every other company would think of doing because it GOES AGAINST POLICY.

Again - I don't know what rules exist. But I'm guessing most if not all here don't either.

Let's not say no one else was willing to pay or anything of the like. Because that's not fact. That's supposition. We have the audit. And based on the audit - things were shady.

Wondering about your intensity about this subject. You want morals and ethics from politicians?

For starters: no other company was creative enough to figure out to pay off the existing lessee.

Next, Apple could have just taken that lease and kept the pricing for two years, but they didn't.

So, they approached the MTA for an extension, throwing in more money, plus renovation.

How is that a sweetheart deal as some post? The only sweetheart thing that happened was that they got to extend the lease and Apple paid $ 5 million upfront.

The end result is that this is a good deal for NYC and if there really was another party interested:

1) They didn't have the buy out idea
2) They didn't offer 5 million

And, when it first became public there was no outcry by any company that we heard of.

As a NY taxpayer you should be happy and if you really need to crucify anything , it's the way government and NYC does business. Just because it's Apple doesn't make a difference.

As they say one of the two biggest lies is:

I am from the government and I am here to help!

See above.

 

[theBB]

Now, find one business (other than a casino) that would have the same effect and would pay the renovation needed and can (and is willing to) pay the rent on top of it.

Maybe, there would be one, maybe there would not be. If you give one company a year to get its ducks in a row and just 30 days for the others, of course there won't be another who can match it. There could be more competitors if MTA allowed a longer period for bidding. High end fashion or jewelry retailers or another high end restaurant could afford to pay a similar amount of rent. Maybe, Samsung would think about opening a flagship store there, who knows...

A private real estate operator could decide to agree on a lease as soon as it believes it will not get a better deal, but government officials do not get afforded the same luxury to make sure they don't cheat taxpayers due to corruption or leave taxpayer money on the table due to incompetence.

 

[IJ Reilly]

I don't know how much money it cost to audit. I'm pretty sure the only reason there was an audit was because it was Apple. And things didn't add up.

And if this were Samsung who wanted the space - I think everyone would be crying foul here. Point is - it doesn't matter what company this was - if the deal was shady - it was shady. And deserved an audit. That has nothing to do with my opinion on whether I think an Apple store is good for business, the MTA, etc.

Probably you've noticed this already but these boards are loaded with people who will spring to Apple's defense at any time, for any reason, and with our without the requisite knowledge to make an informed point. As often as otherwise, without. At these times it is truly embarrassing to be an Apple fan, with so many prepared to treat them as the Holy of Holy.

 

[gnasher729]

So Apple was given exclusive knowledge 1 year in advance of the upcoming vacancy and already paid off the current tenant BEFORE the MTA opens up the bidding process?
I don't care how much additional foot traffic is generated having an Apple store there, the process was unethical.
Anyone making excuses for Apple or the MTA should be ashamed of themselves.

There was no upcoming vacancy. The current tenant had a multi-year contract that would have run out in a few years from now. Apple offered a contract where they would buy out the tenant's lease agreement to make them leave, then pay more money for the lease.

Apparently that wasn't the case here.
The MTA opened up a bidding process for a new lease on the space (as they are required too with publicly owned property).
This process was rigged, fixed, whatever you want to call it, in Apple's favor nearly a year in advance.
Sounds like some folks at the MTA got some "favorable treatment" from Apple's check book.

If that bidding process was too short, how many companies called and asked for an extension? Let's say Samsung heard of this and said "we never thought about opening a store in that location, might be a good idea but we've only got a month's time" - it would then be obvious to just call and ask for an extension. So did anyone do that and got denied?

And I wouldn't think the MTA usually starts bidding for a lease when there is a paying tenant with a long term contract who didn't give any sign of wanting to move - until Apple approached them and offered money. So the order of things is: Apple sees spot for a store, Apple talks to existing tenant and convinces them that moving is a good idea, then Apple talks to the MTA and tells them that they can make more money that way, and _then_ the bidding process starts. Apple had a head start because it was Apple's idea and Apple's initiative in the first place.