New York’s Metropolitan Transportation Authority on Wednesday approved a deal surrendering its vacant former downtown Brooklyn headquarters for use by New York University as an applied science center.
“In light of our multiple objectives, I believe this is prudent financially, and it turns back to the people of Brooklyn a forward-looking project,” board member Allen Capelli said as his peers signed off on returning 370 Jay St. to New York City.
Two days earlier, the authority, the university and Mayor Michael Bloomberg announced the agreement, under which the university will transform the 460,000-square-foot building into its Center for Urban Science and Progress.
The school has six months to conduct due diligence on renovation costs. It projected completing the project in 2017.
The MTA, which had been paying the city a nominal $1 per year as long as it needed space in the 61-year-old building, its headquarters for 30 years, will receive $50 million in relocation costs from NYU, largely to move telecommunications equipment.
The university had originally offered $20 million several months ago.
MTA chairman Joseph Lhota told reporters that the agency will be better off with all its employees in one building.
The authority plans to sell or lease its headquarters on 347 Madison Ave. in Midtown Manhattan, and move remaining employees to 2 Broadway, in the city’s financial district, where it houses roughly workers. Adding employees at 2 Broadway is seen as less costly because the authority does not have to renovate the building to do so.
Lhota also said leasing, rather than selling, 347 Madison is still an option. “This idea that we’ll sell the building [at 347 Madison] may not be the case. We may lease the building and be landlords,” Lhota said.
Members of the Transport Workers Union Local 100 criticized Lhota Monday for leaving a building where it pays $1 rent annually to 2 Broadway, where it pays $23.2 million annually under a 50-year agreement it signed in 1998. Although the contract expires in 2048, the MTA has two 15-year renewal options.
Lhota also wants to move business service center employees to 2 Broadway.
“There is a lot of money to be saved by housing everybody in one place. We’re looking to reduce our rent exposure as much as we can,” said Lhota.
The MTA is planning its latest bond sale for next month.
It will offer up a $200 million transportation revenue refunding of subseries 2002D-1 bonds.
Moody’s Investors Service assigned an A2 rating and a stable outlook.
Last week, the MTA increased its transportation revenue bond issue by 30%, to $729.1 million from an estimated $556 million during retail pricing.
Also on Wednesday, the board agreed to hold public hearings for what chief financial officer Robert Foran called “a major cost-savings proposal” — offering free rides to disabled persons through special MetroCards.
In a report to the board, Foran said the MTA could save $97 million, or 14.5% annually, by replacing the more expensive Access-a-Ride service.
Paratransit costs, Foran said, rose 20% annually from 2005 to 2010.
In a report to the finance committee, Foran said the authority’s $2.2 billion of variable-rate debt represents 7% of the MTA’s total debt.
Fixed-rate debt, totaling $24.5 billion, accounts for 80% of the debt. Synthetic fixed rate is at $3 billion, or 10%, and term rate is at $800 million, or 3%.
Foran will report on synthetic fixed-rate bonds to the finance committee in October.
He said outstanding variable-rate debt mostly consists of $3.3 billion of variable-rate demand bonds.
Variable rate debt also includes $900 million of commercial paper, $446 million of floating-rate notes, $325 million of auction-rate securities and $200 million of private placements.