Grand Central Terminal
NEW YORK CITY—The Metropolitan Transportation Authority (MTA) is purchasing Grand Central Terminal, and Metro-North Railroad's Harlem Line and Hudson Line from a private holding company, MidtownTrackage Ventures, LLC.
The agency's acquisition of the Hudson Line extends to 2.2 miles north of the Poughkeepsie Station. At this point, the Metro-North train dispatchers will relinquish control to Amtrak. The MTA will acquire the Harlem Line as far north as Dover Plains, NY.
MidtownTrackage Ventures had acquired the assets which once belonged to PennCentral Transportation. In the 1970s, PennCentral filed for bankruptcy and its liquidation resulted in MTA's managing the regional rail operations.
The MTA's full board is expected to approve the sale on Thursday.
Owning the property will give the public benefit corporation control and responsibility of operations including the East Side Access terminal being built beneath Grand Central Terminal.
The purchase will end a 280-year lease that gives the MTA a one-time window of opportunity to buy the assets, which closes in 11 months. The MTA states that the $35 million purchase price equals the net present value of the estimated rental stream the MTA had been paying under its lease, discounted at a highly favorable rate of 6.25%.
“This was a no-brainer, from a financial standpoint,” says MTA chief development officer Janno Lieber. He explains the interest rate environment and a $500,000 discount that the seller offered made it cheaper to buy now than to continue paying rent under the lease.
“Equally important, this transaction secures for the MTA control over development rights along the Harlem Line and Hudson Line, which will allow us to help local jurisdictions implement high quality Transit Oriented Development for generations to come,” says Lieber.
Built by the New York Central Railroad, Grand Central Terminal opened on February 2, 1913. The New York Central merged with the Pennsylvania Railroad to create PennCentral Transportation in 1968. PennCentral went into bankruptcy in 1970 and leased the rail assets to the MTA in 1972. The assets passed to the American Financial Group, then American Premier Underwriters. Commuter rail operations were taken over by Conrail in 1976. The system took its current form in 1983, when the state through the MTA formed Metro-North.
In 1994, the MTA signed its lease with American Premier Underwriters through Feb. 28, 2274, that included an option for purchase in 2019. American Premier Underwriters sold the ownership rights to Midtown Trackage Ventures, LLC, in the early 2000s.
“By becoming the true owners of the infrastructure that we have long maintained on behalf of the people of New York, we are asserting Metro-North's permanence as an institution dedicated to public service,” says Catherine Rinaldi, president of Metro-North Railroad.
MTA's public transportation system includes the subway, buses, Metro-North and Long Island Rail Road.
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Betsy Kim
Betsy Kim was the bureau chief, East Coast, and New York City reporter for Real Estate Forum and GlobeSt.com. As a lawyer and journalist, Betsy has worked as the director of editorial and content for LexisNexis Lawyers.com, a TV/multi-media journalist for NBC and CBS affiliated TV stations in the Midwest, and an associate producer at Court TV.
