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City transit head questions Boston Properties’ MTA HQ deal
99-year lease would see REIT pay agency while avoiding hundreds of millions in city property taxes
Boston Properties’ bid to redevelop the Metropolitan Transportation Authority’s former headquarters in Midtown is on hold, after MTA official and Department of Transportation Commissioner Polly Trottenberg raised questions about the company potentially avoiding hundreds of millions in property taxes.
The Boston-based real estate investment trust has a deal in place to build a new skyscraper on the site of the MTA’s former headquarters at 341-347 Madison Avenue, near Grand Central Terminal.
But the MTA delayed the deal’s approval on Wednesday, according to the Wall Street Journal, after Trottenberg – a member of the authority’s 21-person board — questioned whether it was “unfairly letting [Boston Properties] get out of paying their property taxes.”
The arrangement would see Boston Properties pay PILOTs, or payments in lieu of taxes, to the MTA as part of its 99-year lease of the authority’s old headquarters. The MTA, which is exempt from city property taxes, would continue to own the property.
While those PILOT payments are currently valued at more than $1 billion over the life of the 99-year lease, according to the MTA, they would see the city miss out on hundreds of millions of dollars in property tax revenue, Trottenberg said.
The city transportation commissioner said the questions raised were not related to friction between her boss, Mayor Bill de Blasio, and Gov. Andrew Cuomo, who effectively oversees the state-run MTA. [WSJ] – Rey Mashayekhi