Updated, 4:45 p.m., Feb. 12: City Comptroller John Liu is claiming that a 1998 lease agreement between the city and the Marriott Marquis Hotel in Times Square was a terrible move that could cost taxpayers $344 million, in a recently released audit of the deal, the New York Daily News reported. And he is calling on the Mayor’s Office to take a second look at it.
“This is one of the worst deals since Manhattan was sold for $24,” Liu told the Daily News.
“City Hall needs to reexamine this agreement and do whatever it can to recoup the millions taxpayers have lost in this boondoggle,” he added.
The deal took place under Mayor Rudy Giuliani’s administration and was pushed ahead by the New York City Economic Development Corp., which gave Marriott the rights to buy the 50-story tower for $19.9 million. The price represented a tenth of its fair market value of $193 million, according to the audit.
Liu claims that the city has lost $173 million in rent since 1998. A rent forgiveness clause allowed Marriott to pay off its back rent instead of paying current rent, which Liu said has cost an additional roughly $172 million. And according to Liu, the hotel still owes $3.6 million in unpaid rent and interest.
But City Hall greeted the findings with laughter.
“What a joke — the controller must have run out of things to audit and is now rummaging through old Giuliani files,” a spokesperson for Mayor Michael Bloomberg told the Daily News.
In response, a Liu spokesperson told The Real Deal that “Instead of pointing fingers at a previous Mayor or finding humor in one of the largest corporate subsidies in recent history, City Hall should spend its time recouping the $345 million taxpayers lost in this sweetheart deal.” [NYDN] —Zachary Kussin
CORRECTION: The Daily News said that the city lost $173 million in rent since 1998, however a Liu spokesperson told The Real Deal that this figure relates to potential loss on land sale. The Daily News also said that the Marriott Marquis owes the city $3.6 million in unpaid rent and interest, but the spokesperson said that this number pertains only to interest.