NY comptroller says MTA sided with Apple for Grand Central Store

Raindrops are seen in front of an Apple logo outside an Apple store in Shanghai February 22, 2012.

NEW YORK (Reuters) - New York's Metropolitan Transportation Authority gave Apple Inc an inside advantage landing a lease for the technology company's store in Grand Central Terminal, according to an audit New York State Comptroller Thomas DiNapoli released Monday.

The MTA for more than a year worked behind the scenes exclusively with Apple on the lease before issuing a request for proposals, the state comptroller's office said, citing its auditor's' report. That resulted in only one response, and that was from Apple, the state comptroller's office said.

"While Apple may turn out to be a good tenant, the MTA set a troubling precedent when it played favorites and gave Apple a competitive edge over others for the Grand Central space," DiNapoli said in a statement. "Apple was directly involved in setting the terms of the lease and given exclusive access to information more than a year before any other vendor knew the Grand Central location was available."

Apple, based in Cupertino, California, signed a $2 million agreement with the former tenant, Metrazur, to vacate its space five days before the MTA issued the RFP, the comptroller said.

The MTA shot back calling the audit "not fact-based" and its conclusions "worthless," and questioning the department's ability to opine on real estate deals.

"The Comptroller's audit staff clearly has no understanding of how high-profile commercial real estate works, given the shockingly inaccurate and clearly biased audit they issued. The MTA's lease process with Apple was open, transparent and followed both the spirit and letter of the law," Joseph Lhota, MTA chairman and chief executive officer, said in a statement.

Auditors at the comptroller's office examined the Apple lease while completing a follow-up audit of the MTA's real estate practices. They found that only two of 12 recommendations from the 2010 audit had been fully implemented.

DiNapoli is recommending a statutory change to increase oversight of public authority contracts exceeding one million dollars. "Because the MTA lease to Apple was purportedly a competitive process, it was not eligible for the Comptroller's review before it was finalized," the comptroller's office said.

Michaela Wilkinson, an Apple spokeswoman, declined comment.

(Reporting by Ilaina Jonas; Editing by Gary Hill)