Street view of 341-347 Madison Avenue; Map data © 2020 Google
The Metropolitan Transportation Authority and New York City reached an agreement to redevelop the agency’s former headquarters in Midtown as part of a revenue-generating plan, officials announced on Thursday. The redevelopment of the site at 341-347 Madison Avenue is expected to create more than $1 billion for the cash-strapped agency’s capital program. The deal, delayed due to a prior dispute between city and state officials, comes nearly a decade after the MTA first announced plans to sell or lease its three-building complex.
According to the MTA, Boston Properties is “conditionally designated” to construct an office tower that will also include transit improvements to Grand Central Terminal. The project includes a new subway entrance on Madison Avenue to connect to Grand Central and the new Long Island Rail Road terminal, which is scheduled to open in 2022 as part of the East Side Access project.
“This type of redevelopment deal is consistent with what we envisioned when we agreed on a funding commitment to the MTA’s 2015-2019 Capital Plan,” the city’s First Deputy Mayor Dean Fuleihan said. “Through mutual agreement, we were able to find a creative way to fund transit projects on behalf of riders, while also ensuring that the maximum potential of the East Midtown Rezoning is fully realized.”
The agency, which moved to 2 Broadway in 2014, first announced plans to sell or lease the three adjoining buildings of its former headquarters in 2011. In 2016, the MTA said it would lease the complex to Boston Properties for 99 years in a deal worth $1.3 billion. The developer had plans to build an office tower that could measure up to 900,000 square feet.
But the deal was put on hold after city officials questioned the developer’s use of PILOTS, or payments in lieu of taxes, which would have lost out on hundreds of millions of dollars in property tax revenue, according to the Wall Street Journal.
The agency is jumpstarting the project as it faces a “financial calamity,” with ridership at an all-time low as a result of the coronavirus outbreak. The MTA is set to receive roughly $4 billion in federal aid to deal with enormous revenue loss.
The deal announced on Thursday allows the city to provide $600 million from alternative non-tax-levy revenue sources as a way to meet its obligation to contribute $2.7 billion in the MTA’s capital program.
Boston Properties’ proposal will have to go through the city’s Uniform Land Use Review Procedure. To be able to benefit from the development-friendly Midtown East Rezoning, which allows for a higher floor area ratio (i.e. One Vanderbilt), the developer must follow through on any proposed transit improvements.
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Neighborhoods : Midtown East