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Metro-North Rail Purchase Announced One Week After Cuomo's Election? Cynics Call Timing 'Fishy'

A Metro-North railroad employee putting yellow paint near a platform warning sign. Photo Credit: Jon Craig
A dozen unions listed in the contract for the New NY Bridge Project, a nearly $4 billion endeavor named after Cuomo's father -- the late Gov. Mario Cuomo -- donated at least $784,000 to the younger Cuomo’s campaign since 2010. Photo Credit: Jon Craig

Does anyone think the Metropolitan Transportation Authority's plan to buy Grand Central Station and two of Metro-North's commuter railroad properties a week after Election Day had bizarre timing?

The MTA Board was expected to vote on the plan to buy the privately owned properties on Thursday, Nov. 15.

One week after Gov. Andrew Cuomo of New Castle was elected to a third-term, the MTA proposed buying the 105-year-old Grand Central Terminal and two Metro-North railway lines for $35 million.

Several of the Top-10 contributors to Cuomo's re-election campaign have ties to the MTA. In fact, financial disclosure records show they have donated more than $1 million to Cuomo's gubernatorial campaigns -- while receiving hundreds of millions in public contracts.

MTA Board member Scott Rechler, his family and business interests gave at least $395,000 to Cuomo's campaign, according to public records.

Rechler himself has given the governor only $60,000 since 2015, although his wife has donated $65,000 and two of their children gave $25,000 apiece. Four limited liability companies tied to his real estate firm RXR Realty also contributed.

Cuomo appointed Rechler to the Port Authority of New York and New Jersey in 2011 and the MTA in 2017. He’s also recently served on Cuomo’s “Fix NYC” committee, responsible for devising a funding plan repair the city's crumbling subway system.

SL Green, which for many years has subsidized the rent of Cuomo’s campaign office, listed an "in-kind" donation of $236,579, on finance disclosure reports. Last year, the MTA announced it would sell development rights for a property that SL Green wanted to build a new tower in Lower Manhattan.

The International Union of Operating Engineers, heavily involved in building a new Tappan Zee Bridge and overhauling Penn Station, gave at least $207,500 to Cuomo's campaign. Members of the state labor union would no doubt reap the benefits of the MTA ownership of more railroad lines and Grand Central Terminal.

Eight different union locals and Political Action Committees affiliated with IUOE have given to Cuomo's campaign since 2015.

A dozen unions listed in the contract for the New NY Bridge Project, a nearly $4 billion endeavor named after Cuomo's father -- the late Gov. Mario Cuomo --  donated at least $784,000 to the younger Cuomo’s campaign since 2010, according to finance records.

Earlier Daily Voice coverage of those  Cuomo campaign contributions from unions involved in the Tappan Zee Bridge project can be found by clicking here.

Haugland Group, a civil engineering company, was Cuomo’s biggest new campaign donor in the first half of this year, contributing at least $162,405, according to finance reports. It performs work for the MTA, largely controlled by Cuomo.

Haugland Group also is a major contractor for other state agencies, receiving public contracts for at least $259 million from the Department of Transportation and Office of General Services during the governor's eight-year tenure.

Now, Republicans and taxpayer advocacy groups are curious about the timing and whether the Democratic governor benefitted from any campaign support from the MTA or rail-related unions for the move and what it means for the future of the MTA -- which has been under increasing scrutiny and criticism for its failing subway system and crumbling infrastructure.

Earlier this week, MTA Chairman Joseph J. Lhota, who promised widespread improvements to service and infrastructure, abruptly resigned.

Lhota was appointed chairman of the MTA in June 2017, returning to a position he previously held from January to December 2012.

The MTA Board’s Finance Committee granted approval to purchase Grand Central Terminal, and Metro-North Railroad’s Harlem Line and Hudson Line from a private holding company. That company, Midtown Trackage Ventures, LLC, had acquired assets that once belonged to PennCentral Transportation, the railroad whose 1970’s bankruptcy and liquidation led the MTA to assume management of regional rail operations.

Owning the properties means that for the first time, Metro-North Railroad will have unencumbered control and responsibility of its operating environment.

The MTA’s ownership of Grand Central Terminal will further give MTA Long Island Rail Road clear control of the East Side Access terminal being built beneath Grand Central Terminal.

MTA ownership of the Harlem Line and Hudson Line means that the public can now capture the full value of improvements made through transit-oriented development projects and other public-private partnerships along the rail lines as communities advocate for such projects in the years ahead.

The purchase would put an end to a 280-year lease that gives the MTA a one-time window of opportunity to buy the assets, which closes in 11 months. The purchase price, approximately $35 million, is equal to the net present value of the estimated rental stream the MTA had been paying under the lease, discounted at a highly favorable rate of 6.25 percent.

Grand Central Terminal, an iconic landmark and one of the most visited destinations in New York City, was built by the New York Central Railroad and opened on February 2, 1913. The New York Central Railroad had previously built the Hudson Line and Harlem Line in the 19th century.

New York Central later merged with the Pennsylvania Railroad to create PennCentral Transportation in 1968. PennCentral went into bankruptcy in 1970 leased the rail assets to the MTA in 1972, and the assets passed to the American Financial Group, then American Premier Underwriters. Commuter rail operations were taken over by Conrail in 1976, and the system took its current form in 1983, when the State, through the MTA, formed Metro-North.

In 1994, the MTA signed the current 280-year lease with American Premier Underwriters, through February 28, 2274, that included this option for purchase in 2019. This longer lease term was advantageous to secure the MTA’s investment in the redevelopment of the terminal in the late 1990s. American Premier Underwriters sold the ownership rights to Midtown Trackage Ventures, LLC, in the early 2000s. Metro-North has been paying an annual rent of $2.4 million.

The MTA’s Hudson Line ownership will extend through Westchester and Putnam counties and about 2.2 miles north of the Poughkeepsie Station in Dutchess County.

At that point, where Metro-North train dispatchers handoff control of train movement to Amtrak, is known to railroad operations personnel as Milepost 75.8, representing its distance from the bumper blocks at Grand Central. Tracks north of this point are owned by CSX Transportation, one of the seven major “Class I” railroads that carry freight throughout the United States.

The portion of the Harlem Line now being acquired by the MTA extends as far north as Dover Plains, also in Dutchess County. The MTA previously acquired the segment of the line from Dover Plains to Wassaic, also in Dutchess County, in 1990 when Metro-North extended the Harlem Line tracks northward over this five-mile segment.

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