The Metropolitan Transportation Authority (MTA) Board’s Finance Committee agreed to proceed with a plan to buy Grand Central Terminal, and Metro-North Railroad’s Harlem Line and Hudson Line.
Midtown Trackage Ventures acquired the assets that once belonged to PennCentral Transportation. The railroad company’s 1970s bankruptcy and liquidation led the MTA to assume management of regional rail operations.
Approval of the MTA’s full Board is expected Thursday.
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.
The 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.