MIDTOWN — A "sweetheart deal" with one of Manhattan's most famous hotels could ultimately cost New York City taxpayers close to $350 million in lost revenue when its lease expires in four years, Comptroller and 2013 mayoral candidate John C. Liu announced Tuesday.
The Marriott Marquis in Times Square, a 49-floor hotel with famous curved, glass-enclosed elevators, will be eligible in 2017 to buy its property for the "fire-sale price" of just $20 million — a $173.1 million markdown from market value, Liu alleged.
"This is one of the worst deals since Manhattan was sold for $24," the comptroller said in a statement.
Under the terms of the new deal, the hotel avoided having to pay $172 million in rent it agreed to under the terms of the 1998 deal, Liu said.
The dispute's roots stretch to 1998, when the city's Economic Development Corporation allegedly encouraged City Hall to rewrite and shorten the Marriott's lease from 75 to 35 years, Liu said. The new terms sharply reduced the Marriott's rent payments — the hotel was still required to pay-off its back rent — and it permitted the hotel to purchase its location "for a song" in 2017, instead of 2057.
Liu is urging the city to renegotiate its lease with Marriott or find another tenant for the property.
"City hall needs to reexamine this agreement and do whatever it can to recoup the millions taxpayers have lost in this boondoggle," he stated. "If Marriott refuses to renegotiate the lease, they should vacate the property; after all, the land still belongs to the city and there are certainly other luxury hotels that would be willing to pay a fair price for a Times Square location."
Economic Development Corporation spokesman Patrick Muncie, however, argued in a statement that the Marriott helped spur the redevevelopment if Times Square, which has provided "more than 1,500 jobs and hundreds of millions in taax dollars."
He added: "The hotel has proven a catalyst for economic growth and played a critical role in the area's revitalization in recent decades, making Times Square a top destination for businesses as well as millions of visitors annually. This renaissance is celebrated as one of the greatest urban economic development achievements in history, and it didn’t happen by accident or without encouraging private investment.”
Marriott officials said in a statement that the hotel paid an estimated $1 billion to in "rent, taxes and acquisition costs since the project began, including every penny owed under its ground lease.
"The Comptroller’s office," it continued, "did not understand the Marriott Marquis hotel deal, and its audit report is wrong on all counts."