Hochul, Adams reach agreement on financing for Penn Station rebuild
Gov. Kathy Hochul and Mayor Eric Adams announced Monday that they have reached an agreement on who will pick up the tab for the planned reconstruction and expansion of Penn Station and the redevelopment of the surrounding area. The financial agreement between city and state assures that a consistent level of property tax revenue is maintained and underscores a commitment to not raising taxes or transit fares by using funds from privately financed development to help pay for the project.
Rendering courtesy of Gov. Kathy Hochul’s Office
To fund the project, based on Hochul’s proposal for a renovation that could cost up to $7 billion, the state plans to sell development rights to private developers–in this case, nine office buildings and a residential tower in the Midtown area–and collect payments-in-lieu-of-taxes (PILOTs) on the new buildings. As Gothamist reports, Vornado Realty Corp. will build most of the properties as the project’s main developer.
A percentage of PILOT payments, as well as revenues from the sale of additional development rights, will help to fund the project, up to:
- 100 percent of improvements to streets, sidewalks, public spaces, and other elements of the public realm;
- 50 percent of improvements to transit infrastructure including underground concourses and subway entrances in the neighborhood; and
- 12.5 percent of the cost of the reconstruction and potential expansion of Penn Station
The remaining funding will come from the federal government, New Jersey, New York State, Amtrak, and other public sources. The agreement also establishes a shared governance entity to oversee the planning and implementation of public realm improvements.
In order to maintain its tax revenue stream, the city will keep collecting amounts equal to current taxes on each development site, increasing the amount by three percent annually. The buildings will return to the city’s tax rolls after the agreed project contribution costs are are met, or after a period of 80 years. The city and state have also agreed to cap property tax abatements.
“The current Penn Station is unsightly, inefficient, and impossible to navigate, and New York commuters deserve better. This agreement brings us one step closer to a beautiful, modern station worthy of New York with vibrant open space, lively streetscapes, and better, more seamless connections to local transit,” Hochul said in a statement.
Hochul’s vision for the revitalization of North America’s busiest train station, unveiled last November, includes a reconstructed, expanded station and improvements to the surrounding area, to be overseen by the city-state governance entity. Improvements include enhancements to streets and sidewalks, the addition of new public spaces, and the creation of seamless transit connections between Penn and the subway stations that serve it.
“This partnership underscores the commitment by leadership at the city and state level to work together and ‘Get Stuff Done’ for New Yorkers,” Adams said of the partnership in a statement. “A state-of-the-art transportation system is at the heart of our ability to have a prosperous life and a prosperous city, and the key to an equitable recovery. The new vision for Penn Station is to our generation what the Empire State Building was to previous generations: a symbol of our resiliency and a project that will define our city for decades to come. ”
The agreement comes as the Empire State Development Corporation plans to meet Thursday for a vote on the project’s financials and scope, Gothamist reports. The final vote will fall to the Public Authorities Control Board.
As 6sqft previously reported, the plan is officially in the design phase, seeking proposals from architecture and engineering firms. Proposals are due July 28 and a winning bid could be selected by late summer or early fall.
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