$7 Billion Plan to Revamp Penn Station Clears Major Hurdle, But Not All Are Happy

The deal gives developers an estimated $1.2 billion in tax breaks

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What to Know

  • The Empire State Development Corporation’s members voted unanimously to approve the $7 billion dollar plan that calls for New York, New Jersey and the federal government to cover the overhaul costs.
  • New York City will play a roll too, as to get the deal done, they will allow developers to tear down existing buildings near the transit hub and construct 10 state of the art skyscrapers.
  • The reconstruction of the station and the first phase of the improvements to public spaces is expected to cost roughly $8 billion.

A multi-billion dollar transformation of Penn Station and the area around it took a big step forward on Thursday, but those who opposed the change are vowing to fight on, saying the deal puts developers interests ahead of everyday New Yorkers.

The Empire State Development Corporation’s members voted unanimously to approve the $7 billion dollar plan that calls for New York, New Jersey and the federal government to cover the overhaul costs. New York City will play a roll too, as to get the deal done, they will allow developers to tear down existing buildings near the transit hub and construct 10 state-of-the-art skyscrapers.

"This is not only good for the city of New York but the entire metro area," one board member said.

The deal gives developers an estimated $1.2 billion in tax breaks. In turn, the agreement outlines those developers will cover part of the station renovation costs — paying with revenue generated by 18 million square feet of office space leases, retail sales, rent from nearly $2,000 apartments and a hotel.

The entire deal is part of a complex finance notion called "payments in lieu of taxes" or "PILOTS."

Those who oppose the development are in the second year of their fight, calling the financing risky and questioning what happens if there is a recession — something a large number of economists believe the U.S. may be heading for this fall.

“We think it’s anti-urban from the start, it’s corrupt. It favors one developer over the upside of the entire region for years to come," said Sam Turvey, who lives in the area.

Opponents worry the plan won’t fix all the issues in around Penn Station, like rush hour traffic. They also said it doesn’t offer enough affordable housing and will ultimately mean some residents will lose their homes.

"I just don’t even know what’s going to happen to us," said Eugene Sinigalliano.

The Penn Station development plan has passed. Adam Kuperstein reports on what the new hub will look like and when it might be finished.

Others think it’s misguided to bet on office space when the pandemic has shown many want to work from home.

Governor Kathy Hochul and NYC Mayor Eric Adams support the plan, which was first introduced by former Governor Andrew Cuomo. They also like the outdoor portions of the plan that require: Wide sidewalks and elevated landscaping with ample seating.

Officials said this the right moment for a massive shift at Penn Station because they think they have the necessary support in Washington, D.C. Holly Leicht, the Executive Vice President of Real Estate Development & Planning at Empire State Development, said that the federal government will foot half the bill, as the railroads want them to pay more.

The financing for this project is exactly like what happened for the Hudson Yards development years ago. The plans still have to get federal approval, with the idea being to get it in front of decision makers by the fall or early next year.

Last fall, Hochul announced a plan to transform the crowded, dingy 54-year-old station that sits underneath the Madison Square Garden arena into a modern, traveler-friendly facility. In pre-pandemic times, Penn Station served roughly 600,000 passengers per day on regional rail lines from New Jersey and Long Island, Amtrak and the New York subway system.

The plan calls for a large, single-level train hall with higher ceilings and a 450-foot-long skylight to replace the current cramped, windowless interior; more escalators, stairs and elevators to platforms, and more street entrances to reduce sidewalk crowding.

Hochul’s vision, a scaled-down version of earlier plans announced by her predecessor, would create new residential and office space around the station and has provoked criticism from neighborhood groups who contend it will destroy a vibrant area and displace residents and businesses.

While the expansion of the station to add tracks is years away, the memorandum of agreement released Monday sounded a potentially ominous note: A study is underway to determine whether two additional tunnels would need to be built to connect the Hudson River tunnels to an expanded Penn Station, it said.

The commuters who use Penn Station have been asking for improvements for decades. Hochul initially announced last month that her plan for the revamp includes a lot of natural light. While the overall plan seems to be moving forward, a lot of neighbors in the community say they are not sure they are getting a fair deal.

The dark labyrinth inside Penn Station is famous for commuter complaints, including those from Dorothea Simmons, who calls the transit hub "chaotic and dirty."

Meanwhile, the sunlight inside the new Moynihan Train Hall across the street is a glimpse of the future. 

That same glass-ceilinged look a key part of the new Penn Station plan, with Hochul describing the plan with a unique word choice.

“A skylight that reminds you 'yes, the heavens are out there still -- despite the feeling you may be living in hell," she said.

Hochul's plan calls for revamping Penn Station and changing it into a modern, light-filled facility easy to navigate, while also revitalizing the surrounding neighborhood to prioritize the public realm, invest in affordable housing, increase transit access, and create a pedestrian-friendly streetscape, among other points. 

The surrounding neighborhood would be rebuilt by 2044. 

NBC New York's Andrew Siff reports.

Adams has said on multiple occasions that the transformation will be a positive change for the Big Apple.

“We are going to turn an embarrassment into a symbol of what’s great about our city," Adams said last month when Hochul announced her initial plans.

However, critics — including the local community board -- are not happy with the plan that allows real estate giant Vornado to build up to 10 new skyscrapers around penn station without paying property taxes. 

"It would destroy six city blocks and cause displacement of hundreds of residents and thousands of businesses," Maki Livesay, of Community Board 5, previously said.

"The simple math of this plan, does not add up," Sam Turvey, another protestor, said.

Samuel Turvey, chairperson of RethinkNYC, a transportation and land use advocacy group, said the plan is misguided because it fails to turn Penn Station into a through-running facility where trains would pass through to other areas of the city, rather than turning around and returning to their origin or sitting in rail yards.

Turvey called the plan “a very ugly replacement theory where local residents, small businesses and historic structures are being cast to the winds with the help of the state and city.”

When News 4 New York previously asked Hochul if she could demand that Vornado and other private entities pay property taxes, the governor said the state has listened to concerns and have made changes.

"They've already had to deal with major adjustments that I put in place after hearing the public about their dissatisfaction. We brought down the height. We cut off 1.4 million square feet. We require more public space," Hochul said.

There is also political pressure from New Jersey as the long awaited Gateway Tunnel across the Hudson creeps forward. 

“Having a brand new Penn Station doesn’t mean much if we can’t ensure that the trains heading here can get here on time," New Jersey Gov. Phil Murphy previously said.

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