Hochul and Adams reach a deal on financing the Penn Station upgrade
Governor Kathy Hochul and Mayor Eric Adams announced an agreement on how to pay for the renovation and expansion of Pennsylvania Station, which might cost up to $7 billion. Under the new deal, the city and state committed to not raising taxes for New Yorkers or increasing fares for commuters.
To fund the Penn Station makeover, New York City will continue to collect property taxes from the construction sites surrounding the station with a 3 percent increase each year. In addition, it will also receive funds from private developers that will build 10 towers – nine office buildings and one residential structure. The remaining expenses will be covered by New Jersey, New York State, Amtrak, and other public funding sources.
"The current Penn Station is unsightly, inefficient, and impossible to navigate, and New York commuters deserve better," Governor Hochul said. "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."
The city plans to provide tax exemptions to developers of each of the 10 future towers in exchange for helping to finance the station makeover. This system is known as PILOT, or payment in lieu of taxes. PILOTs will cover 12.5 percent of all costs associated with the Penn Station renovation, according to The Real Deal.
Many government officials have criticized the decision to offer tax breaks because they primarily benefit one developer – Vornado Realty Corp. The recent analysis found that Vornado could potentially save $1.2 billion in property taxes. However, as Politico reports, state officials agree that this is the surest way to fund the renovation of Penn Station, which serves over 600,000 commuters daily.
“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,” Mayor Adams said. “Today's agreement is a win-win for New Yorkers - helping to deliver improved transit access, affordable housing, and quality jobs while also safeguarding future revenue and protecting against financial risk."
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Resources:
“Governor Hochul and Mayor Adams Announce Agreement on Financial Framework to Support Reconstruction, Potential Expansion of Penn Station and Revitalization of Surrounding Area,” by Governor Kathy Hochul (New York State, 2022)
“Hochul, Adams reach agreement on financing for Penn Station rebuild,” by Michelle Cohen (6sqft, 2022)
“Hochul, Adams strike cost-splitting deal for controversial Penn Station project,” by Danielle Muoio Dunn (Politico, 2022)
“80-year itch: Hochul, Adams deal on Penn delays taxes for decades,” by Kathryn Brenzel (The Real Deal, 2022)
“Hochul and Adams announce ‘financial framework’ for Penn Station deal; watchdog slams lack of specifics,” by Kevin Duggan (amNY, 2022)
“The Penn Station $7 Billion Fix-Up: Here’s What to Know,” by Matthew Haag and Patrick McGeehan (The New York Times, 2022)
“Funding for Penn Station Plan Could Fall $3 Billion Short, Report Says,” by Patrick McGeehan (The New York Times, 2022)
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