New York State officials on Thursday approved a major redevelopment of Midtown Manhattan that would transform Pennsylvania Station, the busiest transportation hub in North America, from a run-down transit center into a city center. The eight-member board of Empire State Development, the state’s economic development agency and the group leading the project, voted unanimously in favor. The plan calls for building 10 towers around Penn Station and providing an estimated $1.2 billion in tax breaks to developers.
The redevelopment would be one of the largest real estate projects in United States history: approximately 18 million square feet, primarily of office space, up to 1,800 residential units, retail space and a hotel. At the center would be a renovated Penn Station, which lies beneath Madison Square Garden and served 650,000 riders each weekday before the pandemic.
The board’s approval paves the way for an application for federal funding to help pay for the station upgrade, which is expected to cost approximately $7 billion. New York expects about half of that amount to come from Washington.
How would Penn Station change?
The new Penn Station would not add new tracks or additional rail lines, but would solve the most common passenger complaints: The facility is cramped and gloomy. It would have higher ceilings to bring in more natural light, 18 new entrances and larger underground passageways to navigate between subway platforms and rail lines.
Outside the station, a new 0.7-acre plaza would have wider sidewalks, cycle paths and landscaped areas with seating.
How would commuters benefit from this?
The overhaul of the 54-year-old station would be the final phase of the sprawling project to add train tunnels under the Hudson River known as Gateway. But Governor Kathy Hochul insisted that the station’s renovation be done sooner. In June, the Metropolitan Transportation Authority asked for proposals from architectural firms to come up with a way to “relieve overcrowding and improve passenger flow” at the station.
Ms Hochul said the rebuilt station would be a “single-level unit with high ceilings that welcome natural light.” Amtrak owns the station, but the Long Island Rail Road and New Jersey Transit are the largest users. It is connected to the new Moynihan Train Hall, which is used by Amtrak and LIRR. The state has not yet chosen the builder of the new station.
How would commuters not benefit from it?
The renovation in itself will not solve the station’s traffic problems. Before the pandemic, Penn Station was flooded during rush hour with overcrowded commuter trains arriving from Long Island and New Jersey, clogging the tracks beneath Midtown. The station would need to be expanded, with more tracks, to handle the extra trains that new Hudson tunnels could supply.
Apart from the Penn Station overhaul, state officials also approved a plan to build a new train concourse south of the site that would increase train and passenger capacity, with new lines and platforms. That project could cost $13 billion and would require federal approval.
Whose idea was this?
Former Governor Andrew M. Cuomo first proposed the project. However, Ms. Hochul has embraced the plan, calling Penn Station a “hell.” State officials have linked the upgraded Penn Station to the construction of the 10 towers, arguing that the larger development is needed to help pay for public transportation renovations.
The project exceeds New York City’s local control to allow developers to build taller buildings than otherwise allowed. Mayor Eric Adams supported the plan.
Many other elected officials and community members have objected to the size of the redevelopment, the tax breaks and the complex financing structure. Opponents fear taxpayers will be in trouble if the project does not generate the revenue supporters expect.
How would Midtown change?
The more notable changes to the area could be the larger real estate project around Penn Station.
The new towers would be one of the tallest in New York City, over 1,000 feet high, though final dimensions would be determined later. The project will require the demolition of many existing buildings, possibly including a 150-year-old Roman Catholic church, and would reshape the Manhattan skyline between the Hudson Yards neighborhood to the west and the Empire State Building to the east.
Some of the tallest buildings would rise on the block south of the existing Penn Station, which spans West 30th Street between Seventh and Eighth Avenues, and would be taller than nearly any commercial building in New York City. Today, that block includes the Church, St. John the Baptist’s Roman Catholic Church, and parking garages. A monastery previously located in that street had already been demolished. The last building would be completed in 2044.
The state’s plan doesn’t address what would happen to Madison Square Garden, whose operating license at the site expires in 2023.
What’s going on with these towers?
Most of the new towers would rise on sites owned by Vornado Realty Trust, the publicly traded company that is one of the largest developers of office space in Manhattan. It owns approximately 20 million square feet of office space in the city, about half of which is near Penn Station.
Its director, Steven Roth, has called the redevelopment of the Penn Station area the company’s “Promised Land” and has erected its current and future towers there as the New York home base for the world’s largest tech companies. The largest tenant, Meta, the company formerly known as Facebook, leases 1.4 million square feet of Vornado, including space in the Farley Building across the street from Penn Station.
The new towers on Vornado’s five properties around Penn Station could exceed 10 million square feet — more than half the total redevelopment size — and consist of a hotel, offices, retail stores and up to 1,256 residential units. Building them would require the demolition of a large number of establishments, including a Hooters, an Irish restaurant and several tourist shops.
Mr. Roth, along with his family members, gave Mr. Cuomo about $400,000 in campaign donations before stepping down, and Mr. Roth donated the maximum, $69,700, to Ms. Hochul’s campaign last year. He recently gave $22,600 to Lieutenant Governor Antonio Delgado’s campaign, who will be on the ballot along with Ms. Hochul in November. State officials and a Vornado spokesperson said the donations did not affect Vornado’s role in the company.
Who would pay for the renovation?
The MTA is leading the $7 billion renovation project at the station, but New York expects the federal government, Amtrak and New Jersey to contribute most of the money.
An agreement the state has reached with New York City allows payments from developers of the 10 towers to cover some of the station’s renovation costs, all of the cost of the pedestrian and street improvements, and half of the cost of the new metro entrances and underground halls.
The developers’ payments would come from office rent, retail sales, apartment rentals and the hotel. That arrangement is part of a complex financial arrangement known as payments in lieu of taxes, or PILOTs, which would suspend additional property taxes on the buildings for decades after they are built.
What’s in it for the developers?
The tax breaks for developers could be lucrative, a recent analysis concluded, possibly including $1.2 billion in tax breaks for Vornado, the largest landowner in the area. The city would not benefit from the additional property tax on the new buildings until the station improvements are paid off.
Who doesn’t love this plan?
There has been vociferous opposition from many elected officials and community leaders from the start. Opponents include state senator Liz Krueger, who questioned the wisdom of betting on office real estate in New York City at a time when the pandemic has turned the way people work upside down and has led companies to lose space in record time. . Also, the new office buildings would compete with Hudson Yards, the newest office district in Manhattan, which has a similar structured real estate tax agreement.
A report released last month by the city’s Independent Budget Office concluded that the state had provided too little information about the financing plan to determine whether it is viable, or whether taxpayers would have to foot the bill if revenues from the new towers are not realized .
Another Manhattan senator, Brad Hoylman, said taxpayers should be made aware of the project’s financial risks before the board of directors votes to approve the general plan. He was among a group of 15 senators who sent a letter to state officials in March demanding that they “pause the Penn Station plan until these answers are given.”
