7.21.22 - Development authority green-lights controversial Penn Station plan
' Gov. Kathy Hochul’s controversial plan to upgrade Penn Station and redevelop the surrounding area is one step closer to reality after securing approval from the Empire State Development Corp.
In Thursday, the development authority's seven-member board unanimously approved the project, which would allow developers to build 10 new skyscrapers in the area to help fund more than $7 billion in renovations to Penn Station.
Kevin Law, the chair of the Empire State Development Corp.’s board, said it’s a “terrific project for the entire metropolitan region and the state of New York.” He said the agency received 110 comments about the plan, and the majority were in support.
Details: The proposal would redevelop 18.3 million square feet in midtown Manhattan, narrowly surpassing nearby Hudson Yards as the largest development project in city history.
Almost all of the new buildings will be dedicated for “Class A” office space — amenity-rich workplaces that are often used by tech giants like Google and Facebook. The plan also sets aside 1,800 units of housing, including 540 rent-regulated apartments.
Instead of paying city taxes, developers covered under the plan are on the hook to fund upgrades to the rail hub and street infrastructure improvements using so-called payments in lieu of taxes, which are expected to be lower than they’d otherwise pay. The Hochul administration hasn’t detailed how much it expects to raise through the PILOTs.
State officials want to make Penn Station a single-level train hall that is easier to navigate and draws in more sunlight than the current dilapidated and dreary rail hub. A key component is the construction of a new glass atrium over a former taxiway, which will require obtaining property interests from Madison Square Garden, POLITICO first reported.
The state and city have agreed the PILOTs will cover the entirety of the improvements to public space, such as upgrades to streets and sidewalks. Half of the payments will also go to transit infrastructure improvements, like new subway entrances and an underground concourse connecting Penn to the nearby Herald Square subway station. Only 12.5 percent of the payments will go toward the actual reconstruction and potential expansion of Penn Station, making those pieces of the project most reliant on federal funding.
State officials estimate it will cost $7 billion to reconstruct Penn Station and $1 billion for the initial public realm and transit improvements. It plans to share the costs with Amtrak, the federal government and New Jersey.
The Hochul administration will need additional federal approval to expand Penn Station, as it requires razing 50 buildings to the south to make room for the new terminal. The expansion is designed to accommodate the Gateway Program, a $14 billion effort to repair and expand rail tunnels under the Hudson River. Amtrak is currently taking lead on designing the new tracks and platforms.
The Hochul administration plans to apply for funding from the federal infrastructure package to help support the Penn Station reconstruction and expansion, along with new Hudson River tunnels. They’re presuming the Biden administration will cover half of the proposed expenses, with New York and New Jersey splitting the rest.
Holly Leicht, the executive vice president of real estate development and planning at the Empire State Development Corp., said the level of federal funds available “haven’t been seen in decades, if not ever.”
The state has agreed to make the city whole for lost tax revenue by paying back what it currently collects, plus an additional 3 percent each year, using revenues from the PILOTs.'