7.27.22 - Hochul’s controversial Penn Station funding plan secures final state approval
' Gov. Kathy Hochul can move full steam ahead with her plan to redevelop Penn Station and the surrounding area, after securing key approval from the state entity responsible for approving public financing projects.
The Public Authorities Control Board on Wednesday voted unanimously to approve the state’s plan to raise revenue for the project, despite mounting opposition from budget watchdogs and local officials over the controversial financing structure.
Just hours before the board meeting, state comptroller Tom DiNapoli urged the panel to delay a vote to ensure “sufficient information and funding commitments are in place.” But the warning didn’t sway the outcome, with all three voting members quickly approving the project with minimal public comment.
Wednesday’s action means the Hochul administration has secured the necessary local approvals to move forward on what will become the largest development project in city history, spanning 18.3 million square-feet. Yet it’s only the start of the decades-long endeavor, which will require additional federal approvals and funding.
Details: The Public Authorities Control Board is composed of two lawmakers appointed by Senate and Assembly leadership and one tapped by the governor.
Assemblymember Amy Paulin told POLITICO she recused herself from the vote because her husband works for Savills, a real estate company whose clients include Vornado, a developer that stands to benefit most from the redevelopment plan.
Philip Fields, a member of the Assembly’s central staff, evaluated the project and voted in her place. Fields didn’t comment on his reason for approving the project, nor did the official representing Hochul.
Sen. Leroy Comrie, the final voting member, said the project will require additional scrutiny going forward in casting his "yes" vote.
“Today’s vote is only on the PILOT agreement between the city and the state. It is the first step towards building a framework for a multi-decade redevelopment plan,” he said. “Today’s vote is not the final say on this massive undertaking. Future review and votes will be required, both by the PACB and the MTA Capital Program Review Board.”
Key context: Hochul largely inherited the plan for Penn Station from her predecessor, Andrew Cuomo, who wanted to make use of private development to fund a new wing for the rail hub.
The station’s expansion is considered the second phase of the Gateway Program, a longtime initiative by top Democrats in New York and New Jersey to repair and expand the rail tunnels under the Hudson River. The new terminal and tunnel will allow Amtrak and New Jersey Transit to run more service out of New York City.
Hochul altered the plan to prioritize upgrades to existing Penn Station over the expansion, stating she wanted a plan that “puts New Yorkers first.” Her plan relies heavily on securing federal funding for the proposed expansion, while putting private developer money mostly toward cosmetic upgrades.
The state estimates it will cost $7 billion to reconstruct Penn Station, which entails turning it into a single-level train hall and adding a new glass atrium to let in more sunlight. The new terminal is expected to cost $13 billion. Other improvements to transit infrastructure and public space are expected to cost $2 billion.
How it works: Under the state’s plan, developers who own property in the vicinity of Penn Station will be allowed to build up to 10 skyscrapers without going through the more exhaustive city land use process. Instead of paying city taxes, the developers will help make payments toward the station’s reconstruction and expansion.
The so-called “payments in lieu of taxes,” or PILOTs, are expected to be less than what the developers would otherwise pay in taxes. Reinvent Albany, a good government group that opposes the proposal, commissioned a study that estimated that developers would receive an aggregate tax break of $1.2 billion.
The state is estimating it will get $10 billion in support from the federal infrastructure package. It’s also projecting $5 billion in assistance from New Jersey, using the same funding split the states agreed to in order to pay for the Gateway tunnels. New York and New Jersey have agreed to cover half of the $14 billion project and will apply for federal funding to cover the rest.
That would leave New York on the hook for $7 billion for the entire overhaul.
But state officials have yet to ink a formal agreement with New Jersey on how to split the cost of reconstructing and expanding Penn Station. And it’s still unclear how much New York will get from federal transit grants created by the infrastructure deal.'