New York state officials on Thursday approved a massive redevelopment of midtown Manhattan that will transform Pennsylvania Station, North America’s busiest transportation hub, from a derelict transit hub to a downtown. The eight-member board of Empire State Development, the state’s economic development agency and the project management group voted unanimously in favor. The plan calls for building 10 towers around Penn Station and providing about $1.2 billion in tax breaks to developers.
The redevelopment will be among the largest real estate projects in United States history: approximately 18 million square feet of mostly office space, up to 1,800 residential units, retail space and a hotel. The center will see a revamped Penn Station, which sits beneath Madison Square Garden and served 650,000 riders each weekday before the pandemic.
The board’s approval clears the way to apply for federal funding to help pay for the station upgrade, which is expected to cost about $7 billion. New York expects about half of that amount to come from Washington.
How will Penn Station change?
The new Penn Station won’t add new tracks or additional rail lines, but it will correct the most common passenger complaint: the facility is cramped and dreary. It will 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 will have wider sidewalks, bike lanes and landscaped seating areas.
How will commuters benefit?
The overhaul of the 54-year-old station was supposed to be the final phase of a sprawling project to add train tunnels under the Hudson River, known as Gateway. But Gov. Kathy Hochul pushed for the station’s renovation to happen sooner. In June, the Metropolitan Transport Authority asked for proposals from architectural design firms to come up with a way to “relieve overcrowding and improve passenger flow” at the station.
Ms Hochul said the redeveloped station would be “a single level station with soaring ceilings that welcome natural light”. Amtrak owns the station, but the Long Island Rail Road and New Jersey Transit are its largest users. It is connected to the new Moynihan Rail Hall, which is used by Amtrak and the LIRR. The state has not yet chosen the builder of the new station.
How will travelers not benefit?
Renovation alone will not solve the station’s traffic problems. Before the pandemic, Penn Station was congested at rush hour with packed commuter trains arriving from Long Island and New Jersey clogging the tracks under Midtown. The station will need to be expanded with more tracks to accommodate the additional trains that the new Hudson tunnels can deliver.
Separate from the Penn Station overhaul, state officials also approved a plan to build a new train hall south of the site that will increase rail and passenger capacity with new lines and platforms. That project could cost $13 billion and would require federal approval.
Whose idea was that?
Former Governor Andrew M. Cuomo first proposed the project. However, Ms. Hochul embraced the plan, calling Penn Station a “hellhole.” 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 transit repairs.
The project overrides New York’s local controls to allow developers to build larger buildings than otherwise allowed. Mayor Eric Adams supported the plan.
Many other elected officials and community members objected to the scale of the redevelopment, the tax breaks and the complex financing structure. Opponents fear taxpayers will be on the hook if the project fails to generate the revenue supporters expect.
How will Midtown change?
The more noticeable changes to the area may be the larger real estate project around Penn Station.
The new towers will be among the tallest in New York, topping 1,000 feet in height, though final dimensions will be decided later. The project calls for the demolition of many existing buildings, potentially including a 150-year-old Roman Catholic church, and would change the Manhattan skyline between the Hudson Yards neighborhood to the west and the Empire State Building to the east.
Some of the largest buildings will rise in the block south of the existing Penn Station, which spans West 30th Street between Seventh and Eighth Avenues, and will exceed the size of almost any commercial building in New York City. Today this block includes the church, St. John the Baptist Roman Catholic Church and parking lots. The monastery that used to be on this street was already destroyed. The last building will be completed in 2044.
The state’s plan does not address what, if anything, would happen to Madison Square Garden, whose permit to operate the site expires in 2023.
What’s the deal with these towers?
Most of the new towers will 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 about 20 million square feet of office space in the city, about half of which is near Penn Station.
Its CEO, Steven Roth, called the redevelopment of the Penn Station area the company’s “promised land” and positioned the current and future towers there as the New York home for the world’s biggest tech companies. Its largest tenant, Meta, the company formerly known as Facebook, leases 1.4 million square feet from Vornado, including space in the Farley Building across the street from Penn Station.
The new towers at Vornado’s five properties around Penn Station could exceed 10 million square feet — more than half the total size of the entire redevelopment — and consist of a hotel, offices, retail and up to 1,256 residential units. Their construction will require the demolition of a wide range of establishments, including Hooters, an Irish restaurant and various tourist shops.
Mr. Roth, along with family members, gave Mr. Cuomo about $400,000 in campaign donations before he resigned, and Mr. Roth last year gave the maximum, $69,700, to the campaign of Mr. Mrs. Hochul. He recently gave $22,600 to the campaign of Lt. Gov. Antonio Delgado, who will appear on the ballot with Ms. Hochul in November. State officials and a Vornado spokesman said the donations did not affect Vornado’s role in the venture.
Who would pay for the repairs?
The MTA is leading the $7 billion station renovation project, but New York expects the federal government, Amtrak and New Jersey to contribute most of the money.
An agreement reached by the state with New York allows payments from the developers of the 10 towers to cover a portion of the cost of the station renovation, all of the cost of pedestrian and street improvements and half of the cost of the new subway entrances and underground concourses.
Payments from the developers will come from office rents, retail sales, apartment rentals and a hotel. That agreement is part of a complex financing scheme known as payments in lieu of taxes, or PILOTs, that will stop additional property taxes on buildings for decades after they are built.
What does this offer for developers?
Tax breaks for developers could be lucrative, a recent analysis concluded, potentially including $1.2 billion in tax breaks for Vornado, the area’s largest landowner. The city will not benefit from the additional property taxes on the new buildings until the station improvements are paid for.
Who doesn’t like this plan?
From the beginning, there was vocal opposition from many elected officials and community leaders. Opponents include state Sen. Liz Kruger, who has questioned the wisdom of betting on New York office real estate at a time when the pandemic has upended the way people work and prompted companies to vacate space at a record pace. In addition, the new office buildings will compete with Hudson Yards, Manhattan’s newest office district, which has a similarly structured property tax arrangement.
A report issued 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 was viable or whether taxpayers would have to foot the bill if revenue from the new towers failed to materialize. materialize.
Another state senator from Manhattan, Brad Hoylman, said taxpayers should be made aware of the project’s financial risks before the board votes to approve the general plan. He was among a group of 15 senators who sent a letter to state officials in March urging them to “stop the Penn Station plan until these answers are provided.”
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