State Shorts $3 Billion for Penn Station Rehab, Study of Claims – Business Observer

The financing plan to redevelop Pennsylvania Station in a more graceful space could cost at least $3 billion, according to a watchdog group that conducted a financial analysis of the project.

Reinventing Albany claims that the public-private partnership to raise the $7.5 billion needed to restore some of the lost grandeur of the original Penn Station may not be enough to pay the bill given the tax incentives given to developers such as Vornado Real Estate Trust. The findings of the monitoring group were released on Wednesday.

Penn Station’s redevelopment plan, launched by the disgraced former governor. Andrew Cuomo and amended by Gov. Kathy Hochul, calls for 10 new buildings in the area surrounding the transit center and would allow developers to build at a higher density than normally permitted. In exchange, property tax revenues and royalties would be directed to the state to fund the renovation of Penn Station.

Vornado’s payments in lieu of taxes (PILOTS) would be given to the state for the right to build a series of office towers, but it will still require the state to come up with $3.4 billion to $5.9 billion dollars from other sources, the report of Reinventing Albany complaints.

Vornado could receive tax relief of about $1.2 billion in property taxes paid to the city, while only $6.6 billion will be paid to the state through property taxes, according to the report. . Reinvent Albany commissioned the report, written by Bridget Fisher and Flavia Leite from Schwartz Center for economic policy analysis at The new schoolbecause he argued that the state “has refused to release basic financial assumptions and projections for the Penn Station project, despite a likely vote on the general project plan for the project at the next meeting of the board of directors ” from Empire State Developmentthe agency directing much of the plan.

ESD, however, was skeptical of Reinvent Albany’s findings, as the process of finding cash is ongoing.

“Given that the ESD was denied a copy of the report prior to its release, it is difficult to comment on its accuracy. That said, the state is improving the city’s tax base by unlocking the real value of the long-neglected area, which will improve the lives of millions of New York commuters,” an ESD spokesperson said in a statement. “It’s disappointing that an organization that considers itself a citizen watchdog would prefer Penn Station to remain a junkyard, depriving New Yorkers of the important affordable housing, open space and desperately needed transportation improvements this plan provides. .”

Vornado released a statement talking about his own story delivering similar projects.

“Vornado is a key partner in this neighborhood and committed to a GPP that transforms the area and reflects the vision outlined by Governor Hochul and Mayor Adams,” a Vornado spokesperson said in a statement. “Vornado has a strong track record of working on successful public-private partnerships that opened Moynihan Train Hall, completed a new station entrance at 33rd Street and will provide a new LIRR concourse.”

In June, the governor Kathy Hochul kicked off the design phase of the project by issuing a request for proposals (RFP) seeking contractors to reinvigorate the lackluster underground facility into a station worthy of the title of the busiest transit hub in North America .

Reinvent Albany’s report could fuel critics of the project. A mix of conservationists condemned the replacement of historic buildings such as the Hotel Pennsylvania with skyscrapers, and community activists such Layla Law – Gisikowho is running for New York State Assembly, says the project is a gift to the developers.

“The report commissioned by Reinvent Albany confirms our fears,” Law-Gisiko told Commercial Observer. “The Penn Station towers are a liability that could end up costing taxpayers billions of dollars while delivering a generous corporate gift to Vornado. We urge the governor to withdraw this fatally flawed plan.

It wouldn’t be the first funding for the plan, known to Cuomo as the Empire Station Complex, is called into question. In May, the city Independent Budget Office (IBO) released a report saying the state would need more than $8 billion and $10 billion, and office space may not even be fully leased given a slow return in demand as the COVID-19 pandemic becomes rampant.

“It’s not about whether this project is good or bad,” George Sweetingacting director of IBO, told CO at the time. “We would like to have more information on the details of the plan. How much is it really going to cost? How much are they going to fund it? How are these payments structured? »

In March, Metropolitan Transport Authority chair Janno Liebera veteran of Silverstein Properties who worked on his world trade center reconstruction of the campus, explained the financing of the Bipartisan Infrastructure Agreement was not a sure thing and that the state had to gather what it could – where it could.

Hochul wasted no time in deviating from the original plan proposed by Cuomo – who left office amid allegations of sexual misconduct – in early 2020, narrowing the scope of development allowed by Vornado.

Marc Hallum can be contacted at [email protected].

Denise W. Whigham