NYC, State Agree On Funding For Huge Penn Station Rebuild

MIDTOWN MANHATTAN, NY — The city and state have reached an agreement on how to fund the multibillion-dollar reconstruction of Penn Station and redevelopment of the surrounding Midtown blocks, Mayor Eric Adams and Gov. Kathy Hochul announced Monday.

The deal comes as the $8 billion project awaits final approval from an obscure, four-person state panel. Under the agreement, private developers who will be given land around the Penn Station area will help fund the rail hub's reconstruction in lieu of paying taxes.

First initiated by ex-Gov. Andrew Cuomo, the latest version of the controversial Penn Station plan would allow the developer Vornado to build 10 skyscrapers on nearby blocks in order to fund an expansion of the beleaguered rail hub.

Penn itself would be more than doubled in size to nearly 250,000 square feet, with a light-filled, single-level train hall, added entrances and connections to nearby subway stations. But the plan has come under harsh criticism from some neighbors and elected officials, who say the real estate component is unnecessary, has not received enough scrutiny and amounts to a giveaway for wealthy developers.

While no funding details were publicly announced on Friday, the Associated Press reported that the project's first phase, which includes rebuilding the station and improving public spaces, will cost $8 billion. The state is contributing $1.3 billion to that initial phase.

Also as part of the deal, the city and state will establish a shared governing group that will oversee planning and public realm improvements.

"The current Penn Station is unsightly, inefficient, and impossible to navigate, and New York commuters deserve better," Hochul said in a statement Friday. "This agreement brings us one step closer to a beautiful, modern station worthy of New York with vibrant open space, lively streetscapes, and better, more seamless connections to local transit."

Adams said the deal "underscores the commitment by leadership at the city and state level to work together and 'Get Stuff Done' for New Yorkers.

"A state-of-the-art transportation system is at the heart of our ability to have a prosperous life and a prosperous city, and the key to an equitable recovery," he said.

The "payments-in-lieu-of-taxes" from Vornado will over 12.5 percent of the cost of rebuilding Penn Station, 50 percent of improving the surrounding transit infrastructure, and 100 percent of the improvements to streets, sidewalks and public spaces.

To maintain the city's tax revenue, the deal ensures that the city will receive funding equivalent to the tax payments for each development site that will increase by 3 percent each year.

Remaining costs will be funded through a combination of the federal government, New Jersey, New York, Amtrak, and other public funding sources, according to officials.

The state is now awaiting proposals from architects seeking to design the new Penn Station, with awards to be announced this fall.

Related coverage:

• New Penn Station Plan Revealed: Hochul Scales Back Cuomo's Vision
• Midtown Leaders Slam Cuomo's Empire Station Complex
• Twin Proposals To Remake Penn Station Unveiled By State
• Embattled Cuomo Pushes Skyline-Altering Penn Station Real Estate Plan As Critics Mobilize