New York City Mayor Eric Adams and New York Governor Kathy Hochul announced an agreement on a financial framework between New York City and New York state that will help fund the reconstruction and potential expansion of Penn Station and the revitalization of the surrounding area. The framework ensures that the city maintains a current and consistent level of property tax revenue, while requiring that funding for the station, vibrant open space, and public realm improvements come in part from private development. This agreement also affirms the state’s ongoing commitment to rebuilding Penn Station without raising taxes on New Yorkers or fares for transit riders.
As part of the agreement, the city and state have committed to establishing a shared city-state governance entity to oversee public realm improvements and ensure comprehensive and coordinated planning and implementation.
Under the agreement, funds from privately-financed development will help pay for a reconstructed Penn Station, the potential expansion of Penn Station, and improvements to the surrounding area that the city-state governance entity will oversee. Specifically, this private financing will help provide enhancements to the streets and sidewalks, will create new public spaces in the area around the station, and allow for the construction of more seamless transit connections between Penn and nearby subway stations.
The state will sell development rights to private developers and collect payments-in-lieu-of-taxes (or PILOTs) on newly constructed, modern, and environmentally friendly office and residential buildings. The amount of PILOT payments collected in excess of existing property taxes, in addition to revenues from the sale of additional development rights, will help to fund the project. The state and the city have agreed that PILOTs can be used to pay for up to:
- 100 percent of improvements to streets, sidewalks, public spaces and other elements of the public realm;
- 50 percent of improvements to transit infrastructure, including underground concourses and subway entrances in the neighborhood; and
- 12.5 percent of the cost of the reconstruction and potential expansion of Penn Station.
Remaining costs would be funded through a combination of sources from the federal government, New Jersey, New York state, Amtrak, and other public funding sources.
To ensure that New York City maintains its tax revenue stream, the city will continue to collect amounts equal to current taxes on each development site with a three-percent increase each year. All buildings will return to the city’s tax rolls after the agreed contributions to project costs are met, or after a period of 80 years (at the latest). Because of the anticipated increase in property values, the city is expected to collect significantly more in tax revenue once the buildings are put back on the city’s tax rolls. The city and state have also agreed to cap any property tax abatements.
Last month, Mayor Adams, Governor Hochul, New Jersey Governor Phil Murphy, and MTA Chair and CEO Janno Lieber unveiled the joint vision for Penn Station, in addition to a request for proposals for the design of the new Penn Station. Submissions are due later this month, and awards are expected to be announced in the fall.
-via Press Release