On Monday, New York Gov. Kathy Hochul and New York City Mayor Eric Adams announced they had reached an agreement over the financial framework between the city and the state to help fund the reconstruction and potential expansion of Penn Station.
Officials said the framework will ensure that the city maintains the current level of property tax revenue while requiring that a portion of the funding for the station and surrounding areas comes from private development. The agreement also solidifies the state’s commitment to rebuilding the station without raising taxes or fares.
“The current Penn Station is unsightly, inefficient, and impossible to navigate, and New York commuters deserve better,” Hochul said. “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. Thanks to our partnership with Mayor Adams and other local and community leaders, we are standing by our commitment to revitalize Penn and the surrounding area while getting the best possible deal for New Yorkers.”
As part of the agreement, the city and state have committed to establishing a shared governance entity to oversee public realm improvements and ensure coordinated planning and implementation.
“This partnership underscores the commitment by leadership at the city and state level to work together and ‘Get Stuff Done’ for New Yorkers,” Adams said. “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. The new vision for Penn Station is to our generation what the Empire State Building was to previous generations: a symbol of our resiliency and a project that will define our city for decades to come. Today’s agreement is a win-win for New Yorkers – helping to deliver improved transit access, affordable housing, and quality jobs while also safeguarding future revenue and protecting against financial risk.”
Under the agreement, funds from privately financed development will help pay for the reconstruction, potential expansion and improvements to the surrounding area. The state will sell development rights to private developers and then collect payments in lieu of taxes (PILOTS) on newly constructed office and residential buildings. The amount collected in excess of existing property taxes would help fund the project.
The city and state have agreed that PILOTs can be used to pay for up to 100 percent of the improvements to streets, sidewalks, public spaces and other elements of the public realm; 50 percent of the improvements to the transit infrastructure and 12.5 percent of the reconstruction and potential expansion of Penn Station. The remaining costs will be paid for with funds from the federal government, New York, New Jersey, Amtrak and other public funding sources.