State: Nyc Will Be ‘Made Whole’ without Losing Tax Revenue After the Penn Station Redevelopment
The Empire State Development Corporation, in charge of the Penn Station and Midtown redevelopment project, sent a letter last week to state lawmakers in a bid to quell concerns about the multi-billion dollar project’s financing.
The letter came after several state lawmakers had called for a halt on the Penn Station project, which includes a new 450-foot concourse for the station and 10 new mixed-use skyscrapers, until several questions about funding were answered. In the letter, president and CEO designate Hope Knight said the hefty price tag for the upgrades would be offset in part by revenues from the projects, and that New York City would not lose any money upon its completion.
Knight said the expected cost of the “Penn reconstruction,” which includes the actual train station improvements, such as new entrances and a skylight, would be $7 billion. The expansion of Penn Station, which features adding more tracks, would cost $12 billion, she said. The revenue from the projects would help fund those costs and other upgrades to Midtown, like eight acres of open space, she said.
“The City would be made whole for existing property taxes, adjusted annually, in the Project Area,” Knight wrote in the letter.
Budget watchdog Nicole Gelinas with the Manhattan Institute read the letter and said it didn’t confirm whether the developers would have to pay current and future property taxes in full.
“It is not too paranoid to surmise that the state is contemplating some sort of temporary gap payment to the city, especially as it also says PILOTs [Payments In Lieu of Taxes] to be paid would be comparable to other Midtown West properties. Does that mean Hudson Yards?” Gelinas said.
Hudson Yards received around $5.6 billion in subsidies from the PILOT program, which allows developers to avoid paying city taxes by paying a fee to the state.
Gelinas added, “It is a highly convoluted way of doing something fairly simple, building office buildings and maintaining transit. No need to strip a large swath of commercial Midtown off the tax rolls. Creating yet another special district, such as the [World Trade Center] or Hudson Yards, when such special districts don’t have great track records, either fiscally or aesthetically, is unwise.”
At least one of the lawmakers who received the letter said they still had questions.
State Sen. Brad Hoylman said he’s waiting for a final assessment from the Independent Budget Office before he gives his full approval. He said it’s still not clear how much revenue the city might be losing as part of the plan.
“I think there’s more information that we’re going to want to see before we think the project should proceed,” Hoylman said.
The senator said he would also like to see the plan include more affordable housing. Currently, there are expected to be 1,800 units of housing, with 540 “affordable units,” which is a term that hasn’t been officially defined yet.
“We want to see deeply affordable and supportive housing at a much higher number,” Hoylman said.
Lynn Ellsworth, one of the fiercest critics of the project who leads a group of civic groups called Human-scale NYC, said she is opposed to the project’s size as well as the loss of historic buildings in the construction zone. She said the letter did little to assuage her concerns.
“Sounds like ESD is just digging its heels and parrying the Senators with no new information,” she wrote in an email.
