Agreement Ensures No Loss of Local Property Tax Revenue, Commits to Establishing Governance Entity
Critical Framework Provides Once-in-a-Generation Opportunity to Build Penn Station Worthy of New York
Governor Kathy Hochul and Mayor Eric Adams today announced an agreement on a financial framework between New York State and New York City that will help fund the reconstruction and potential expansion of Penn Station and 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,comes 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.
"The current Penn Station is unsightly, inefficient, and impossible to navigate, and New York commuters deserve better," Governor 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."
"Penn Station is one of the nation's major transportation hubs, hosting millions of commuters every year, and yet it has not kept pace with the 21st century," said Lieutenant Governor Delgado. "To ensure that we can continue to meet the needs of the commuters of today and tomorrow, the city and state are joining together to agree on a financial framework that provides economic viability and works for all New Yorkers."
New York City Mayor Eric Adams said, "This partnership 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. 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 a reconstructed Penn Station, the potential expansion of Penn Station, and improvements to the surrounding area that the city-state governance entity will oversee. This includes enhancements to the streets and sidewalks, the creation of new public spaces in the area around the station, and 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 the City maintains its tax revenue stream, the City will continue to collect amounts equal to current taxes on each development site with a 3 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 November, Governor Hochul unveiled her vision for a new commuter-first world-class Penn Station and revitalized surrounding neighborhood that reflects the community's needs and focuses on public transit and public realm improvements. The plan prioritizes the reconstruction of the existing station while the station expansion and the Gateway Project initiatives — both of which the Governor strongly supports — continue on their federally established timelines.The plan came after several months of collaboration and more than 100 meetings with community stakeholders, government agencies, and elected officials to improve on past plans and establish a new way forward.
In June, Governor Hochul announced that the Penn Station Reconstruction project had entered the design phase and launched a request for proposals for the design of the new Penn Station. Submissions are due later this month; awards are expected to be announced in the fall.
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