Governor Hochul issued a press release today saying she and Mayor Adams have agreed on the City/State split of theoretical revenue from Vornado’s planned development around Penn Station.
However, the governor’s release does NOT include basic details, including:
- How much each component of the Penn Station area project would cost (Penn Station refurbishment, Penn Station Expansion, Gateway tunnels, and public realm improvements).
- How much revenue Vornado real estate development in the form of Payment In Lieu of Taxes (PILOTs) will be assumed to generate.
- How much taxpayers will have to pay before Vornado development starts generating PILOT revenue.
- A dollar figure for 12.5% of the cost of the reconstruction and potential expansion of Penn Station.
Additionally, the press release blurs together two enormous, separate components of the Penn Station area project: The “reconstruction” of the existing station and “expansion” of the station.
The governor’s Empire State Development authority has not published details about the City-State deal – continuing a long failure to publish basic information about project financing and likely subsidies for Vornado. Three years into a state deal that could include a $1.2B tax break for Vornado, the governor has not explained the most fundamental question: why fund Penn Station improvements with a secretive scheme that steers future NYC property tax revenue to the State via a Payments in Lieu of Taxes (PILOT) and puts all the risk on taxpayers? Many, many more outstanding questions remain.
The fatal flaws of Governor Hochul’s Penn Station plan were highlighted today in an unusually detailed, three-part, “No deal” editorial by the Daily News ed board.
Financing doesn’t add up
In part one, the editorial board showed how the financing plan just does not yield enough money to fully fund the project. Citing a recently-released study by researchers at the Schwartz Center for Economic Policy Analysis at The New School and commissioned by Reinvent Albany, the board notes that even under the best circumstances, there simply won’t be enough money to fund New York’s share of the $40 billion project.
Disingenuous project goals
The second editorial focuses on the tunnels running under the Hudson River and connecting the Northeast with the rest of the country. In pushing for tunnels to be repaired now and while trains are still running via a repair-in-place scheme, the editorial board implicitly underscores that the Penn Station redevelopment project is, and never was, about increasing transit capacity, nor improving Penn Station to better serve transit riders (a goal Reinvent Albany wholeheartedly supports). Rather, the core of the deal is a $1.2 billion tax break to Vornado Realty Trust, a major donor to the Governor.
Too many details are being kept hidden
The third editorial is a scathing criticism about the project’s disgraceful lack of transparency. Governor Hochul famously (or now infamously) declared that her administration will bring a new era of transparency, yet ESD has repeatedly refused to share basic information with the broader public. The Daily News editorial board rightfully notes the absurd opacity of ESD’s Community Advisory Committee (CAC), which does everything in secret. Throughout the planning process, materials were provided to the CAC that were not also released to the public, and CAC members were under a gag order to not share any information with the public. Reinvent Albany filed a Freedom of Information Law request for the CAC materials that were eventually (and reluctantly) provided.
The press has been attentive to the blatant secrecy and murky details of the Penn Station redevelopment project. But, many think that this project is now teed up to march through the approval process because the board of Empire State Development is stacked with Cuomo and Hochul appointees. However, the Penn Station redevelopment project is not a fait accompli. There are two avenues by which this secret sweetheart deal for a Cuomo and Hochul donor can be stopped.
The ESD Board of Directors is set to vote on the project’s General Project Plan, or GPP, on Thursday (which, unfortunately, still has not yet been released to the public). While the GPP is not a financial document, but is instead a land use document, the ESD Board is bound by fiduciary duty, and board members signed an acknowledgement of such duty with the state Authorities Budget Office. This duty requires that Board members act “in the best interest of the authority, its mission and the public.” In this spirit, we urge the ESD Board to act in good faith, review the information provided, in addition to what has not been provided, and remember their oath. In the words of the Daily News editorial board, “[t]hey must remember that they took a fiduciary oath. They must vote no.”
The second hurdle facing the project is a vote by the state’s Public Authorities Control Board (PACB). Although Cuomo stripped some of its powers in 2019, the PACB still has the authority to reject the Penn Station project. This somewhat obscure board must approve any project financing for any project of ESD (and 10 other state public authorities). PACB typically approves an application when it determines that there are enough funds committed to finance a project. In the case of Penn Station Redevelopment, it’s clear that the state has not demonstrated there are enough funds to finance the project, and thus the Board is obligated to reject the project.
If you missed the release of our commissioned report last week, be sure to check it out, as well as the press coverage:
The New York Times
AMNY
Crain’s NY
NY Post
NY Daily News
The Real Deal
Gothamist
Commercial Observer
The City
The Daily Gazette (editorial)
StreetsBlog
Forbes (opinion)
The Jewish Voice
The Washington Post
NBC New York
Spectrum News