Watchdog Report Uncovers $1.2B Tax Break for Vornado in State’s Opaque Penn Station Financing Scheme

Report Raises Basic Question:
Does it make sense for New York to partially pay for a train station by giving a real estate developer more than a billion dollars to build on some of the most valuable land in the world?

Reinvent Albany today published a detailed analysis of New York State’s secretive plan to pay for upgrades to Penn Station by diverting New York City property taxes from the future development of nearby land by Vornado Realty Trust. These payments in lieu of taxes (PILOTs) – which state sources say will be set at the same reduced rate as nearby Hudson Yard – will result in Vornado getting a tax break worth roughly $1.2 billion.

The report was commissioned by watchdog group Reinvent Albany and was first reported on by the New York Times earlier today. The report was written by Bridget Fisher and Flávia Leite, Schwartz Center for Economic Policy Analysis at The New School, who did the definitive analysis of Hudson Yards’ tax increment financing. The authors had their methodology and findings reviewed by public finance experts at city agencies and budget watchdog groups.

Reinvent Albany commissioned the report because the State has refused to release basic financial assumptions and projections of the Penn Station project, despite a likely vote on the project’s General Project Plan at the next board meeting of Empire State Development, which is expected to be held on July 21, 2022. 

The report applies the same 20% discount on PILOTs currently available at Hudson Yards to the Penn Station project to find that Vornado will get a tax break worth $1.2 billion or $67/sqft. 

The full report with key findings is available on Reinvent Albany’s website, along with the underlying data.