The good news is that the future of Penn Station does not depend on the success or even survival of struggling real estate developer Vornado, which is being crushed by debt and pandemic commuting patterns.
New York State planning documents say the State will pay $1.75 billion of the $7 billion needed to fix Penn Station (25%), with the feds (50%) and New Jersey (25%) paying the rest. As part of its funding, New York budgeted $875 million from Payments in Lieu of Taxes (PILOTs) from new Vornado office towers in the Penn Station area. (These PILOTs are New York City property taxes diverted to the state.)
Given Vornado’s bombshell announcement that it was delaying all new development around Penn Station for an indefinite period, some observers have wrongly concluded that Vornado’s woes will delay fixing Penn Station. Nope, now the Governor and Legislature can relatively easily find $875 million more in NYS capital funds somewhere else and move quickly to fix Penn. The Governor and Legislature have already appropriated $1.3 billion in the state budget for below ground transportation improvements at the Penn Station project. For some perspective, $875 million is only 1.5% of the current MTA capital plan or 8.25% of the new Green CHIPS tax break.
There is no reason the Vornado Iceberg should sink Penn Station commuters. The Governor, Senate, and Assembly should find the funds to fix Penn Station and end the magical thinking and free money fever dreams that have plagued the Penn Station redevelopment project from day one.