Debt-burdened Vornado is indefinitely delaying construction on a campus of massive office towers around Penn Station (Crain’s). Company CEO Steven Roth said on a recent earnings call, “Headwinds in the current environment are not at all conducive to…development.” If the project moves forward, the company could receive up to $1.2 billion in tax breaks and potentially much more in other public subsidies.
Midtown Manhattan, where Penn Station resides, just had its slowest month for office leasing in a year (Crain’s). As an analyst told Crain’s, “It’s just not the right time … They won’t spend billions to build an empty building.” For now, the Governor’s office remains committed to the project, with an Empire State Development spokesperson attributing Vornado’s decision to “temporary market adjustments” (Crain’s).
Some have concluded that all hope is lost for Penn Station commuters, but as we said in our statement, New York should fix Penn Station now, and the future of critical transit infrastructure should not depend on the fate of a real estate developer afflicted with COVID-related financial woes:
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.
In other Penn news, we reviewed the lawsuit filed by community groups against the state Empire State Development Authority’s Penn Station area development activity, and it’s pretty good! Check out our summary of the lawsuit here.
Other subsidy stories from this week:
- As if up to $5.5 billion in tax breaks wasn’t enough, Micron may also get a $284 million property tax break from Onondaga County to build its chip fab there (Syracuse Post-Standard).
- Ross Barkan points out the reluctance of some pols to criticize the Micron deal, despite the fact that Micron will receive more tax breaks than Amazon would have for HQ2 (Crain’s).
- To supply Micron’s new plant, Edwards Vacuum plans to build at the oft-criticized upstate STAMP site, home of the $4-million-per-job tax break for Plug Power (Buffalo News, Investigative Post).
- A report partly blames the demise of 421-a for a slowdown in real estate deals (Crain’s). The tax break costs NYC $1.7 billion a year.
- Madison Square Garden, which gets a $43 million tax break from the state every year, is owned by a family that just spent $560,000 on pro-Hochul ads (The City).
- The savvy Streetsblog also writes about the headwinds facing Vornado, and the Daily News editorial board says the plan is running into “big trouble.”
- The contractor to build the new Buffalo Bills stadium – which will receive $1.1 billion in taxpayer subsidies – has been chosen (Buffalo News).
Welcome to Liz’s Library, where our Senior Research Analyst Elizabeth Marcello highlights timely research on corporate welfare.
Micron is slated to get a $284 million property tax abatement from Onondaga County under a proposed 49-year deal. Why? The Lincoln Institute of Land Policy published a report in 2012 that found, “Despite the widespread use of property tax incentives, documented evidence of their effectiveness is limited. In fact, most studies suggest these incentives have little impact on economic growth.” The report considers property tax abatement programs; firm-specific property tax incentives; tax increment financing; enterprise zones; and tax-exempt industrial development bond (IDB) issuance. The report recommends local governments stop using property tax incentives and instead “use more cost-effective economic development tools such as customized job training, certain types of business support services, and labor market intermediaries.”
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