ESD Must Come Clean on Potentially Huge Vornado Subsidies and Penn Station Financing, Risks to Taxpayers

Good evening, my name is Rachael Fauss and I am the Senior Research Analyst for Reinvent Albany. Reinvent Albany advocates for transparent, accountable New York State government.

As we testified to you at the December 2021 hearing on the Penn Station GPP, we continue to ask that ESD be fully transparent about the project’s financing. This should include telling the public exactly how much ESD expects to raise from PILOTs to finance New York’s contribution to the Penn Station project, which documents show to be $7.5-$10 billion.

It would be irresponsible for the state and city to sign off on this project without knowing exactly how much PILOTs could raise, because NYS taxpayers – including those living in NYC – will be on the hook for the balance of the state’s share. Additionally, NYS would also pay for any shortfalls if the development does not occur as planned. This is exactly what happened in nearby Hudson Yards for the 7 train extension. Ultimately, NYC had to make bond payments when the developers did not pay the amount PILOTs expected, while developers are expected to receive $1B in tax breaks over 25 years.

ESD’s own documents say that the “best case scenario” is that “a portion, but not all, of the billions of dollars necessary for New York’s share could be generated by GPP real estate revenues.” If this is the best case, what is the worst?

New Yorkers deserve fiscal honesty, not wishful thinking.

The public and state leaders also should know exactly what level of tax abatements and subsidies the developer, Vornado, would receive, and whether Madison Square Garden is expected to keep their $44 million annual tax abatement, which has cost New York City over $600 million in lost tax revenue since 1982.

Thank you for your consideration.