The massive plan to modernize Penn Station and redevelop the surrounding midtown Manhattan neighborhood is quickly taking shape with Gov. Kathy Hochul issuing a request for design proposals. But the state has yet to answer one key question: how to pay for the project.

This Friday the state Senate’s corporations, authorities and commissions committee will hold a joint oversight hearing on the project with the finance and cities committees. The hearing marks the first time senators will formally determine how the estimated $7 billion project will be financed.

While the state Senate doesn’t have the ability to advance the project, the Public Authorities Control Board (PACB) — an obscure, four-member governmental body that terminated the Amazon Headquarters project in Long Island City — does. For the project to receive public financing, whether in the form of grants or state-backed bonds, all members of the PACB must unanimously approve it.

Among those largely at the center over whether the project moves ahead is Queens state Sen. Leroy Comrie. Along with serving as chair of the authorities committee, Comrie represents the Senate on the PACB.

Comrie was one of 15 senators who signed a letter in March asking the governor to halt all progress on the project until funding questions are resolved.

"My goal is to provide oversight and gain additional perspective on outstanding challenges, potential challenges, and contingency plans,” Comrie wrote in a statement to Gothamist. “I believe the timelines, finances, and underlying assumptions of the plans all deserve our attention.”

Comrie didn’t say which direction he’s leaning on the project but added the hearing is expected to help ”make better-informed decisions about what our next steps should be as legislators, as advocates, and as New Yorkers."

The multi-phase project, formally known as the Pennsylvania Station Area Civic and Land Use Improvement Project, has been widely touted by Hochul, who envisions Penn Station as a “world-class, commuter-focused transportation facility,” akin to Moynihan Train. This aspect would be done in conjunction with the MTA, NJ Transit and Amtrak, and could be partially funded with federal infrastructure dollars.

Since last year, when Hochul took on the project launched under former Gov. Andrew Cuomo, she’s insisted it would cost $7 billion and take up to five years to complete.

Other aspects of the project, which could include demolishing several buildings in midtown Manhattan — including the 151-year old St. John the Baptist Church to make way for the construction of 10 skyscrapers around Penn Station, and add 8 acres of public space — are considered more complicated and controversial.

Rendering of a redesigned 33rd Street next to Penn Station.

Rendering of a redesigned 33rd Street next to Penn Station.

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Rendering of a redesigned 33rd Street next to Penn Station.
Courtesy of Governor Hochul's Office

Officials from the Empire State Development corporation, which is leading the project, said the developers, primarily Vornado Realty Trust, would not have to pay city real estate taxes on their properties, they instead would pay the state a fee through a program known as Payments In Lieu of Taxes (PILOTs). State officials haven’t disclosed how much the real estate companies might pay, only saying that city taxpayers wouldn’t be on the hook for financing shortfalls.

The state also believes these fees would be enough to cover the cost of the pedestrian improvements in the area, and some improvements to Penn Station.

“We don’t have a financing plan that tells us exactly how much money the development is going to generate, exactly how much money the federal government can provide, and exactly how much the state will provide,” said Rachael Fauss, senior research analyst with the good government group Reinvent Albany. “We don’t have a clear financing plan and that’s exactly why this hearing is so necessary to answer those questions.”

Sam Turvey, chair of the group ReThinkNYC and co-coordinator of Empire Station Coalition, is leading the opposition to the project, which he refers to as “old style urban renewal.”

“There’s this idea that what’s there is bad, what’s there is blighted, what’s there doesn’t work and we need to eliminate it and spruce it up, and make it nice,” Turvey told Gothamist. “I think history has shown us more often than not that is the wrong response.”

So far, much of the focus of the project has been on improving the look of the train station and the surrounding neighborhood, but little has been said about increasing train capacity at the station. Before the pandemic, 600,000 commuters went through Penn Station a day. The station, as it was designed in 1968, was built for 200,000 people a day. The Penn Station project planning website notes that platform space could be increased by 40%, but nothing about how it will increase the number of trains that enter the station.

The last part of the Gateway program includes increasing the number of tracks at Penn Station, once the long-stalled project to build a second Hudson River tunnel and repair the existing one is complete.

Turvey is prepared to file a lawsuit to halt the project arguing the project’s fragmented rollout makes it impossible to publicly comment on the entire project, which may violate federal environmental review laws. Turvey believes the project should be presented holistically, not with the MTA in charge of some aspects and the state in charge of others. The project is expected to be completed in 2028.

“The lawyers we’ve spoken to feel this is one of the strongest cases to prevail on that theory that they’ve seen,” Turvey said.

The state Senate hearing is scheduled for 10 a.m. on June 24th.