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What Penn Station’s $6 Billion Makeover Means for NYC



For decades, New York’s Pennsylvania Station was an eyesore. The busiest transit hub in the Western Hemisphere, it’s a deflated gateway to the Big Apple for tourists and a daily ordeal for commuters from Long Island and New Jersey. Now it’s about to get an expensive makeover. That is, if government officials, neighborhood activists, investors and property developers can agree on how to complete a $6 billion renovation that, although a step back from a plan originally proposed by former Governor Andrew Cuomo, would be one of the biggest transportation projects in recent New York history.

1. Who uses Penn Station?

The station is owned by Amtrak, serving as the national rail carrier’s primary hub. New Jersey Transit, Long Island Rail Road, and the New York City Subway System also use it. The Metropolitan Transportation Authority, which operates the LIRR and the subways, plans to create an extension of its Metro-North Railroad’s New Haven line to reach Penn Station. Before the pandemic, the station served 600,000 daily passengers.

2. What is the problem?

Built in 1910, it was considered a masterpiece of the Beaux-Arts architectural style, with soaring steel and glass offering travelers plenty of light and space.

It was demolished in 1963 and rebuilt in 1968 to make way for the latest version of Madison Square Garden, an act that sparked international outrage and helped create the modern architectural preservation movement. Le Jardin, a concert and sports arena, was built above what was left of the station – a maze of crowded hallways under low ceilings that more than a few people have called a “hellhole”. Tourists flock to Grand Central Terminal across town for photo ops; they plod or rush into Penn Station if they have to. Commuters? Do not ask.

Ideas to replace, remove, or renovate Penn Station have been circulating for decades. The biggest question has been whether to move Madison Square Garden to make room for something resembling the original station. That’s what Cuomo wanted to do. An earlier budget included $1.3 billion to redevelop Penn Station and the surrounding neighborhood, adding 10 buildings with approximately 20 million square feet of space for hotels, offices, retail, and possibly residential units. The plan drew criticism from city and state lawmakers, including former mayor Bill de Blasio, who said the money was a giveaway to big developers, particularly Vornado Realty Trust, which owns a much of the land targeted for development and was to be a partner of the state. project. Cuomo resigned in 2021 as the legislature prepared to consider impeaching him over sexual harassment allegations. After Kathy Hochul, who had served as lieutenant governor, replaced Cuomo, she scaled back her plan.

4. What does Hochul want to do?

Hochul’s plan focuses on upgrading the existing rail hub instead of building a new terminal. He asks :

• A modern single-level train hall with wider corridors, a main hall on each side and a 460-foot (140-meter) high atrium with a skylight. The new public concourse would be double the height of the current station and feature more stairs, escalators and lifts across its 11 platforms. The east side would have a huge open space equal to the combined area of ​​the central halls of Grand Central and Moynihan Train Hall, the burgeoning new Amtrak hub just across Eighth Avenue.

• A new underground concourse linking 34th Street Herald Square to Penn Station.

• The addition of new commercial and residential space in the surrounding area, with 10 new buildings on eight development sites. The Governor’s plan for the surrounding area lowers the height of buildings from the previous proposal, reducing density by 1.4 million square feet. It includes up to 1,800 residential units.

• Eight acres (3.2 hectares) of public space would be added and traffic would be restricted on 33rd Street, Sixth to Ninth Avenues.

5. How would this be constructed?

Hochul said the project would take four to five years and cost between $6 billion and $7 billion. But documents released by the state’s economic development agency put the cost of Hochul’s overall plan at around $22 billion. Under a funding agreement announced in July by Hochul and current Mayor Eric Adams, the state would sell development rights to private real estate companies and also collect payments in lieu of taxes, known as of PILOTS, on all that is new built in the neighborhood. The city would collect a share of PILOT payments equal to current taxes at each development site with a 3% increase each year. The remainder of the station’s renovation costs would be funded by the federal government, New Jersey, New York State, Amtrak and other public sources.

6. Where are things going?

The Public Authorities Control Council, a state entity that has the final power to approve state public financing agreements, voted in July to approve the financing plan. The MTA has finished accepting bids from design firms and architects for the renovation and will select the winners this fall.

7. What is the reaction?

Unlike de Blasio, Adams supported the project, as did New Jersey Governor Phil Murphy. A transit activist group, ReThinkNYC, says Hochul’s plan goes far beyond a station renovation and is a “neighborhood replacement program.” New York State Comptroller Thomas DiNapoli, in a July 27 letter to the PACB, recommended the board take more time to determine that enough funding disclosures and commitments are in place.

8. What do property developers earn?

Potentially a lot, depending on the commercial real estate market. Many technology and financial companies flocked to Manhattan’s far west end to the new skyscrapers of Hudson Yards and Manhattan West, two developments built on former rail yards. This request could impact the Penn Station area. At the same time, the city faces a glut of empty offices caused by the pandemic, which could weaken demand. The current plan allows developers to build large towers on sites they already own. According to a report by Reinvent Albany, a government watchdog organization, Vornado could see up to $1.2 billion in tax relief.

9. What do commuters stand to gain?

The prospect of a new, nicer Penn Station comes as work progresses on the Gateway project, which aims to ease the toughest rail bottleneck on the US East Coast. This project will double rail capacity between New Jersey and midtown Manhattan by building a new tunnel under the Hudson River and rehabilitating an existing tube.

10. What about the name?

Hochul also touted the idea of ​​renaming Penn Station, saying a new station should be named after a New Yorker or “something to do with the iconic character of New York State.” The current name comes from the original owner, the Pennsylvania Railroad, which built several similar stations in other cities in the early 20th century. Moynihan Train Hall was named after New York Senator Daniel Patrick Moynihan, who spent years lobbying for the conversion of the old post office building. Amtrak says that if the station were to be renamed, that decision would have to be made jointly between the partners.

More stories like this are available at bloomberg.com