July 18, 2022
Agreement Ensures No Loss of Local Property Tax Revenue, Commits to Establishing Joint Governance Entity
Critical Framework Provides Once-in-a-Generation Opportunity to Build Penn Station Worthy of New York
NEW YORK – New York City Mayor Eric Adams and New York Governor Kathy Hochul today announced an agreement on a financial framework between New York City and New York state that will help fund the reconstruction and potential expansion of Penn Station and the revitalization of the surrounding area. The framework ensures that the city maintains a current and consistent level of property tax revenue, while requiring that funding for the station, vibrant open space, and public realm improvements come in part from private development. This agreement also affirms the state’s ongoing commitment to rebuilding Penn Station without raising taxes on New Yorkers or fares for transit riders.
As part of the agreement, the city and state have committed to establishing a shared city-state governance entity to oversee public realm improvements and ensure comprehensive and coordinated planning and implementation.
“This partnership underscores the commitment by leadership at the city and state level to work together and ‘Get Stuff Done’ for New Yorkers,” said Mayor Adams. “A state-of-the-art transportation system is at the heart of our ability to have a prosperous life and a prosperous city, and the key to an equitable recovery. The new vision for Penn Station is to our generation what the Empire State Building was to previous generations: a symbol of our resiliency and a project that will define our city for decades to come. Today’s agreement is a win-win for New Yorkers — helping to deliver improved transit access, affordable housing, and quality jobs while also safeguarding future revenue and protecting against financial risk.”
“The current Penn Station is unsightly, inefficient, and impossible to navigate, and New York commuters deserve better,” said Governor Hochul. “This agreement brings us one step closer to a beautiful, modern station worthy of New York with vibrant open space, lively streetscapes, and better, more seamless connections to local transit. Thanks to partnership with Mayor Adams and other local and community leaders, we are standing by our commitment to revitalize Penn and the surrounding area while getting the best possible deal for New Yorkers."
Under the agreement, funds from privately-financed development will help pay for a reconstructed Penn Station, the potential expansion of Penn Station, and improvements to the surrounding area that the city-state governance entity will oversee. Specifically, this private financing will help provide enhancements to the streets and sidewalks, will create new public spaces in the area around the station, and allow for the construction of more seamless transit connections between Penn and nearby subway stations.
The state will sell development rights to private developers and collect payments-in-lieu-of-taxes (or PILOTs) on newly constructed, modern, and environmentally friendly office and residential buildings. The amount of PILOT payments collected in excess of existing property taxes, in addition to revenues from the sale of additional development rights, will help to fund the project. The state and the city have agreed that PILOTs can be used to pay for up to:
Remaining costs would be funded through a combination of sources from the federal government, New Jersey, New York state, Amtrak, and other public funding sources.
To ensure that New York City maintains its tax revenue stream, the city will continue to collect amounts equal to current taxes on each development site with a three-percent increase each year. All buildings will return to the city’s tax rolls after the agreed contributions to project costs are met, or after a period of 80 years (at the latest). Because of the anticipated increase in property values, the city is expected to collect significantly more in tax revenue once the buildings are put back on the city’s tax rolls. The city and state have also agreed to cap any property tax abatements.
Last month, Mayor Adams, Governor Hochul, New Jersey Governor Phil Murphy, and MTA Chair and CEO Janno Lieber unveiled the joint vision for Penn Station, in addition to a request for proposals for the design of the new Penn Station. Submissions are due later this month, and awards are expected to be announced in the fall.