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Land Use, Housing & Zoning
Manhattan Community Board Five resolution regarding Funding for Penn Station.
At the regularly scheduled monthly Community Board Five meeting on Thursday, March 09, 2023, the following resolution passed with a vote of 32 in favor; 1 opposed; 1 abstaining; 0 present not entitled to vote:
WHEREAS, Penn Station is one of the busiest transportation hubs in the United States, serving more than 600,000 commuters every weekday; and
WHEREAS, Penn Station is in dire need of refurbishment due to the poor state of its infrastructure, including crumbling ceilings, inadequate vertical circulation elements, narrow platforms, overcrowding, inadequate lighting, and poor ventilation; and
WHEREAS, The poor condition of Penn Station is a major safety issue; and
WHEREAS, It not only a major inconvenience to commuters but also negatively impacts the economic growth of the region; and
WHEREAS, It is the responsibility of the government to provide safe and reliable infrastructure for its citizens, including transportation hubs like Penn Station; and
WHEREAS, The New York State and Federal governments have a history of investing in the improvement of transportation infrastructure, as demonstrated by their recent investment in the renovation of LaGuardia and JFK airports; and
WHEREAS, The refurbishment of Penn Station would not only improve the quality of life for commuters but also contribute to the economic growth of the region by improving transportation connectivity; and
WHEREAS, Gov. Cuomo introduced a General Project Plan (GPP), in June 2020, to redevelop a nine-blocks area around Penn Station to develop 18 million sq/ft of office space with the goal to fund Penn Station improvements from the office space development; and
WHEREAS, Soon after she took office, Gov Hochul embraced her predecessor’s plan; and
WHEREAS, While the refurbishment of Penn Station is long overdue, CB5 believes that the GPP's plan to refurbish the station is a flawed approach that will result in significant negative impacts on the community; and
WHEREAS, CB5 notes that the state has already appropriated $1.2B for Penn reconstruction; and
WHEREAS, CB5 has passed 5 resolutions expressing opposition to the GPP and raising grave concerns regarding the GPP funding scheme; and
WHEREAS, There are several reasons why the GPP funding plan to refurbish Penn Station is a flawed approach, including:
1) The GPP will only generate revenue if the single majority property owner Vornado builds the slated towers, which could take decades or could never happen, leaving the state to pay off expensive bonds without any revenue in sight;
2) The GPP tax revenue known as PILOTs (Payments In Lieu Of Taxes) may not even be significant as it would have to be shared with the city to make sure the city is left whole;
3) CB5 believes that the proposed towers are too large and dense and therefore would overburden our district. But the state argues that smaller towers would not provide the necessary revenues putting our district in a damn-if-you-do and damned-if-you-don’t paradigm;
4) The revenue from the towers would be generated at the sole discretion of a single developer, Vornado, as the GPP does not have any mechanism to compel Vornado to make payments of any type unless and until the towers are fully built;
5) Issuing bonds against hypothetical revenue is very costly to the state as such bonds credit rating would have to be enhanced and bridge loans would have to be secured to pay bond holders until PILOT revenues would start to trickle in, which may never happen;
6) Penn Station reconstruction is currently estimated to cost $7 billion, and it is likely that the federal government will provide up to 80% of the needed funding, leaving the state with a share that can and should be covered by appropriations in the state budget, such as general bonds over a period of a decade or more;
7) The GPP relies on one single developer which is particularly concerning because:
- i) private developer is entirely dependent on market forces that may impede his ability to generate any revenue for the state in the near future or even at a later time; and
- ii) private developer has already negotiated a tax abatement, which will reduce the revenue the state and/or city is eligible for, and is therefore not in the fiduciary interest of the state and its transportation partners; and
iii) private developer may prioritize profits over public benefits, which could lead to compromises in the design or execution of the project that negatively affect its overall quality or efficiency; and
- iv) Private developers may have different priorities than the public sector, which could lead to conflicts or delays in decision-making and private developers may prioritize short-term gains or specific objectives that do not align with the long-term needs of the project or the public interest; and
8) Limited focus on refurbishment: While the GPP is connected to Penn Reconstruction, it fully focuses on construction of 18 million sq/ft of office space and has no compelling mechanism to cause any of Penn Station needed upgrades; and
9) The following offices and administrations have expressed concerns over the GPP funding scheme, the Independent Budget Office, the State Comptroller, The City Planning Commission, State Senators Krueger, Hoylman-Sigal, Comrie, Assembly Member Simone, Council Member Bottcher, Former Lt Gov Ravitch, and well as the editorial boards of the NY Daily News and the NY Post; and
10) At a senate hearing on March 3rd, Sen. Comrie pronounced the GPP dead and warned that it would be a liability to the state and tax payers; and
WHEREAS, CB5 recommends that the GPP be entirely abandoned and not relied upon as its funding scheme is a liability and not an asset; and
WHEREAS CB5 recommends the following sources of funding for the Penn Station redevelopment project:
- Federal funding: The Federal government should provide funding to support the refurbishment of Penn Station. This kind of improvement project is eligible for up to 80% federal funding. This funding could be provided through grants from the Federal Railway Adminsitration (FRA) and or the Federal Transit Administration (FTA), Capital Investment Grants (CIG), as well as loans (Railroad Rehabilitation & Improvement Financing [RRIFF], Transportation Infrastructure Finance and Innovation Act [TIFIA]). In particular, the Infrastructure Investment and Jobs Act (IIJA) has a generous allocation of funding for State of Good Repair Projects along the Northeast Corridor. This funding is intended to improve rail infrastructure and services along the Northeast Corridor, which includes Penn Station as a critical transportation hub; and
- Municipal bonds and general bonds: New York State government should issue municipal bonds or general bonds to fund the Penn Station redevelopment project. These bonds could provide a significant source of funding for the project and could be repaid over time through increased tax revenue generated by the improvements to Penn Station; and
- In November 2022, New York voters overwhelmingly approved the Clean Water, Clean Air and Green Jobs Environmental Bond Act, a ballot proposition to make $4.2 billion available for environmental and community projects. New York State should allocate funding from the Clean Water, Clean Air and Green Jobs Environmental Bond Act to support the Penn Station redevelopment project. This funding could be used to support the environmental remediation of the site and could help to mitigate the negative impacts of the project on the surrounding community. These funds could also be used for improving energy efficiency or reducing greenhouse gas emissions associated with transportation; and
- Contribution from Amtrak: Amtrak, which owns Penn Station, should contribute funding to support the redevelopment project. This contribution could help offset some of the costs associated with the project and could help to ensure that Amtrak is a responsible partner in the effort to improve Penn Station. Amtrak's proposed $30 billion funding plan, which includes funding for a variety of infrastructure projects across the country, can be used to rehabilitate Penn Station. In fact, Amtrak has specifically cited the need to improve infrastructure at Penn Station as one of the key priorities for this funding. The plan includes funding for various projects related to the Northeast Corridor, including the rehabilitation of Penn Station, and would be used to improve rail infrastructure, increase capacity, and enhance passenger experience; and therefore be it
RESOLVED, that CB5 urges the state legislature and the governor to launch a truly responsible fiscal path to success that does not depend on the flawed GPP; and be it further
RESOLVED, That CB5 urges the state to promptly apply for federal grants from the USDOT for which the project is eligible; and be it further
RESOLVED, That CB5 urges New York State to consider allocating funding from the Clean Water, Clean Air and Green Jobs Environmental Bond Act to support the Penn Station redevelopment project; and be it further
RESOLVED, That CB5 urges Amtrak to contribute funding to support the redevelopment project.