NYC and state officials agree on how to pay for Penn Station redevelopment deal

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NYC and state officials agree on how to pay for Penn Station redevelopment deal


Mayor Eric Adams and Gov. Kathy Hochul announced Monday that the city is on board with the state’s plan that allows developers to build 10 skyscrapers in Midtown Manhattan and use money from leases toward the massive renovation of Penn Station and its surrounding neighborhood.

The agreement comes ahead of a key vote by the state entity charged with approving the financial terms of the deal along with the scope of the project. It also comes amid ongoing scrutiny of the project that’s largely been viewed as lacking any financial transparency.

Under the terms, the city will receive fees in place of taxes on the Midtown properties being developed as part of the project, with annual 3% increases. The city and state say this arrangement can last upwards of 80 years or until the project fees are paid off, but it still doesn’t outline how much the fees would be.

The project calls for nine office buildings and one residential property, making it one of the state’s largest redevelopment projects. The project’s key developer, Vornado Realty Corp., wants to build the bulk of the properties. Monies from fees imposed on developers like Vornado will go towards improving upon existing amenities to the neighborhood and rehabilitate the aging train station.

A recent study by the good government group Reinvent Albany found the company could get more than $1 billion in tax breaks with this deal.

“Some would like to say we’re just giving rich cats tax breaks. No. They’re going into improving the infrastructure, and when you start dealing with that infrastructure, it costs money and we’re saying with those tax incentives you have to improve the infrastructure,” Adams said at an unrelated news on Thursday. “We know the devil is still in the details; we still map it out, but we feel confident that this project is a much-needed improvement in the Penn Station area.”

Adams did not say whether the city has any guarantees this project will proceed even during an economic recession, saying that the city “can’t sit back” in advancing a project.

The Empire State Development corporation is set to meet Thursday to vote on whether to approve the project’s financial terms and scope of work. The final vote goes to the Public Authorities Control Board, another quasi-government agency whose members include the state’s budget director Robert Mujica, who’s been supportive of the project, as well as state Sen. Leroy Comrie, who has expressed more skepticism about the plan .

In the last few months, Comrie joined a group of lawmakers asking ESD to fully release a plan on how the project will be built. State officials have been selling the project as one that will not raise taxes on New Yorkers.

As part of the agreement, the city and state will also create a governance board made up of seven members, four of which chosen by the governor, and three chosen by the mayor. It would be a subsidiary of ESD, and something advocates and lawmakers had called for in an effort to inject more transparency into the project.

John Kaehny, executive director of Reinvent Albany, said the deal lacks details, like how much the developers are paying the state, and total cost of the project.

“This is kind of a masterpiece of obfuscation and vagueness and it’s really a disgrace for an administration that pledged to be the most transparent in New York history,” Kaehny said. “It’s mind boggling in its obtuseness to public concerns, and just continues in the vein of complete secretiveness that has dominated this entire process.”



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