Rival developers back Zeldin in opposition to Hochul’s Penn Station plan
Two city development honchos are on board with Republican gubernatorial candidate Lee Zeldin’s attack on the Gov. Kathy Hochul-backed Penn Station-area redevelopment proposal.
The real estate insiders, who unsurprisingly insisted on anonymity for themselves and their firms, said they don’t support Zeldin on some other issues — but cheered his thumbs-down of the Penn plan, which would give Vornado Realty Trust a head start in future office projects.
As we reported last week, Zeldin called Hochul’s proposal a “deeply flawed boondoggle” that would “waste away billions of tax dollars.”
Zeldin’s opposition marked a rare alignment of left and right. Most prior criticism of the plan came from liberal Democratic elected officials and community board activists who called it a “giveaway” to Vornado.
The Penn proposal, drawn up under former Gov. Andrew Cuomo and only slightly tweaked by Hochul, would give Vornado, led by founder Steven Roth, the inside track to build on at least five mostly low-rise sites that it owns in the zone earmarked for major new commercial building around the station. (Vornado is already upgrading two others that it owns, PENN 1 and PENN 2, which are not part of the larger proposal.)
One official of a rival development company told Realty Check: “The issue is the long term. Everybody knows there’s no market for big new office buildings right now. It would take years before they got all the green lights they still need in any case.”
In fact, while the state Public Authorities Control Board blessed a loose framework for financing the scheme last summer, it would still need a bevy of federal and environmental approvals.
“But if demand for new construction eventually comes back, which it will, Vornado would have a big advantage,” the source continued. “Payments [to the state and city] in lieu of taxes would save them a lot.” Watchdogs estimated Vornado’s tax saving at $1.2 billion.
“Plus, Vornado wouldn’t have to struggle to get zoning variances, because Empire State Development would override city zoning under the master plan.”
That’s true but misleading, however. The state would first need to condemn land at each site and then have the PACB approve specific plans for it — a process that, in theory, could prove as prolonged and contentious for Vornado as the city’s ULURP system.
A different insider fumed, “The whole rationale that Hochul always talks about is to give us a new Penn Station. But they don’t need a $22 billion plan to upend a whole neighborhood and evict people just to improve the station.”
For sure, commuters might be forgiven any confusion. Wasn’t the Moynihan Train Hall supposed to be a “new Penn Station?” What about signs all over the existing station complex touting a “transformation” already in progress, mostly in the LIRR portion?
The messy truth is that Amtrak-owned Penn Station can’t be meaningfully redesigned for any price as long as Madison Square Garden sits on top of most of it.
Zeldin pointed out that the issue of renewing its license with the city, which expires in 2023 hasn’t been resolved. But a source scoffed, “The idea of moving the Garden is a fantasy. All the politicians, Democrats and Republicans, are afraid of the Dolans,” who have no intention of moving.
Roth last week told jittery Vornado investors that the time is “not conducive” to ground-up Penn-area construction soon. He even said, “I’m going to duck that question” when asked about the site of the Hotel Pennsylvania, which is being demolished and where the largest of the proposed skyscrapers was supposed to rise.
We’re told that his pause-button statements blind-sided state officials who didn’t know they were coming.
The project has also been hit with three major lawsuits that challenged its legality and lack of transparency.
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texasstandard.news contributed to this report.