A long hearing on Penn Station revealed that nobody likes to say “Vornado.”
Lawmakers repeatedly brought up the developer — without actually naming the company — and voiced concerns over its ability to lease out the new office space planned for the area around Penn, given the uncertainty in the market.
State officials sought to provide reassurance. Empire State Development CEO Hope Knight repeatedly said the state is confident in the class A office market and that the up to 18 million square feet of new space will be absorbed. And MTA head Janno Lieber noted that the project timeline spans some 20 years, with the final tower projected to be complete in 2044.
"It is not dropping all of these buildings onto the market all at once," he said during the Friday hearing.
There seems to be a lot of anxiety around the idea that Vornado and whoever else is involved in the development will get zoning bonuses but the various transit improvements (the new Gateway tunnel, an expanded Penn Station, a new walkway from Herald Square) won’t be delivered.
Sen. Leroy Comrie cited Bruce Ratner’s involvement, and eventual departure, from Atlantic Yards, the megadevelopment formerly known as Pacific Park, where only a portion of the promised affordable housing units have been completed. (An extension was granted after the 2008 crash.) Comrie asked if there will be any penalty built into project agreements, should the developers abandon ship.
The answer to this question was one that was repeated throughout the hearing: ¯\_(ツ)_/¯
More specifically, state officials said they will make individual agreements with property owners on the eight development sites, in addition to a separate financial deal with the city over the structure of the PILOT program. None of these deals has been finalized, though Knight indicated that her agency is expected to vote on the city agreement sometime next month. Details of said deal will be announced sometime before that.
It is expected that the city will continue to collect taxes on these properties at the current level, adjusted annually, only diverting the increase in taxes resulting from the new development. That structure would last for the duration of the PILOT, which stands for payments in lieu of taxes.
At one point, Sen. Liz Krueger asked if the PILOT will be capped at 40 years — a figure she was told — but Knight would not confirm that. One thing that seems relatively clear is that the state will be on the hook for debt payments for the project, should there be any shortfalls in revenue.