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Brian Lehrer: It's the Brian Lehrer Show on WNYC. Good morning, everyone, and now we return to the contentious battle over something that everyone in New York and New Jersey wants, a better Penn Station, where Amtrak, the Long Island Railroad, the subway system, and NJ Transit all converge for commuters and other travelers every day. Here's the part that everyone agrees on. This is Governor Hochul's director of state operations, Kathryn Garcia, on the show last month.

Kathryn Garcia: It's the largest rail site in the country, but it also is a rabbit warren of tunnels and small spaces really difficult to get around, a very uninviting environment.

Brian Lehrer: Uninviting. Right. Everyone thinks Penn Station the way it is ugly, jams people together in uncomfortable ways, and needs to be much better, or as Garcia states, the vision.

Kathryn Garcia: We want to make sure that we are putting forward a plan that really is going to make it so people want to be taking mass transit and coming into the most glorious station in the country.

Brian Lehrer: By way of a simple comparison, let's make the Penn Station experience more like the one at Grand Central, but the question is how? That's where the disagreements began. Should Penn Station even be a terminal anymore as opposed to a through-running station that various rail lines pass through, stop at but keep going? If a new Penn Station will cost billions of dollars, how do we pay for it? How much with tax dollars? How much with tax breaks for developers?

Michael mentioned this in the newscast, who would get to build profitable new skyscrapers around there but also help fund the new station? How much new office development versus residential should there be in that model? Affordable housing? Remember that perennial need if we're building, and who should get to decide all these things? One group of lawmakers and advocates is calling on Governor Hochul to give up her control of the project, which he is not.

In fact, yesterday she and Mayor Adams announced their latest version of the plan. Let's see what's in it and who likes it or not and why with WNYC and Gothamist's transportation reporter Stephen Nessen, or as he's known on Twitter, just your friendly neighborhood transit reporter. We'll also touch on the mayor's other controversial transportation announcement in the last few days, the new fare system for the ferries, in which different people pay different fares. Hey, Stephen, thanks for coming on. Welcome back to the show.

Stephen Nessen: Hey, Brian, thanks for having me.

Brian Lehrer: The original sin here, I think we can say was tearing down the majestic old Penn Station in the 1960s so they could sell air rights. Penn Station now is really just the basement of Madison Square Garden and the office buildings around it. It feels like a basement. It's way too small for the 600,000 people who pass through there every day, at least to use the pre-pandemic traffic number. Let's start with a vision for the station itself. Is the Hochul and Adams' plan specific about what the new Penn Station would look like and be like for the users?

Stephen Nessen: From the very start, you may remember it was actually Governor Cuomo who came up with this idea, this plan to redevelop the area with skyscrapers. When Hochul took over as governor, she tweaked it a little bit. You can barely say she changed the scope of the vision, I think she cut down the height of the skyscrapers, which was a complaint from a lot of neighborhood community residents, but essentially, the scope has not changed. Like you were mentioning, there's going to be all this development around Penn Station, which we can talk about in a second, and then the station itself.

Really, the only idea that they have that they've consistently stuck with is that they want it to be similar to the old station, but they're not going to move Madison Square Garden. They're going to do their best to work around Madison Square Garden. Both Cuomo and Hochul agree that they want there to be some sort of skylights so people can see it so it's not a dingy dark dungeon experience. They want to create some single floor level where everyone enters at the same level. There's going to be a skylights. What they say what they want it to look like is have more floor space than the new Moynihan Train Hall and more floor space than Grand Central Terminal.

Hochul just put out a request for proposals for designs, but they've been trotting out these mock-ups of what it might look like. That's the general idea, some ground floor retail, and a big skylight, and lots of new entrances. You could enter all the way at Herald Square and take a walkway to enter Penn Station.

Brian Lehrer: In your story on this last week, you refer to some people who don't want Penn Station to be a terminal anymore where the commuter lines end but a pass-through station where you can get off or keep going. Would that just be to connect Long Island, Long Island Railroad and New Jersey, New Jersey Transit, right? They both end at Penn Station to each other, maybe not that many people going between Long Island and New Jersey per se, or what would the point of that be?

Stephen Nessen: I think the idea is you wouldn't have trains hanging out in Penn Station taking up space, they have to wait to turn around and go back the way they came or go out another way. The idea is that, theoretically, this would create more capacity, allow more people to pass through, and it would make trains move through the station faster, so you can get more people in and out more quickly.

Brian Lehrer: That's not in the plan, right?

Stephen Nessen: It's not in the plan. In fact, the Empire State Development Corporation put together a little deck addressing this very question last year, I believe, and they decided without a lot of detail, essentially, it's too complicated. The configuration the way it is right now wouldn't work. The crux of all this is that the actual train station, the actual train part of the station would not change at all in this scenario. It's the same amount of trains coming in to the same platforms, underground. The above-ground experience would be quite different, but the below ground would stay the same.

Brian Lehrer: All right. The more active disputes or the most active disputes are over how to pay for it. Who wins, who loses, and would there be enough from these development deals not to stick the taxpayers with an extra bill? How is the new Penn Station supposed to be paid for if you can describe it in a nutshell?

Stephen Nessen: In a nutshell, essentially, because this is a state project, the state is taking over these properties and working with the developers themselves. None of the developers would have to follow any sort of city land use rules or pay any city taxes. Instead they would pay a fee to the state. It's called a PILOT, payment in lieu of taxes, which you may recall was part of the Hudson Yards development project.

Basically, these fees which we don't know what they are, they haven't been disclosed yet so we don't know what the fees are going to be, essentially would go to pay for those cosmetic repairs to Penn Station; the skylight, the mezzanine, the elevators, et cetera. The city is like, "Hey, wait a minute. What about our tax revenue?" The deal that was struck yesterday, at least publicly announced yesterday, between Mayor Adams and Hochul is that the city would still get the equivalent of the current real estate taxes on those properties as well as a 3% increase each year.

Brian Lehrer: From a financing standpoint, who's against that or skeptical about that and why?

Stephen Nessen: Would you like a list of parties skeptical?

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Brian Lehrer: How much time do we have?

Stephen Nessen: Let me just give you a nutshell, Reinvent Albany, a good government watchdog group, Nicole Gelinas with the right-leaning Manhattan Institute, the New York City Independent Budget Office. A slew of activists and state city lawmakers are raising major concerns about this. Primarily, there's just not a lot of information, Brian. I told you that they're going to pay a fee. Your question should be, "Well, how much? Is it going to be enough to cover the expenses? What if those leases on those units don't really materialize?"

I know you were mentioning earlier about people returning to the office, do we need 10 office towers in Midtown right now? If those don't materialize, how's the real estate developer going to pay their fees? But we don't know what those fees are. [laughs] It raises a lot of questions. There's a lot of transparency questions about this project that have not been satisfied by the recent financial agreement that was released yesterday.

Brian Lehrer: When the Governor's adviser on this, Kathryn Garcia, was here last month, I asked her about the high vacancy rate in Manhattan office buildings as it is in the pandemic with what seems to be a more permanent transition to hybrid work with less need for office space, so this might go underutilized and Penn Station underfunded. Here's part of what she said. "What we're seeing in the city right now is a real flight to quality. You see buildings that have a lot of, for example, tech infrastructure in them being where tenants want to go. We're seeing that there are much higher vacancies in what is called the B and C office tower, which are much riper for conversion to residential."

On a global scale and a hybrid work economy, she said, "There's going to be hybrid work that happens going forward, but that's going to happen internationally and we want to make sure we are still being competitive on the international stage, whether that's in Asia or in Europe because we want to keep the jobs here that are the most valuable jobs across the world."

That's a position, that this much new office space is going to be needed because it's going to be a high-quality office space that's outfitted with modern technology, et cetera. It's what she called the B and C-level office buildings that are projected to be underutilized in the future. Do you know if people disagree with that specific? That was a pretty specific answer.

Stephen Nessen: Certainly, like you mentioned, there's just that question about what is the future of office work in New York city going to look like? I will say, we've been covering this for a really long time. I've spoken extensively with the MTA chairman, Janno Lieber, who you may recall worked on the World Trade Center development site. He for years now had been saying, "Don't bet against New York. Everyone thought lower Manhattan wasn't going to come back after 9/11 and now look at it, it's a booming site, offices are filled."

I imagine Kathryn Garcia, Janno Lieber, and Hochul, they're playing the long game. They're not looking at current trends, they're looking at long-term trends. They believe 20, 30, and 40 years from now New York City will still be a desirable place, people will still want to work here. They see Midtown Manhattan, as you've seen it, it has a certain dumpy quality to it. There are not the top-notch gleaming office towers around Penn Station, considering, like we said, it's the world's largest transit hub. In a way, it does make sense to develop around a major transit hub.

Brian Lehrer: Right. To that point, I also asked Garcia, "Why not have the developers build more housing there, especially affordable housing, as some people are asking for, which affordable housing is arguably what new Yorkers need much more than office towers?" She said this.

Kathryn Garcia: The Governor listened to the more than 100 public meetings that occurred. We did add more housing to the plan, nearly 1,800 new residential units, of which 500 would be affordable. Residential does not create as much value as office towers do in order to have us fund Penn Station, which is the real driver here, is how do we get a new Penn Station?"

Brian Lehrer: Stephen, do any financing experts, as far as you're aware, disagree with Garcia and the Governor about the real driver of revenue being commercial, not residential, and so if the issue is sufficient funding for Penn Station, that's a good argument for keeping it office-oriented?

Stephen Nessen: I guess, yes, sure, nobody's going to dispute that. I think on the flip side of that, if you know that office space is so valuable, why do you need a state subsidy to build it? Just if it's so great, then build it in the regular way that any office tower is built in the city. Why would it be getting state subsidies and taxpayer breaks to do so if it's such a valuable and, as they argue, important project?

Brian Lehrer: Listeners, who has an opinion or a question about the plan to redevelop Penn Station or maybe on the new fare structure for ferries, which we'll also touch on, 212-433-WNYC, 212-433-9692, or tweet your question or comment @BrianLehrer for our friendly neighborhood transit reporter, Stephen Nessen from, of course, WNYC and Gothamist.

Stephen, another controversy has to do with the main developer, Vornado real estate, which is a big campaign donor to the Governor. I read like $70,000 as she runs for re-election, and I'm not sure if also the mayor, you tell me. Is anyone charging corruption or conflict of interest here? Like she doesn't really believe this is in the public interest but it helps her campaign?

Stephen Nessen: As we can all publicly see, Steve Roth, members of his family have all contributed and ancillary members have contributed either close to the maximum or the maximum amount they can give. Vornado would develop five of the eight sites, which, like we mentioned, includes 10 skyscrapers and essentially the property right over Madison Square Garden, which would give them a lot of leverage. It certainly doesn't look great. It's all on the surface. I don't think there's any like backroom dealing that we've exposed or seen yet.

I should add, Marie Torres-Springer is the deputy mayor for Economic and Workforce Development. She signed off on this plan yesterday. She is married to Jamie Torres-Springer, who is the head of capital construction at the MTA, who very much would get some money to develop Penn Station. I don't think you need to look too hard to see how all the pieces are connected and in the interest of all the different parties to get this project done.

Brian Lehrer: The Mayor yesterday defended the tax break system for funding a new Penn Station like this as a concept.

Mayor Bill de Blasio: Some would like to say, well, we're just giving [unintelligible 00:15:18] tax breaks. No, they're going into improving the infrastructure, and when you start dealing with that infrastructure, it costs money.

Brian Lehrer: It costs money. Is anybody proposing a way that's going to cost the taxpayers less than this system that they're developing with tax breaks for developers to build around it, but they're also going to fund the work primarily?

Stephen Nessen: Well, I was speaking with John Kaehny with the good government group Reinvent Albany, who pointed out to me that they're redeveloping the neighborhood, they're adding eight acres of public space. Essentially, they're getting a tax subsidy to improve their own investment because it's their towers, it's their neighborhood, it's their buildings. They're getting extra money to improve the area around their own buildings, which will only increase the value and desirability, ideally, of it.

I guess it's a theoretical concept. Is that the way we want to develop the city or do we want to use taxpayer money to do it? If those buildings were being charged the appropriate city tax rate, the city would make a lot more money and that money would go into the general fund to fund schools, hospitals, police, and city development that's decided by the city council. They would normally vote on those sorts of things.

Brian Lehrer: Right. The deal is they would get those tax breaks to help improve their own neighborhoods, as you describe it, but they would also be contributing to the development of Penn Station, which is the central point. Yet listener Kevin writes on Twitter, "I have very little confidence that the builders, the true recipients of our city's welfare will keep up their end of the deal. It's sad that Madison Square Garden was put in the very worst spot possible. It never made any sense except, again, to big real estate."

Let me ask you about that keep-up-their-end-of-the-deal part. Are there requirements built into this plan as far as you've been able to see it so far, that no matter what happens with these developers office towers, if they fail to fill them or anything else, that they will still have to fund the new Penn Station itself?

Stephen Nessen: What we've seen so far is a "framework agreement". I don't think anything is legally binding as of yet.

Brian Lehrer: Let's take a phone call. Here's Ben in New Brunswick. You are on WNYC. Hi, Ben.

Ben: Hi. Yes. My question was about the fees that they'll be paid. Is that going to be more than the tax break that they're receiving?

Brian Lehrer: That's a good question. Do we know that math?

Stephen Nessen: No. That's part of the problem that a lot of folks have, is we don't know what the fees are. We don't know if they're getting a greater tax break than they would get. I have to assume they are, but we don't know.

Brian Lehrer: Timon in Manhattan, you're on WNYC. Hello, Timon

Timon: Hi. Thank you for taking my call. I just want to say, I think this proposal is the worst smokey backroom politics. No deal, no details, and the whole concept of doing it this way is wrong. I think there should be a plan to improve the functioning statement, there should be a public investment. The payback will be from increased taxes in the neighborhood. The idea that they would do this huge giveaway and not actually improve the station and just leave it. This horrible underground maze of tunnels is terrible.

Brian Lehrer: Timon, thank you very much. The underground maze would be for the trains, as Stephen was describing it before. Not so much for the people passing through the station until they went down through the actual platform. At least it would change in that respect. I want to go back to what the listener on Twitter wrote, an aspect of it. It said that Madison Square Garden was put in the very worst possible spot.

It said in this tweet, "It never made sense except, again, to big real estate." That's an issue here. As I recall it, Stephen, correct me if I'm wrong, when Governor Cuomo first proposed massive redevelopment of Penn Station almost 10 years ago, I think it was in 2013, moving Madison Square Garden was part of the plan. Do I have that right? What happened to that, if you know?

Stephen Nessen: I do vaguely recall that. He really had a big idea, a big vision for reimagining Midtown. There was also, remember, the Port Authority bus terminal was going to get a new station and there was going to be expansion of the Javits Center. I think they were hoping to move MSG to the west side, but that's completely fallen by the wayside. In fact, the city council will have a key vote next year, I think, to renew MSG's lease in that location.

There could be some drama with that, but as of yet, I have yet to hear of any serious consideration of moving MSG, despite the fact that everyone says if they were to move it, it would alleviate so many problems with the station itself and they could really open it up a lot more.

Brian Lehrer: Alita in Manhattan you're on WNYC. Hi, Alita.

Alita: Hi. Thank you, and thank you for this show, Brian. I have two questions. One is that I heard that the federal government was willing to pay some high percentage of the cost to renovate Penn station but the state turned it down. If that's true, why would they have turned it down other than what might be called a gift to developers? The second thing is, there hasn't been adequate consideration, and Governor Hochul said that while community is important, the commercial development is more important, but I'm sure that there are people who live there and other interested groups that would beg to differ with that.

To say nothing of the loss of small businesses and buildings that should be landmarked, but which the Landmarks Preservation Commission has not shown an interest in landmarking. All of that makes the fabric and the culture and the history of New York the very reasons that people want to live and visit and work here.

Brian Lehrer: Alita, thank you very much. Let me play, Stephen and everybody, one more clip of the governor's advisor, Kathryn Garcia, to this point, because as Alita points out, people who live in the neighborhood now also don't like the idea of 10 new skyscrapers there. Garcia on the show last month said the defining factor has to be what should be built near Penn station per se. Here she is on that.

Kathryn Garcia: If you think about the future of cities, the future of cities has to be you put jobs where transportation is so that we can continue to grow and be at the cutting edge, whether or not that's technology, or biolife sciences, or financial services, or technology. I think that in order for us to be at the forefront, we need to have jobs where our transportation infrastructure is.

Brian Lehrer: That last part of it makes intuitive sense. We need to have the jobs where the transportation infrastructure is, especially if we want to encourage mass transit use, which seems to devalue. I don't even mean that as an insult to Kathryn Garcia, but she's saying the first priority is not who lives near Penn station, the first priority is the economy of the region as it relates to what we build near Penn station. What are the people in the neighborhood saying?

Stephen Nessen: I did a walking tour, they have some historical walking tours of the neighborhood, and they would point out some interesting historical buildings there. There's the Gimbel's skybridge, which was featured in the recent west side story film. There's over a hundred-year church that's there. I don't know about the current condition of it. I believe it's not well-attended, but I haven't done extensive reporting on it, but it is beautiful. If you walk around, you could see-- if you look carefully, there are some unique details, some moldings on the outside, all the different architectural features that do make New York have that classic 1940s, '50s look to it.

That said, and there's the Hotel Pennsylvania, but it's all been somewhat run down, not renovated, not upgraded to modern use, and part of it's because, I think, the developers bought the lands and didn't really invest in them, so of course, they're going to look somewhat dumpy and derelict and run down and not utilized to their maximum capacity.

Brian Lehrer: Stephen, before you go, just briefly on the mayor's new fair system for New York City ferries, it looks like regular commuters, people who commute with the ferry to work from other points around the city five days a week, whatever, would pay less per ride than New Yorkers who might just take a ferry occasionally or what tourists would pay. Do you have the comparative numbers?

Stephen Nessen: Yes, I do. Starting September 12th. We still have the summer to go, but starting September 12th, low-income New Yorkers, people who would qualify for the MTAs fair fair program as well as residents 65 and older would only pay $1.35 per ride. Single ride, like you said, tourists or people who are just going to the beach on the weekend, that would go from 2.75 which it is now to $4. In recognition that some people do use the ferry as a regular form of transportation, if they bought 10 trips or they'll be selling 10 trips for $27.50 as a way to reward the regular users. A bonus for bike riders, they're going to lift the $1 fee for carrying your bike on the ferry.

Brian Lehrer: That 10-trip, is that a time thing? That's a little better than I thought it was going to be. If you can use the 10 trips, you don't have to use-- Like with a weekly Metro card, you better go 10 trips in that week, more than if you want to come out ahead as a result of that. Is it timed like that for the ferries? Do we know?

Stephen Nessen: I don't know. I haven't seen that yet, but we'll have more details, I'm sure, coming soon.

Brian Lehrer: Who likes it and who doesn't?

Stephen Nessen: I think actually most people like it. It's certainly an effort to address the inequity and subsidies that the ferry has been receiving. You may recall we've done a lot of reporting on who uses the ferry, predominantly white and upper middle class folks, and the subsidy per person was like $8.59, which is a lot more than other forms of mass transit, for sure. A recent controller audit believes that it could actually have been as high as $12.88 per person. It's a huge subsidy compared to subways, which is pretty close to what it actually costs.

I think folks are excited, and as a way to address the inequality of who can afford to ride the ferry because it is $2.75, it's great that there's a discount fair for folks, and $4 is still a great deal for the ferry considering how much it actually costs to operate and run.

Brian Lehrer: Our transportation reporter for WNYC and Gothamist, Stephen Nessen, or on Twitter as your friendly neighborhood transit reporter. Stephen, thanks for all your work.

Stephen Nessen: Thank you, Brian. I appreciate it.

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