Judge Dismisses Challenge to Hochul’s Penn Station Plan

Gov. Kathy Hochul’s plan to fund the reconstruction of Penn Station survived a court challenge. It still may not survive market conditions.

Judge Lucy Billings on Tuesday ruled in favor of the Hochul administration and Empire State Development in a lawsuit brought by local community groups, Crain’s reported. An attorney for the plaintiffs, which included Penn Community Defense Fund and the City Club of New York, is weighing an appeal.

The plaintiffs argued the state agency didn’t assess how much revenue Vornado Realty Trust’s development of 10 supertall towers in the district would contribute to Penn Station. They also argued against the influence Steve Roth’s real estate investment trust has had in the process.

The judge said the plaintiffs failed to show that ESD didn’t have a legal basis for the decisions it had made. Tthe law “unambiguously allows” state officials to temporarily defer questions on financial details, she said.

The legal loss might not matter for Vornado’s development.

Weak demand for office space and a rollback in bank financing forced Vornado to press pause on the project in November. The new buildings were set to yield 18 million square feet across a handful of commercial towers.

In June, the state decided to “decouple” Penn Station’s redesign from the Vornado-reliant funding plan. Hochul also opened up the floor for redesign proposals for the transit hub. Neither Hochul nor Roth have outright canceled the development. Vornado controls most of the eight relevant sites involved in the Penn Station funding plan.

Payments in-lieu of taxes from the Vornado development were expected to generate as much as $3.75 billion for the Penn Station overhaul. The total cost of the project is expected to be about $7 billion. The state has already committed $1.3 billion.

Another plan that has some Penn Station prognosticators talking is Italian firm ASTM Group’s proposal, an offer to rebuild the station in exchange for a half-century of management rights. That proposal includes the removal of Madison Square Garden’s Hulu Theater.

— Holden Walter-Warner