The Fight Over Penn Station and Madison Square Garden

Sports arenas are another matter. They are usually privately owned, and yet they often enjoy large infusions of public funds. Governor Hochul recently agreed to put six hundred million dollars of state tax money toward a new stadium for the Buffalo Bills. This type of corporate welfare is a function of politics, not economics. It’s crony capitalism—the winners, who generally risk nothing, are already billionaires.

Last year, it seemed for a moment as if the billionaires might help save Penn Station, in the form of the developer Related Companies. Related was founded by Stephen Ross (not to be confused with Steven Roth, of Vornado, although both are super-rich octogenarians in the same business). Its executives approached M.S.G. about moving the arena to a spot across Eleventh Avenue, near Related’s showcase property, a dense nest of glass skyscrapers known as Hudson Yards. Situated basically in the same place where Michael Bloomberg planned to put his football stadium, Hudson Yards is only half finished. The finished part occupies the eastern half of the rail yards; the western half, the idea went, is where M.S.G. could go, perhaps combined with a casino. M.S.G. walked away from the talks, without publicly acknowledging that they had happened.

Big projects often leave behind them a wake of failed attempts. Before Bloomberg’s unrealized stadium, there was, in the same spot, George Steinbrenner’s unrealized stadium for the Yankees. In the nineteen-fifties, another tycoon wanted to build the world’s tallest skyscraper there, but was rebuffed by the banks. Even Robert Moses had to make several runs at crossing the Verrazzano Narrows (bridge? tunnel? bridge?) before finally getting a bridge built in 1964. “All the channels have to line up—the political, the financial, the design,” Washburn, the architect and planner, said. The Moynihan Train Hall, begun under his leadership, took twenty-five years to complete.

The idea that we cannot get public works built except in collaboration with billionaires has become a kind of defeatist gospel among politicians, who are themselves dependent on wealthy donors. Still, Liz Krueger, the chair of the State Senate’s finance committee, told me, “It’s simpler not to do these deals with real-estate partners. You tend to lose in fights with real estate more than you win.” Although Krueger is pessimistic about the City Council’s ability to force Dolan to move, she assumes that the cost of effectively buying him out can largely be covered by issuing state bonds. “If the numbers look huge, let’s talk about bonding—forty- or fifty-year payments,” she said. “Then it’s not so scary.”

Other public-works projects in New York City, including the reconstruction of lower Manhattan after September 11th, have been funded by bonding. “We have the formula for doing this—bonds issued against the future value of development,” Chakrabarti said, one afternoon at his office. “It isn’t hard. Moving Madison Square Garden is a clambake compared to what we had to do at the World Trade Center.” Chakrabarti spent years working on the reconstruction of the World Trade Center neighborhood as Bloomberg’s director of city planning for Manhattan. “This is building a sports arena,” he said. “Other cities do it all the time. We’re New York City.” He said that as if it somehow meant “high-functioning.”

But moving an arena is not ultimately the goal, of course. The goal is a modern train station. “This is the future,” Chakrabarti said. “It’s about high-speed rail lines connecting all these business hubs.” Intercity trains will be well served at Moynihan. What’s needed now, he said, is a facility that will attract regular riders from New Jersey and Long Island: “We need to entice suburban workers back to New York City.”

In the three years since the Covid-19 pandemic began, hundreds of thousands of people have left New York—some temporarily, some permanently. It’s believed that Manhattan alone lost two hundred thousand households. Along with nearly forty-five thousand deaths from the virus, the economic blow has been harsh: more than a hundred thousand jobs have still not come back. Tourism, a major employer, is recovering slowly. But the harder financial hit has been the disappearance of commuters.

Nearly four million people used to enter Manhattan’s business districts on weekdays. Now, on average, slightly less than half the office workers in midtown come to the office. Whole ecosystems that served those people—shops, delis, bars, restaurants, food carts, nail salons—have been crushed, wiped out. The office-vacancy rate in midtown is the highest it’s been since the nineteen-seventies, when data first became available. Retail vacancies are also bracingly high. That Hooters on West Thirty-third? Closed permanently. At night, many streets that were lively three years ago now look and feel deserted.

Remote work is here to stay, and you can’t blame commuters for bailing. So many commutes are onerous, wasteful, soul-draining. Weekday subway ridership is a third less than it was in 2019, and the commuter lines have had similar reductions. A recent report issued jointly under the Mayor’s and the Governor’s signatures called the lack of riders “an existential challenge for the financial stability of the Metropolitan Transportation Authority.” Janno Lieber, the M.T.A.’s chairman and C.E.O., says that the basic model will need to change; rather than relying on the fare box, he argues, transit should be funded as an essential service, like policing or garbage collection.

NJ Transit’s planners have suggested that its ridership may be regained by the early twenty-thirties, but the truth is that nobody knows. Empire State Development, which sometimes seems to exist primarily to produce large numbers for political purposes, announced that by 2038 Penn Station and Moynihan will handle nearly nine hundred thousand passengers a day—an increase of nearly fifty per cent from before the pandemic. Perhaps these numbers were meant to attract federal funds.

It’s some comfort that the Mayor and the Governor are co-signing a big what-should-we-do report. Coöperation between the two offices has been weak for many years, especially during Cuomo and Bill de Blasio’s two-term pissing contest. The report, calling for a “ ‘New’ New York,” argues that, in order to face the challenge of telecommuting, we need to make Midtown “more live-work-play.” (Gack.) By that, they basically mean a mass conversion of office space to apartments. These conversions require new city zoning and new state legislation, and they are not cheap, but they have been done before, in the financial district. Only older office buildings need apply, though, since apartments are required by law to have windows that can be opened.

One theory holds that New York is in an “urban doom loop”: empty offices create a reduced tax base, which forces cuts in services, which make the city less attractive, and so on down the drain. This prospect is being fearfully debated, not just for New York but for American cities generally. In fact, a November study of workplace recovery found that, among the ten large cities evaluated, New York was the most fully recovered. San Francisco, Los Angeles, and Chicago were in far worse shape. Certainly New York has survived many crises, including the doom loop of the seventies—although the city was so weakened by that experience that Mayor Ed Koch, desperate to keep sports teams from fleeing, gave Madison Square Garden that free pass on city property taxes. Koch later said that he thought the tax break was just for ten years—that’s how addled he was.

In late January, President Joe Biden and his Transportation Secretary, Pete Buttigieg, came to New York with good news. A federal grant had been awarded to a long-stalled project known as Gateway, which is intended to remake the rail line between Newark and Penn Station. Biden gave a speech in the rail yards by the Hudson, among rows of shiny train cars, backed by workers in high-viz orange vests. “This is one of the biggest and most consequential projects in the country,” he said. He was not wrong. Among other things, Gateway will add two new tunnels under the Hudson. The existing tunnels, built back in 1910, were flooded by Hurricane Sandy, and saltwater corrosion has accelerated their deterioration, causing chronic delays. They already operate at maximum capacity, carrying some four hundred and fifty trains a day, and a failure would be catastrophic. The Northeast Corridor, which runs from Washington, D.C., to Boston, would be severed; the economic impact could trigger a national recession.

Senator Schumer, in attendance, was ecstatic. “Finally, finally, finally, we can say Gateway will be built!” His optimism seemed premature. The tunnel project, which is expected to cost at least sixteen billion dollars, with roughly half of that coming from the federal government, has been derailed twice already—in 2010 by Governor Chris Christie, of New Jersey, who reportedly did not want to raise gas taxes to cover his state’s share of the cost, and in 2017 by Trump, who gave no coherent reason. Today, the project’s managers say the tunnels won’t open before 2035. And Biden’s announcement in the rail yard was actually less momentous than it appeared. The grant, for two hundred and ninety-two million dollars, will be used to help build the concrete casing of a tunnel that extends just a few hundred yards west of Tenth Avenue. That was it.

Alon Levy, a research fellow at the Marron Institute of Urban Management at N.Y.U., argues that the Biden Administration should refuse to provide grants to refurbish Penn Station—that money given to New York would likely be wasted. Levy is a passionate supporter of Gateway, but believes that it can be done for a fraction of the proposed cost.

“It’s trivially easy to waste money,” Levy told me. Example: New York’s subway stations are all slated to be made accessible to the disabled, at a projected cost of seventy million dollars per station. Berlin is doing the same thing, for between two million and five million dollars a station. Berlin’s subway stations are simpler, Levy said, and will require fewer elevators, but that does not explain the disparity. Part of it is that planners in New York are padding estimates, to avoid getting blamed for cost overruns. But by doing so, Levy said, “they’re guaranteeing the overruns.”

“Can you look up what their house cost, so I know what to wear for this party?”

Cartoon by Emily Flake

American managers are largely unaware of global best practices, Levy went on: “Insularity is a big problem. It gets worse the higher up you go. Political appointees, politicians themselves, they’re the worst. Then there’s the revolving door. People leave government, go into consulting, get hired by their former colleagues at three times their prior wage. But there’s no urgency, no new ideas. Just groupthink.”