Byford Sounds Affordability Message for Penn Station Rebuild

Affordable is the political word of the year. Now, it’s even come for plans for a new Penn Station.

“What we can’t do is have a beautiful new station that’s unaffordable for the railroads to be able to deliver,” said the official in charge of delivering it, Andy Byford, special adviser to Amtrak, which owns the station.

Byford’s comments, in the unlikely setting of a holiday party of one of the principal advocacy groups, ReThink New York, highlighted the many devilish complexities Byford must resolve to deliver the new station and, perhaps, that at some point he may have to play Scrooge.

For years, much of the conversation has focused on the form of a new Penn Station (President Trump has put his thumb on the scale for classic architecture in government buildings) and on improving its function for the 600,000 riders who struggle through its claustrophobic corridors every day.

Just finding the balance of form and function is a major design and development challenge to transforming a station with generations of history piled on top of itself, literally (I’m looking at you, Madison Square Garden).

But by bringing up the cost of the project, Byford was seeking to reassure some of his key stakeholders—the commuter railroads that use the station and the state governments they answer to—that he won’t propose something that saddles them and their riders with paying back some huge long-term debt.

He was also signaling to potential bidders, with whom he will soon begin negotiating, that the project cannot be a bottomless well of money for them.

Remarkably, one of those bidders was at the Christmas party, too.

“Can you define affordable,” Byford was asked by Peter Cipriano, executive vice president of Halmar International, the American subsidiary of a prominent Italian infrastructure development company, ASTM.

“I’m not allowed to talk to you, Peter,” Byford replied. “Just football and the weather is what we can talk about.”

But early next year Byford almost surely will speak to Cipriano and other bidders, as he narrows the field of those seeking to be Amtrak’s partner in rebuilding the station. Byford hopes to pick that developer by May of next year and have construction underway by December 2027, a timeline so compressed that he has put an electronic countdown clock in his office to remind everyone of the urgency.

“It’s quite a scary time frame, actually,” Byford said. “But it’s counting down. We haven’t quite gone to seconds. But we’ve got years, months, weeks, and days to the end of 2027. So that focuses everyone’s minds. So, there’s a lot to do.”

One of the “big challenges,” Byford said, is managing the total cost of the project and who is paying what. Central to that is something known as the capital stack, the money committed by various levels of government and other sources to pay for the project.

Who Pays for What

Along with architectural and engineering plans, Byford will have to present this financial plan to the Amtrak Board next year as part of his recommendation for a Master Developer. “My job will be to convince them that we’ve made the right choice, number one,” Byford explained, “and that that choice is not only a compelling proposition and a viable proposition, one that can be built, but clearly we’ll have to also convince them of the business case. And I think that’s going to be one of the big challenges. You don’t have to find all the money by then. But you’ve got to demonstrate, well, pretty much where’s the money coming from? And is this affordable for New Yorkers?”

A first point is that the more money governments put in upfront the less the railroads—which means taxpayers or riders—will have to pay back later. On this, Byford appears to be reopening discussions with New Jersey and New York about their contributions.

After the Trump administration seized control of the Penn Station project from the MTA, a state agency, Governor Hochul withdrew a billion dollars New York state had been offering. It is not clear if Byford can recover that money.

Byford also mentioned funding from New York City, rarely even mentioned in recent years as Mayor Adams stayed far away from the project. Mayor-elect Mamdani said recently he wants to study up on Penn Station.

Byford also said he is planning to meet with the new governor of New Jersey, Mikie Sherrill.

Recoupling the GPP?

The requests Byford issued for interest in the project also reopened a topic Governor Hochul had closed. That is redevelopment around the station that might generate revenue to help pay to rebuild the station.

That was a principal purpose of a massive office tower construction plan proffered by then Governor Andrew Cuomo. This General Project Plan, or GPP, used state powers to override local zoning to build supertall buildings that would then kick back revenue to the Penn Station project, instead of property taxes to the city.

But with the office market in the doldrums after Covid, Governor Hochul at one point “decoupled” Penn Station financing from the GPP. In his request for letters of interest in redeveloping Penn Station, though, Byford asked potential master developers to include any proposals they have for building outside of the property lines of Penn Station itself.

He hasn’t explained yet whether he would execute such projects through the GPP or use federal condemnation powers. Vornado, the largest private property owner in the neighborhood, has recently renewed talk of the luxury office tower it wants to build under the GPP, across Seventh Avenue from Penn Station, the site of the former Pennsylvania Hotel, which Vornado tore down.

Byford has said that proposals to tear down the block immediately south of the station, known by its tax code, Block 780, to make room for more tracks are “on hold” pending a review of how the railroads could operate more efficiently within the present footprint.

But he told the neighborhood leaders at the Christmas party that it wasn’t within his power to restrain all development around the station.

“My honest answer is, personally, I can’t prevent that,” he explained to a resident who asked if he could halt destruction not only of Block 780 but of other parts of the neighborhood. “I think the community is better placed to do that.”

He noted that the “base scope” of the project was transforming Penn Station, including its Service Building on the south side of 31st street, the last remnant of the original McKim Mead and White station

“But people may wish to talk to us about some areas outside of the base scope, so maybe some developmental opportunities,” he added. “But so you know, being bluntly honest with you, I can’t stop that. Your local elected official will be the best person. But certainly, you know my views. I’m a massive advocate and a lover of this city precisely because it doesn’t look like everywhere else. We don’t want Houston on the Hudson.”

Public Project, Private Profit

Another crucial cost question is how much the private partner makes from the project. These private partners are often repaid for their work with what are known as “availability payments.”

Indeed, two years ago Halmar, Peter Cipriano’s firm, proposed to finance the design and rebuilding of Penn Station and then recoup its investment by operating and maintaining the facility for an availability payment of $250 million dollars a year for 50 years from Amtrak, Long Island Rail Road, and New Jersey Transit.

Halmar said that was a return on its investment of between 8 and 11 percent. It can also be described as about $12 billion that taxpayers or rail riders would have to cover.

“What we cannot do is saddle New Yorkers and the railroads—so that’s Amtrak, the MTA, NJT—with, say, for example, unaffordable availability payments. I won’t do that. This has got to be an affordable package.”

The earlier Halmar proposal illustrates another uncertainty around the cost of the project: the future of Madison Square Garden. Byford has left it to individual bidders whether to propose moving the Garden, which would add time and presumably cost to the project.

Halmar in its plan leaves the Garden in place, but purchases from the Garden’s owner, James Dolan, the theater on the west side of the Garden, which Halmar would demolish to make way for a grand entrance facing the old Farley Post Office, which now houses Amtrak’s new Moynihan Train Hall.

Buying the theater would add hundreds of millions of dollars to the cost of the project, which some critics, including the head of the MTA, Janno Lieber, have said is a needless expense.