NYC to Dolan: Back Penn Station Redo or Lose MSG Permit

In what is shaping up to be a classic New York City brawl—the kind where public officials at the state and local level and colossal business interests collide and hurl public “announcements” at each other shifting the blame for not getting the job done.

The job in this case is the redevelopment of Penn Station, transforming it from the rat warren under Madison Square Garden it has been since 1968 into the grand railway palace entrance hall it used to be—with or without Madison Square Garden.

That’s right, MSG could be back on the table—which is where discussions began in 2013, when the city first started using its arena permit to try to spur a rebuild of NYC’s busiest rail transit hub.

We know what you’re thinking: Gov. Kathy Hochul took care of this last month at her press conference to officially “decouple” the state’s plan to rebuild Penn Station from Vornado’s plans to build to build 18M SF of Penn District office towers.

Hochul seemed to suggest that the largest obstacle to the long-delayed redo of Penn Station was Vornado’s decision in January to pause its massive office project for the rest of this year, an obstacle she swept aside by declaring “we are no longer tolerating the delay.”

But the largest obstacle to rebuilding Penn Station is where it’s always been—sitting on top of it.

Now that the governor has had her say, NYC—which is in the process of determining whether Madison Square Garden gets a new permit to continue operating the world’s most-famous arena above the train station—has put down a marker specifying conditions that must be met by MSG owner James Dolan, owner of the Knicks and the Rangers, in order to obtain a new permit.

In terms of whether Penn Station gets its long-awaited upgrade, we’ll put it in MSG parlance: this negotiation is the Main Event.

MSG’s first operating permit was a 50-year deal inked in 1963, four years before MSG was built atop the Victorian train palace, which was demolished to make way for the sports arena.

When that deal expired in 2013, Dolan sought a permanent permit, but the City Council granted a 10-year extension that expires this year. (NYC requires a special zoning permit for any arena with more than 2,500 seats; MSG seats 22K.)

Dolan has again asked the city for permanent authority to operate the arena in its current location. On Monday, NYC’s Department of City Planning offered a new 10-year permit with some hefty strings attached.

According to the announcement from City Planning Commissioner Dan Garodnick, NYC—including the MTA and Metro North—is requiring a series of concessions from Dolan before it signs off on a new permit. Specifically, Dolan will be required to sign off on alterations to MSG when 30% of the plans to upgrade Penn Station have been completed.

“We hope and expect that the rail agencies will deliver a great plan for Penn Station, and MSG has committed to collaborating with them,” Garodnick said, in a statement.

“But we won’t just take them at their word—we are requiring MSG to come back to the Commission once those plans are 30% complete to ensure that the arena remains appropriately compatible,” Garodnick said.

The measure requires that MSG allow the railroads to potentially make major changes to the above-ground portion of the complex—or else the Dolans could lose the permit, a city planning official explained to reporters during a briefing, the New York Post reported.

In June, the MTA, Amtrak and NJ Transit submitted a report to City Planning stating that MSG’s loading operations are “incompatible” with plans to renovate Penn Station. To be compatible, the arena “must agree to collaborate on property swaps,” including its interest in a taxiway on Eighth Avenue, according to the report.

The MTA is working to finalize its Penn Station plans, which the transportation authority estimates will take $7B to rebuild. The project is intended to be folded into a 50-year arrangement that would charge the MTA, Amtrak and New Jersey Transit an estimated $250M annually to operate the station, bringing the total cost of the project to $12.5B.

Dolan reportedly is backing a proposal from Italian developer ASTM Group, which says it can wrap a glass-encased entrance to Penn Station around MSG for $6B.

However, the design contract already has been awarded in a $58M deal with FXCollaborative Architects and WSP USA, who reportedly want to bid on a master planner contract for the project.

NYC also is requiring MSG to remove trucks from W. 33^rd St. as a condition of the new permit.