New York, Jul 18 (AP) A funding agreement has been reached for the multibillion-dollar redevelopment of New York's aging Penn Station, the country's busiest rail hub.

Gov. Kathy Hochul and Mayor Eric Adams were to announce details of the deal, obtained by The Associated Press, on Monday.

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It calls for private developers to make payments in lieu of taxes on new commercial and residential buildings around the station for a period of 40 to 45 years, with the amount collected in excess of existing property taxes applied to the project.

According to the agreement, that money would contribute more than USD 1 billion to pay for improvements to streets, sidewalks and other public spaces and 50 per cent of the improvements to transit infrastructure including underground concourses and subway entrances,

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"This agreement brings us one step closer to a beautiful, modern station worthy of New York with vibrant open space, lively streetscapes, and better, more seamless connections to local transit,” Hochul said in a statement.

The reconstruction of the station and the first phase of the improvements to public spaces is expected to cost roughly USD 8 billion.

A recent study commissioned by Reinvent Albany, a state government watchdog group, estimated that the payments in lieu of taxes would amount to about USD 4 billion, a number that assumed a southern expansion of the station to accommodate more tracks when a new Hudson River tunnel is built several years from now.

That expansion, which is in initial discussions, is projected to cost an additional USD 13 billion.

“The new vision for Penn Station is to our generation what the Empire State Building was to previous generations: a symbol of our resiliency and a project that will define our city for decades to come,” Adams said in an email.

The state has committed USD 1.3 billion for the initial reconstruction of the station. The rest of the cost is expected to be filled by federal dollars and contributions from New York, New Jersey and other public sources.

The funding agreement still needs final approval from the state's Public Authorities Control Board, which oversees project-related financing for the state's public authorities.

Last fall, Hochul announced a plan to transform the crowded, dingy 54-year-old station that sits underneath the Madison Square Garden arena into a modern, traveller-friendly facility.

In pre-pandemic times, Penn Station served roughly 600,000 passengers per day on regional rail lines from New Jersey and Long Island, Amtrak and the New York subway system.

The plan calls for a large, single-level train hall with higher ceilings and a 450-foot-long skylight to replace the current cramped, windowless interior; more escalators, stairs and elevators to platforms, and more street entrances to reduce sidewalk crowding.

Hochul's vision, a scaled-down version of earlier plans announced by her predecessor, fellow Democrat Andrew Cuomo, would create new residential and office space around the station and has provoked criticism from neighbourhood groups who contend it will destroy a vibrant area and displace residents and businesses.

While the expansion of the station to add tracks is years away, the memorandum of agreement released on Monday sounded a potentially ominous note: A study is underway to determine whether two additional tunnels would need to be built to connect the Hudson River tunnels to an expanded Penn Station, it said. (AP)

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)