MSG Blasts MTA, Says Agency Trying to Force It to Give up Land Rights for Peanuts

Madison Square Garden tells Planning Commission that it cannot agree to the commission’s request that it give up some of its property at less than fair market value to help spur a new Penn Station in return for getting an extension on the permit it needs to operate the arena above the nation’s busiest rail hub.

| 26 Jun 2023 | 12:48

Madison Square Garden accused the MTA and its partner railroads of improperly using the city’s land use process to force it to give up some of its property “at less than fair market value” for use in renovating Penn Station.

For this reason, the Garden told the City Planning Commission that it could not agree to the commission’s request that in exchange for permission to continue to operate its 20,000 seat arena above Penn Station the Garden would commit to a declaration assuring that the Garden would be compatible with an overhauled Penn Station.

“Unfortunately, MSG cannot in good conscience execute the restrictive declaration in its current form,” the Garden’s executive vice president, Richard Constable, wrote to the chair of the planning commission, David Garodnick. “The document is missing critical, yet uncontroversial language to establish that the future review process may not be used to obligate MSG to convey property interests or user rights to the Rail Agencies for less than fair market value, or to assume responsibility for any costs of constructing, operating or maintaining any transit improvements.”

This was a direct rejection of the proposal from the railroads–The MTA, Amtrak and Jersey Transit–that MSG should contribute land both in an abandoned taxi way and at the corners of Eighth Avenue at 33d and 31st streets to its plan for improving the station. The Garden would also pay some construction costs under the railroad plan.

The railroads say this is appropriate because the Garden benefits enormously from its close proximity to the rail station. Janno Lieber, the chair of the MTA, said the taxi way was essentially public space, unused since 9/11, and that it was a fluke that The Garden owned it.

But the Garden said the railroads were improperly trying to pressure the Garden.

“As we can all agree,” Constable wrote, “the City’s land use review process is not the appropriate forum to mandate or discuss business terms between a private landowner and governmental agencies.”

As the stand off between the railroads and the Garden grew, Governor Kathy Hochul made a separate announcement that she was decoupling the renovation of the station from a major redevelopment of the blocks around the station. That redevelopment had originally been offered as a way to generate revenue to repair the station.

But the plan is largely moribund in any case because the largest property holder in the neighborhood, Vornado Realty Trust, says market conditions are not ripe for major new office towers. The project envisioned ten supertall towers.

Community leaders have urged the governor to abandon the redevelopment entirely. But instead she said its elements would proceed when possible. “We’ll get that done over time” Hochul said. She said she would find other sources to fund the state’s share of the station renovation.

Neighborhood activists heckled the governor through out her news conference.

The letter from the Garden to the planning commission noted that there were actually two visions for renovating Penn Station. The proposals from the railroads “do not work,” the Garden said, because they don’t leave enough room for trucks to turn into loading bays and because they endanger the refrigeration systems used to make ice for the Rangers.

The Garden spoke more favorably of an alternative vision, proffered by the Italian developer, ASTM. One of the principal differences between the MTA and ASTM plans is that ASTM proposes to pay Madison Square Garden hundreds of millions of dollars for its midblock property and its theatre on Eighth Avenue, which would be demolished to make a grand Eighth Avenue entrance.

ASTM would make these payments from capital it raises in private markets and then earn back its investment from a long term agreement with the railroads to operate the new station.

Lieber, the MTA chair, has said this was a bad use of scarce funds. But he said Monday the railroads would look at all ideas, although he said he believed a far better Eight Avenue entrance was possible without removing the theatre.

As Hochul was running for reelection last fall, she had announced a design and engineering team for renovating the station. But Monday she said that team’s ideas would be considered along with any others.

“We are entertaining all options,” Hochul said. “We are not standing here wed to a plan.” It was not immediately clear what that would mean for the ASTM proposal, which has gained considerable political support.