The mayor and the governor this week revealed their plan to pay for the revitalization of Penn Station and its surroundings following months of pressure on the government to clarify how the financing would work.

City taxpayers won't face a tax increase as a result of the renovation, Gov. Kathy Hochul said in a statement announcing the agreement with Mayor Eric Adams. Under the plan, a joint city-state entity will oversee the redevelopment and possible expansion of Penn Station, as well as the improvement and creation of the area’s public space and sidewalks.

Funding will come from the sale of development rights to private companies and from the collection of payments-in-lieu-of-taxes – known as PILOTs – on new office and residential developments, the state said. Payments to the city will match the amount of current taxes on the development sites and will feature a 3%-per-year increase.

The buildings will go back on the city’s tax roll after 80 years, or once the agreed contributions are met — whichever comes first. The prediction is the values will be significantly higher by that time, so tax revenue will also jump.

"The current Penn Station is unsightly, inefficient, and impossible to navigate, and New York commuters deserve better," Hochul said in a statement. "Thanks to our partnership with Mayor Adams and other local and community leaders, we are standing by our commitment to revitalize Penn and the surrounding area while getting the best possible deal for New Yorkers."

Hochul’s plan involves creating a new concourse in the station, 8 acres of open space, bicycle parking and benches, as well as the construction of 10 new mixed-use skyscrapers, which would be exempt from city zoning laws. The entire redevelopment spans 18M SF, with Vornado the primary developer on the project.

In May, the New York City Independent Budget Office released a report saying the state’s plan, released in November last year, had made so few details clear that it was impossible to assess the project’s financial strategy and its impact on state and city taxpayers. Last week, watchdog group Reinvent Albany released a report claiming the plan was $3B short of what was needed, according to Commercial Observer.