New Gimbels’ Passage under Lux TowerTo Help Fund Penn Station Rebuild

Amtrak is still several billion dollars short of identifying all the money it needs to transform Penn Station into the world class transit hub depicted in the architectural renderings it has rolled out.

“I’ll be looking for funding from myriad sources,” said Amtrak’s man-in-charge of the project, Andy Byford, who has won accolades from many quarters for even getting the project to this stage.

Byford said he would be asking New York State, New York City and New Jersey all to kick in, something Gov. Kathy Hochul says she will not do after the Trump administration took the project away from New York’s MTA last year.

He also revealed one of the new sources of commercial revenue that would help defray costs: the recreation of the so-called Gimbels Passageway that connects Penn Station underground to the Herald Square subways and PATH. The department store chain’s original flagship store closed on July 4, 1986.

“I would remind everyone that the previous attempts to transform Penn Station foundered because they didn’t have the funding that was necessary,” Byford told a news conference at which he unveiled the new design and the private partners who will build it with him. “The difference this time, the game changer, is we have the federal government rock solid behind this.”

Byford said that Federal commitment would be in the sum of billions of dollars. But exactly how many billions remains to be determined.

The new station will cost in the “ballpark” of $7 billion, Byford said. U.S. Transportation Secretary Sean Duffy, in a heated exchange earlier this year with Senator Kirsten Gillibrand had said the federal government was planning to give the project $8 billion. But his spokesman later explained that number was the total cost not the federal share.

In a statement this week that coincided with Byford’s announcement, the DOT said it “is investing nearly $5 billion into Amtrak’s Northeast Rail Corridor to revitalize the nation’s major rail hubs, including Penn Station.”

Byford, along with the CEO of the newly chosen Master Developer, Peter Cipriano, said they would be applying for Penn Station’s share of that money and therefore could not say yet how much it would be. Presumably less than $5 billion, however.

By simple arithmetic that leaves a gap of several billion dollars. Byford said his goal is to build a “capital stack” as high as he can with funds from every level of government, before turning to private financing or fees and payments that could ultimately land on taxpayers or transit riders.

“There are people out there who are saying ‘New Yorkers are going to have to pay for this station through higher fares.’ No, they’re not,” Byford said. “Okay, I’ve said it before, I’m saying it again, there will be no fare hike to pay for this project. That’s not going to happen.”

That is a clear statement about a complicated financial situation. Byford, an Amtrak employee, does not control fares set by the stations two biggest users, The MTA’s Long Island Railroad and New Jersey Transit.

Byford spoke at a news conference convened to introduce the private partner Amtrak has selected to be the Master Developer of the station.

That developer, known as Penn Transformation Partners, will be paid for its work (which includes not just construction but partial financing of the project) in various ways, including what are known as availability payments. Those are paid by the railroads using the station, much the way airlines pay airports for use of gates at a terminal.

The Trump administration has not yet detailed the financial arrangement between Amtrak and Penn Transformation Partners, a consortium led by Halmar, the American subsidiary of the Italian developer ASTM, and Skanska, the Swedish firm that, among other things, built the new terminal at LaGuardia Airport.

But Byford’s repeated statements that he will try to raise as much public money as possible implies there are added costs to whatever portion of the final financing Amtrak leaves to Penn Transformation Partners.

Byford also said the project would include commercial development outside of Penn Station to help generate revenue, a notion originally advanced by Andrew Cuomo when he was Governor

One of these envisioned projects is a luxury office tower Vornado Realty Trust wants to build on the site of the former Pennsylvania Hotel across Seventh Avenue from Penn Station. Vornado would make payments in lieu of taxes on the new tower to help fund the reconstruction of the station, essentially local revenue diverted to the Penn project.

At their news conference, Penn Transformation partners revealed one of the benefits that would come with Vornado’s new office tower: the recreation of the Gimbels’ Passageway, an 800-foot tunnel under 33^rd street that once upon-a-time included shop windows and entrances to the now defunct Gimbels Department store.

The passageway was opened in 1920 and closed in 1986 because of crime and disrepair. Officials said the original tunnel is too narrow and decayed to simply reopen. Instead, they plan to build a wider passage in the foundation of the new office tower. The office construction is a separate project and not part of the cost of the station. But officials hope to proceed in tandem.

Vornado Realty Trust, which owns the site of the Pennsylvania Hotel, had proposed to reopen the passageway in 2010 as part of its bid to build the massive office tower on the site. Vornado tore down the hotel but still has not built the office tower.

An architect’s rendering of the new passageway showed a gleaming corridor with coffee shops and high-end stores, a bit like the basement level of Rockefeller Center.

Vornado, which already operates the shops and restaurants in Penn Station, is a partner in Penn Transformation Partners.

Penn Transformation Partners was the winner in a three-way contest to be the Master Developer.

“There were three good bids,” Byford explained. “But this is without question the best technical design. It also had the most credibility in terms of its constructability and in terms of its affordability. The actual financial model that we saw was the best overall.”

The design is by the firm, PAU, whose founder, Vishaan Chakrabarti, has spent thirty years campaigning to restore Penn Station to a modern version of the original civic landmark, torn down in the 1960s by a financially spiraling Pennsylvania Railroad.

For a long time, he argued Madison Square Garden should be moved from on top of the decapitated train station. But more recently he partnered with ASTM on the present plan, proposed in 2023, to leave the Garden but remove its theater on Eighth Avenue, making way for a large train hall facing the Farley Post Office.

“We really think this is going to transform this neighborhood in this very positive organic way,” Chakrabarti said.

“As a veteran of the Penn Station Wars,” he added, “The thing Andy said is absolutely critical. No plan has ever had the support of the federal government as this plan has.”

The Trump administration has promised shovels in the ground by the end of next year and completion by 2034.