Governor Andrew Cuomo's latest pitch to expand Penn Station is an overflowing grab bag of promises to commuters and city residents to improve what the governor called in his budget speech yesterday the station’s “seven levels of hell”. The governor is proposing 40 percent more train capacity, airier concourses and unspecified new development in a "cohesive transit-oriented district."
The plan also boasts an accordingly mammoth price tag: $8 billion to buy up an entire block of Midtown property, according to one estimate, most of which Cuomo hasn't yet identified specific funds for beyond the idea of siphoning off future retail rents and property taxes.
Meanwhile, sitting atop the now-buried train station is one of the state's biggest poster children for corporate tax giveaways: Madison Square Garden, which thanks to a state law passed at the behest of then-mayor Ed Koch in 1982 has now gone 37 consecutive years without paying property taxes.
The total cost in lost revenue to the city over that time period is now $555 million, according to the latest calculations by the city's Independent Budget Office. If current property value trends continue, MSG's total tax break could clear $1 billion by 2030.
It's an alarmingly high figure, made even more so by the fact that the tax break, first proposed by Koch in order to encourage the Knicks and Rangers to renovate rather than moving to New Jersey, was, according to the mayor, initially supposed to end after just ten years. ("I went to bed at night believing it was a 10-year abatement," Koch told the Times years later.)
In the decades since, MSG's eternal tax break has become a white whale for budget reformers and enraged Knicks fans alike; possible repeal has become a recurring feature of IBO's annual budget options documents offering ways to saving the city money.
Asked for an explanation of the continued need for the tax break, a Madison Square Garden spokesperson provided this statement to Gothamist: "We appreciate that people have their opinions about our location, but the truth is that Madison Square Garden’s tax abatement pales in comparison to the billions in public benefits received by the other New York sports venues.”
The decades-long inaction can partially be explained by the odd nature of the tax break: It's the city losing tax revenue as a result, but the city council has no say over state law. While the state legislature could repeal the law at any time, it's under little pressure to do so given that none of the money would go toward filling state budget holes.
And then, there is the considerable pressure the legislature is likely under from Cuomo, who has long counted MSG owner James Dolan and his family as major campaign donors, though that seems to be on the wane since they sold off Cablevision to Dutch telecom giant Altice for $17.7 billion in 2016. (Then-MSG business partner Irving Azoff did give $10,000 to Cuomo's reelection campaign in 2017, and MSG itself is a regular donor to both Democratic and Republican state legislative campaign committees.)