The new idea to renovate Penn Station would pay billionaire James Dolan about $500 million

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James Dolan, the cable baron who owns New York’s Madison Square Garden, will get nearly $500 million under a new proposal to rebuild the dilapidated Penn Station rail hub that lies beneath it.

The plan, announced Wednesday by Italian infrastructure company ASTM, includes paying Dolan for his Hulu theater, which is located next to Madison Square Garden. Then the developers demolish the stage to open up space in the crowded station, creating a main auditorium with a 55-foot ceiling.

Fixing Penn Station has become one of New York’s most haunting civic endeavors since the original was demolished in the 1960s. The terminal is the gateway to Manhattan and handles more daily commuters than the three airports in the New York area combined.

But any payments to Dolan could be politically charged. He recently angered New Yorkers by using facial recognition technology to ban perceived enemies from the park. The billionaire has been reviled by activists who criticize his residence as a bad neighbour.

ASTM has estimated its plan will cost $6 billion — or $1 billion less than the alternative design New York Gov. Kathy Hochul introduced this week, which would leave Hulu in place.

Peter Cipriano, senior vice president of ASTM North America, dismissed the suggestion that Dolan’s down payment could be construed as a “gift,” and said Dolan’s MSG Entertainment would also pay other contributions to the proposed project, including new exterior cladding for the 1960s arena. Old.

“It’s private property in New York City. The only path forward for this project is to gain control of some of that property. . . Cipriano said. He declined to say what the agreed price would be but told reporters it would be “less than half a billion dollars”.

Patrick Foy, a former president of New York’s Metropolitan Transportation Authority who has since joined ASTM as its North American CEO, said the price was the result of vigorous negotiation: “Just to be clear: we wanted to pay less and they wanted more — like any negotiation. number “.

MSG Entertainment declined to comment on the roughly $500 million sum, saying, “Recognizing that the decision with which the plan moves forward is not ours, we look forward to collaborating with all key stakeholders in improving Penn Station.”

An official from the MTA, which has a central role in the redevelopment, expressed skepticism about ASTM’s cost estimates and the need for public funds to be paid to Dolan to close the theater.

More broadly, the official complained about the private company trying to force its way into racing after the initial design contract was awarded. “They offered an unsolicited proposal for a design already in progress,” said this person.

The design favored by the MTA and promoted by Hochul on Monday would place the train’s main hall near Seventh Avenue, in contrast to the ASTM plan. Its supporters believed that this would obviate the need to remove the theatre.

The long-running effort to fix Penn Station has entered a new phase with Hochul recently admitting that revenue from as many as 10 new office towers around the site can no longer be relied upon to fund the project.

Instead, both proposals would benefit from state and federal funds.

The ASTM plan will be a public-private partnership under which the Italian company will receive a 50-year contract to operate the plant and invest $1 billion in capital. In return, it will seek annual payments of $250 million, when completed, to be divided by Amtrak, the station’s owner, and its two major tenants, New Jersey Transit and Long Island Railroad.

ASTM and its partners, including architect and urbanist Vishan Chakrabarti, former director of city planning for Manhattan at the Bloomberg Administration, are asking for an open competition to submit bids — something the state says is already well advanced.

Chakrabarti and other architects drafted plans that would remove the park entirely in order to restore the grandeur of Penn Station and open up its walkways to natural light. But even some who endorsed that approach now think it might be unrealistic — especially after Dolan undertook a billion-dollar renovation. Removing Hulu, a 5,600-seat venue also located above the train tracks, would be a less exciting alternative.

“We’re happy with the competition,” Foy said. “We want an open, competitive process.”

This article has been modified to clarify the surnames of Cipriano and Foy and an earlier role for Chakrabarti