Penn Station Debacle ?>

Penn Station Debacle

Penn Station is the busiest passenger transportation facility in the Western Hemisphere. It’s a disaster. It is a low-ceilinged underground facility with inferior facilities for both passengers and the trains from three lines that use the terminal.

Perverse incentive

Amtrak, the owner of the station, has a perverse incentive: make life worse for the commuter and be rewarded with more money and more power. Our politicians are unwittingly supporting a continuation of this unhappy situation. Amtrak says it is capable to run Penn Station. For almost a half century it has proven otherwise.

Fifty-year old problem

Penn Station as we know it today is fifty years old, the underground remains of a Beaux-Arts station built in 1910. In 1963, the Pennsylvania Railroad sold the air rights. Today’s Madison Square Garden was built above, completed in 1969.

The Pennsylvania Railroad and successor, the Penn Central, were by then already in financial trouble. In 1970, the Penn Central was federalized and ownership of the station fell to Amtrak. Even then, Amtrak was the smallest user of the station, with New Jersey Transit and the Long Island Railroad the largest users. Amtrak, ever plagued with management problems, deferred maintenance on the station and its connecting tunnels. Amtrak’s Northeast Corridor Serve was profitable, but its profits were diverted to subsidized passenger traffic in the rest of the United States. Amtrak was an absentee landlord with no incentive to invest in its NY property.

Politicians and commuters agree that Penn Station needs to be overhauled or replaced, as do the Hudson tunnels. The question is who should pay. New Jersey cancelled a tunnel project in 2010. Amtrak and NJTransit have fought over who should pay for escalator repairs since 2001. Commuters have withstood the worst of these internecine battles.

The Trump administration has promised infrastructure spending all over the United States. New York’s big projects include replacement of Port Authority Bus Terminal, expansion of LaGuardia airport to include runways over Rikers Island, a new Penn Station and new rail tunnels under the Hudson. These four projects likely total a fifty billion dollars, a substantial portion of the trillion dollars envision for the whole country. The House is unlikely to put that many eggs in Gotham’s basket.

Congress faces a second, thornier, challenge – into which body it will invest. Amtrak, owned by the federal government, wants the money for Penn Station and the tunnels. LaGuardia and the bus station are owned by the Port Authority of New York and New Jersey. NJTransit, owned by the State of New Jersey, wants to control the tunnels. New York State, owner of LIRR and the NY subways, has a stake, as well as the City of New York. The power-grab is being fought in back rooms and in the press.

Punish the commuter; Get more money

Meanwhile, commuters are walking on broken escalators in the station, many parts of which will be closed this summer for track maintenance. As travelers’ tempers flare, calls for spending increase. Insofar as Amtrak controls the maintenance of the statin and its tracks, every failure benefits it. It’s a perverse incentive: make life worse for the commuter, get more money.

If Amtrak isn’t right steward for Penn Station, who is? One can make a good argument that Penn Station is a resource the benefits both NY and NJ. New Jersey certainly has more interest in Penn Station than it does in JFK airport. Putting more assets under the control of PANYNJ is questionable though. It is already powerful, power that hasn’t been used as wisely as it should.

Some argue that Penn Station should be turned over to a private entity. This is the Trump plan – getting private investment into infrastructure projects. Indeed, Grand Central is owned and operated by a private concern, Midtown TDR Ventures. It’s easy to find a company that can handle the concourses, renting retail space. It’s harder to find a company to run the rail infrastructure.

Amtrak has the advantage of incumbency. It has owned the property since 1970. It extended the lease to MSG until 2023. It has friends in Congress. If it sits tight, it will still control the property ten years from now.

Penn Station is just the kind of project that could benefit from the Trump approach: keep the entrenched interested guessing then propose an unconventional solution. It’s clear that the conventional approach isn’t working.

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