US Congress Considers Amtrak Plan to Fund Penn Station Redevelopment via NYC Property Tax Seizure

A proposed amendment to a federal transportation bill could grant Amtrak unprecedented powers to fund its redevelopment of New York City’s Penn Station by seizing local property tax revenues and overriding city zoning laws. The measure, passed by a U.S. House committee as part of the Build America 250 Act, has raised significant concerns among New York officials and urban planning advocates about local autonomy and the fiscal implications for the city.

Federal Power Grab

The amendment, introduced by U.S. Rep. Addison McDowell (R-North Carolina), aims to allow Amtrak to finance station redevelopment projects across the country by partnering with private developers. Under the proposal, Amtrak could “own, lease, license, develop, ground-lease, or enter into joint development public-private partnership arrangements” on land adjacent to intercity passenger rail stations. Crucially, these agreements would allow Amtrak to bypass local zoning regulations and siphon off local tax revenues to fund station upgrades.

McDowell framed the amendment as a fiscally responsible approach to transit investment, stating, “This amendment does not raise federal taxes. It does not require new mandatory spending.” He argued that Amtrak could receive contractual payments from developers, which would then be reinvested into capital improvements and maintenance.

However, the legislation’s impact would be felt at the city and state level. Developers involved in these projects would be exempted from paying local taxes, including sales taxes, potentially draining city coffers.

Key facts

Revisiting Past Plans

The proposed federal scheme bears a striking resemblance to a plan previously considered by New York State. Former Governor Andrew Cuomo and Governor Kathy Hochul had initiated a “General Project Plan” that would have transferred zoning powers for the Penn Station area from the city to the state. This plan also envisioned using payments in lieu of taxes from developers to fund the station’s reconstruction. That state-led initiative was ultimately shelved by Governor Hochul after her election victory in 2022.

Even the state’s original plan, according to Reinvent Albany Senior Policy Advisor Rachael Fauss, included safeguards that the federal amendment would eliminate. For instance, the state’s General Project Plan required approval for each parcel of developed land by the state’s Public Authority Control Board. The federal legislation proposed for Amtrak would bypass even this level of oversight.

Fiscal and Service Concerns

While the amendment mandates Amtrak to make substitute payments to the city in lieu of lost property tax revenue, Fauss warns that these payments may not adequately cover the city’s costs. The proposed payments would be based on current tax revenues and would not account for the additional expenses the city would incur to provide essential services like trash removal and sewage for any new infrastructure developed.

“If it’s a much larger development, if you build something twice as tall as you otherwise could, the costs for basic city services like sanitation services and water services are unaccounted for,” Fauss explained. She also noted that the proposal assumes static tax revenues and that the neighborhood’s development will not change over time.

The concept of transit-oriented development (TOD) is often lauded for its potential to create vibrant, transit-accessible communities. However, critics question whether the proposed Penn Station upgrades truly align with TOD principles. The current vision for Penn Station appears to be primarily cosmetic, focusing on improving a single platform for “through-running” service rather than significantly increasing the station’s overall capacity or enhancing regional transit connectivity.

“What is the capacity changing here? Are there new people coming in? It’s not like they’re building a brand new train station, they’re just making it look nicer,” Fauss commented. “If you add additional transit service, you recoup that cost. What are they doing to make service better? It doesn’t look like much.”

Developer Selection and Transparency

The Trump administration took over the Penn Station project from New York last year, but details on its funding strategy have been scarce. Former MTA New York City Transit President Andy Byford was brought in to lead the project, a move seen by some as an attempt to lend credibility. However, Byford has faced criticism for not making public the criteria for Amtrak’s selection of the Halmar developer team, which includes Vornado, a major Midtown property owner whose CEO, Steven Roth, is a longtime associate of Donald Trump.

Byford has publicly suggested that New York City and New York State should contribute to the project, despite a lack of interest from either government. The proposed congressional maneuvers, however, could effectively compel their participation.

“Because of how broad the authority is just to rezone and take the taxes, it’s really usurping New York City’s ability to decide what to do with that area,” Fauss stated. “This is not the federal government paying for this project if they fund it through this development. This is New York City paying for it.”

The amendment, which has not yet become law, represents a significant shift in how major infrastructure projects might be funded, potentially diminishing local control in favour of federal and private interests. The full implications for New York City’s urban fabric, fiscal health, and transit future remain to be seen.

Fuente: Streetsblog NYC (https://nyc.streetsblog.org/2026/05/27/art-of-the-steal-congress-sets-the-stage-for-trump-nyc-land-grab-to-fund-penn-station-rehab)