What If Moynihan Station Doesn't Happen?

As optimism about the Moynihan Station project morphs into uncertainty, Governor Spitzer, the man at the helm of the endeavor, faces a crucial test in coming weeks, as he turns with an open hat to City Hall and Washington for nearly $1 billion in funding.

The grand plan, which would allow for $14 billion in total investment and would include a redeveloped and expanded Penn Station and a move of Madison Square Garden to the neighboring Farley Post Office, seems on the edge of collapse, many involved say.

Without funding commitments soon, the project as is could easily unravel toward a scaled-back version—or to nothing at all, condemning generations of commuters to the same old Penn Station.

Mr. Spitzer’s funding push comes as the Dolan family, owners of Madison Square Garden, edges closer to a renovation that would effectively thwart the current Moynihan Station plan. The Dolans, eager to shed the reputation of having the NBA’s second-oldest arena, seem to be unhappy with the pace of the plan’s progress.

The reputation of the governor, who recently had to scrap a Jacob K. Javits Center expansion amid cost overruns, would likely suffer a big loss in any Moynihan Station collapse. But his reputation wouldn’t be alone.

Advocacy groups, including one represented by Maura Moynihan, daughter of the station’s namesake, the late Senator Daniel Patrick Moynihan, and the Bloomberg administration, along with numerous elected officials, would also lose. And, finally, Moynihan Station co-developer Vornado Realty Trust, headed by chairman Steven Roth, would lose, as its eight million square feet of commercial space in the immediate area would shed a lot of potential added value.

Of course, failure is far from foregone. State and city officials say the grand plan for Moynihan Station remains alive—and, if not doing well, it is moving along, they say.

Thus far, $550 million has been pledged to the Penn Station redevelopment part of the Moynihan plan from developers Vornado and the Related Companies. The state will likely seek more, given the financial reward that both firms would receive from development connected to Moynihan Station.

(The Pataki administration pushed a $900 million plan for making a portion of the Farley building into a train hall. The redevelopment of Penn Station alone, under the current Moynihan plan, would likely take well over $2 billion.)

The state and the city have pledged $300 million each to the Penn Station project. The Spitzer administration is pushing for a further contribution of $200 to $300 million from the city and the state combined, according to a state official. An agreement has yet to be reached; and the city is unlikely to agree to that amount, said another source close to the negotiations.

As for the federal government, officials say they are pushing for support in the form of various transportation and homeland security bills, among other legislation.

The chairman of the U.S. House Transportation and Infrastructure Committee, Representative James Oberstar of Minnesota, toured the Moynihan Station site last month, a committee spokeswoman said; the developers and state are looking to New Jersey Senator Frank Lautenberg, a project supporter who serves as the chairman of a Senate subcommittee on transportation. Other federal legislators have toured the site as well, and more are expected to do so.

“The governor is personally focused on this project, and we’re working the federal funding piece and the rest of the project daily,” said Patrick Foye, the downstate chairman of the Empire State Development Corporation, which oversees Moynihan.

Mr. Foye, who highlighted the state’s dealings with Senators Hillary Clinton and Charles Schumer and with U.S. Representatives Charles Rangel and Jerrold Nadler of Manhattan, said there was “a fair amount of work still to come” on the federal funding.

Indeed, $800 million from Washington, an amount Mr. Foye has said the Spitzer administration seeks, would be a very substantial contribution compared with similar projects. (The smaller version of Moynihan Station backed by the Pataki administration and once slated to cost $900 million was to receive about $130 million in federal funding.)

In a statement, Mr. Schumer made clear that securing the amount desired by the state would be difficult. “This is a very important project, and we are going to do everything we can to see it through, but a significant federal investment is going to be a very heavy lift, especially under this administration,” he said.

The direct path of action to bring in money for the current station plan also seems unclear.

Mr. Nadler, in a statement, said he and the state are in “early stages” of discussing funding for Moynihan Station. “When we have all the information in hand about funding, Congress can help support this worthy project,” he said.

A long list of major capital improvement projects in the New York area craving federal funding could also hamper the ability of New York’s Washington representatives to snag monies. While many elected officials say Moynihan Station is a priority, so, too, are these other projects. To name a few: the chronically underfunded Second Avenue Subway; the East Side Access rail project, for which the Metropolitan Transportation Authority needs hundreds of millions to complete; and the multibillion-dollar freight-rail tunnel between New Jersey and Brooklyn currently being studied and close to the heart of Mr. Nadler. Next Page >