Amtrak balking at Farley Station deal

Amtrak Is Slow to Embrace New Station
By MICHAEL LUO and CHARLES V. BAGLI

Published: May 28, 2004


After years of delays, plans for a grand, new Pennsylvania Station built within the city’s main post office building are being muddied by demands from Amtrak, the intended tenant, that it be allowed to use the space without paying any rent.

Amtrak was supposed to anchor the soaring, glass-enclosed complex in the landmark James A. Farley post office building between Eighth and Ninth Avenues and 31st and 33rd Streets in Manhattan. But over the last few months, Amtrak has been weighing whether it should even continue to take part in the project, given its financial problems, said railroad. The railroad had said previously that it would not pay anything for the renovation of the station. And now Amtrak notes that it already has a sweet rent deal.




http://www.nytimes.com/2004/05/28/nyreg ... artner=AOL

The farley building was to be a replacement for current Penn Station, so why would Amtrak pay rent when they already own Penn station ???
in that case let the rental tennants of Penn station move.

"We're disappointed that Amtrak isn't meeting the commitments they made in the 1999 [memorandum of understanding]."

Unmet commitments are not much fun. Surely we remember the $2.4 billion that Congress reneged on, over the 5 years covered by the Amtrak Reform 'n' "'Accountability" Act. Money does matter.

Civic planning often moves on unqualified assumption. Per the article, the only financial agreement between Amtrak and the City agencies was that splatter of hogwash on paper known as a "Memorandum of Understanding." Despite the document's clear lack of authority, the City likely felt it safe to assume that an agreement was at hand. Oh, well.

"Guess what? I'm going to build you a beautiful new house. Rent'll be $3.5M a year. You can thank me later."

Well, let's see. Amtrak owns Penn Station. I presume it collects rent from tenants. Now it is being asked to pay rent for the new station? Presumably the developers will make money from the retail space it rents, made valuable in part by the traffic generated by Amtrak. Why should Amtrak pay? It might very well lose some rent revenue.
Considering how broke Amtrak is, and considering how it has trouble getting even bare-bones appropriations from Congress, how would Congress take the news that Amtrak is taking some of its money and paying rent on a glitzy new station? I think Amtrak should get paid rent for using the new station. If Amtrak agreed to pay rent on Farley, Congress would justifiably accuse it of using poor business judgment and not acting responsibly.

Of course, since the Farley building is presumably owned by the USPS, it's just moving money from one pot to another.

Why don't they condem Madison Square Garden, pull it down and build a new station with a new arena above it? You'd get a new station with expanded public areas (which seems to be the biggest problem with NYP) and a new arena (which everyone seems to think is needed anyway).

CDTA in Albany NY area tried something similar.

"Oh, let's build a spanking new station and move Amtrak to it."

Not bad so far (I'll ignore the budget overruns and all that.).

Of course when it came time for Amtrak to move, CDTA claimed Amtrak wasn't willing to pay the rent. Amtrak claimed they agreed to a new station, but had never agreed in the first place to rent. Why would they? They owned the old building free and clear.

Ultimately some sort of deal was reached, but ultimately CDTA ended up with a bit of egg on their face in the deal. (Note, I DO like the new station in some ways and I think as a "portal to the Capital District" it is much nicer than the old one.)

Again, sounds like "someone had some great ideas" but not everyone was clear on their intent, etc.

Personally... sure, I think a "New Penn" would look nice, but ultimately, would it be more functional and more cost-effective to Amtrak? I doubt it, at least as planned. As such, I say, let it wait.

Why don't "they" just condemn Madison Square Garden Center? Consider the "they" who own it.

"In addition to its telecommunications and programming businesses, Cablevision is the controlling owner of Madison Square Garden and its sports teams, the New York Knicks, Rangers and Liberty."

I never say never, but it's one thing to take a house or even a neighborhood to straighten a right of way, quite another to take a major, very-high-profile asset of a publicly traded company.

mattfels wrote:Why don't "they" just condemn Madison Square Garden Center? Consider the "they" who own it.

"In addition to its telecommunications and programming businesses, Cablevision is the controlling owner of Madison Square Garden and its sports teams, the New York Knicks, Rangers and Liberty."

I never say never, but it's one thing to take a house or even a neighborhood to straighten a right of way, quite another to take a major, very-high-profile asset of a publicly traded company.

I was being a tad tounge-in-cheek there, but if New York is anything like Seattle (which it's probably not, as we are very provincial despite Bill Gates) that could be good news for a new station.

The ugly and inadequate Kingdome in Seattle was demolished and replaced by a new outdoor stadium, largely because Paul Allen (Second only to Gates in Microsoft Millions) wanted it. A similar show of force got us Safeco Field. If Cablevision could be brought into the discussion and sold on the idea of a better arena in exchange for a better station, this whole issue could be resolved.

It's just too bad I'm not a New York powerbroker

Part of the answer is in the article, Amtrak's part of Penn Station that they own is probably worth more in rent than the $3.9 Million at the Farley Station.

They should just lease the space at Penn Station to NJ Transit who even with the new 7th ave concourse can use more room, or even better yet to Metro North.

When the LIRR starts sending some trains to Grand Central there will be room at Penn Station for Metro North trains from the New Haven and Hudson lines, they probably could even start some service before the LIRR's East Side Access project is complete.

Amtrak could probably lease out their current Penn Station digs, pay rent at Farley and still make a small profit.

Let's think this through. That's a pretty short list of prospective tenants. Now add a landlord that's really, really motivated to lease. Who has the upper hand? Not the landlord. The name of this game is monopsony.

Say you offer the space to NJT, which declines to pay rent. You take the package across town to MTA, whose managers say, "If NJT doesn't want to pay rent, why should I?" Now you're out of your space, have no rent coming in, owe rent for Farley AND still have a $300 million mortgage to make payments on.

We said we wanted Amtrak run "like a business." Why then do so many of us keep looking for ways to put Amtrak at a clear business disadvantage?

At this point I think it's the responsibility of the City and State Governments at this point. Although the Penn Central was directly responsible for the demolition of the old station by selling its air rights, the City, State and or Federal Government, could have stepped in to slow or even prevent the station from being completely demolished. (I understand that there were no laws on the books at the time to prevent it).

This is a real heartbreaker because I didn't think Amtrak was going to have to pay rent. I expected them to pay for the construction or at least a portion of it, but not rent. What I think may be an ok settlement is if Amtrak didn't pay rent for occupying the Farley building but allow some portion of the money made by shops looking to rent out space to go to the owners of the building, while allowing the rest to go to Amtrak to fund operations in and around the station.

The space in the Farley Building is not being used like it used to. If it was, then the prospect of renovating the building to make it into a new sation would not even exist.

Bottom line, if NY is looking to host the 2012 Olympics, its going to need a "Gem" for passengers who travel from all over the country by train, to NY. I don't see Amtrak looking "bad" by bringing these tourists up into a cramped basement under Madison Square Garden, but NYC/NYS. For impression purposes I think NYC should see this as a worthwhile investment and support Amtrak on this issue if it desires to have a new Station.

Over the long run, Amtrak's practice of backing away from State-sponsored partnerships after the state has invested its money does Amtrak no good. At the end of the day, everyone looks foolish, and the only impression left with the public is why did we waste our time and money in the first place.

As mentioned above, the CDTA-built station in Albany is a good example. When Amtrak initially refused to take possession of the facilility, both Amtrak and the CDTA looked like fools.

Another example is the Turbos. Amtrak's "no-operating manual" excuse for not using the equipment made Amtrak look idiotic.

Here's a lesson for Amtrak: When a state or local government offers to do something that does not fit within Amtrak's long-term best interests, turn the project down at the outset. In otherwords, don't lead people on.

These days, there are too many other good uses for public money. If Amtrak wants State and local support, it is going to have to be a more dependable partner.

Rhinecliff wrote:Over the long run, Amtrak's practice of backing away from State-sponsored partnerships after the state has invested its money does Amtrak no good.

Congress's practice of reneging on its financial commitments and stringing Amtrak along year to year does no one any good. Congress gets away with this because the so-called railfans let it. Surely we agree that "accountability" isn't just for Amtrak.

Rhinecliff then wrote:At the end of the day, everyone looks foolish

.
Not everyone. The ones who are responsible get a pass.

Rhinecliff wrote:Another example is the Turbos. Amtrak's "no-operating manual" excuse for not using the equipment made Amtrak look idiotic.

These are not model trains. They require an operating manual.

Rhinecliff wrote:Here's a lesson for Amtrak: When a state or local government offers to do something that does not fit within Amtrak's long-term best interests, turn the project down at the outset.

What long-term best interest? Amtrak doesn't have a long term, thanks to Congress. All Amtrak has is a short term. You want Amtrak to act as if it has a long term, you give it one: a mandate longer than a fiscal year, and a dedicated funding source. Unless the goal is to keep bashing.

Summing up, Rhinecliff wrote:If Amtrak wants State and local support, it is going to have to be a more dependable partner.

That will take more than wishful thinking, finger wagging and mindless bashing from so-called railfans. That will take money. Go get it.
http://www.house.gov/writerep
http://www.senate.gov

I certainly agree with Mr. Fels insofar as he points out that Congressional missmanagment of Amtrak prevents Amtrak from functioning rationally over the long run.

I am just less willing to let Amtrak off from its own foolish behavior. As I have said in the past, Congressional mismanagement does not, in my opinion, give Amtrak a license to be stupid.