Penn Station Deal Reaches Junction; Bush, Pataki Push

`City and state officials are close to resolving a year-long dispute that had stalled plans for a new Penn Station in the grand Beaux-Arts post-office building on 33rd Street and Eighth Avenue, according to a source close to the discussions.

The resolution of the dispute means that Senator DanielPatrick Moynihan is on the verge of realizing a long-cherished dream-the construction of a huge new transit hub in the James A. Farley Post Office building that will connect an array of subway and commuter lines.

Mr. Moynihan was appointed earlier this month to the board of the Penn Station Redevelopment Corporation, the city-state agency responsible for building the new project. He had spent 10 years pushing for the construction of a new transit hub to replace Penn Station across the street, but endless delays and apathetic public officials had gradually worn him down.

Mr. Moynihan became so dispirited that he took to quoting Vincent Scully’s infamous reflection on arriving at the current Penn Station: “You once entered New York City like an emperor; now you slither in like a rat.”

In the last year, Mr. Moynihan’s hopes were being held up by a bureaucratic dispute. The Penn Station Redevelopment Corporation, or PSRC, was fighting with the U.S. Postal Service, which currently owns the building, over the latter’s desire to use a large portion of the new structure.

But now, according to a source close to the Postal Service, the agency has dramatically scaled back its demand for space in the new structure.

The source said that the agency was almost certain to vote to turn over the building to the new agency in one of its next two monthly board meetings.

A spokesperson for the Postal Service would neither confirm nor deny the claim. “Everything is being finalized right now, but we know what we’re going to do,” said Postal Service spokeswoman Diane Todd.

But Ms. Todd confirmed that there had been “substantial progress” in the talks and said that the Postal Service was no longer debating whether, but where, they would move their Farley operations.

“We’ll be moving the operations to [other] buildings that we have within Manhattan,” she said. “Really, we’re in the final throes of the negotiation, and they’re still working out the plans as far as what offices are going to go where.”

Current plans call for the building of a terminal that would serve Amtrak, New Jersey Transit, the West Side subway lines, and possibly Metro North and even ferries leaving from the West Side waterfront nearby. The deal is being finalized in part because Governor George Pataki wants to have it under his belt in time for the November elections, according to Albany sources.

The recent strides forward have Mr. Moynihan ready for a victory lap. It was Mr. Moynihan who originally rallied support in Congress for rebuilding Penn Station at the post-office site a decade ago. Mr. Moynihan’s only apparent reward for all those efforts was to be tapped by Mayor Michael Bloomberg to sit on the PSRC’s board of directors last April.

It’s not surprising that the Postal Service was loath to give up the building, a white-columned Beaux-Arts beauty that was built to match the old Penn Station, which was torn down in the 1960′s, before those who loved it had a chance to make a peep in its defense.

Trouble started just after the Sept. 11 terror attack, when the Postal Service’s vice president for facilities, Rudy Umscheid, sent a letter to the PSRC that seemed to call the deal off entirely. He cited the Postal Service’s need to use the facility after its Church Street plant near Ground Zero was shut down.

But things got better a month later, when Charles Gargano, chief of the Empire State Development Corporation, accompanied Mr. Pataki and Mr. Bloomberg, then a candidate for Mayor, to the White House to urge the federal government to help rebuild New York.

The President Intervenes

The trio asked President George W. Bush to help break the log jam. They wanted Mr. Bush to pressure the Postal Service to take a deal that would give them $155 million in exchange for the facility. The Postal Service could rent offices and retail space for a period of some 15 years at little or no cost. The next day, Mr. Umscheid sent a letter to the state agency saying the Postal Service was “prepared to negotiate in good faith.”

As negotiations dragged into the spring, the major sticking point was how to replace the space the agency would lose when they forfeited the building to rail concourses and retail and commercial uses.

One Capitol Hill source who has been following the Postal Service’s negotiations closely said that the deal was now possible because the financially strapped agency’s fiscal strategy had changed.

“They’re consolidating their operations where they can,” said the source. “Where they can get money up front or over time for their biggest and underutilized facilities, it makes a lot of sense for them.”

State officials declined to comment on the negotiations. “We continue to work hard and continue to have productive negotiations with the post office,” said Michael Marr, a spokesman for the PSRC. “No deal has yet been finalized, but we will continue our efforts to bring a 21st-century state-of-the-art Penn Station to the 500,000 commuters and numerous travelers who use Penn Station every day.”

The Postal Service had cited financial woes in its threat a year ago to walk away from the deal, but since then it has undertaken severe cost-cutting measures. A Postal Service spokesperson said that a slight recovery, along with those measures, has actually allowed the agency to come in at the end of fiscal year 2002 with a projected $1 billion deficit-$700 million less than the figure for 2001.

Still, the long-running dispute had made it impossible to move forward on the project. A $155 million bond financing the purchase has yet to be floated, and the project’s development team hasn’t been able to put a spade in the ground.

The project has constantly defied optimistic predictions. In December 2001, Mr. Gargano asserted that construction was on a “fast track” and would begin in the spring. When spring arrived, however, contractors on the project were predicting it would start in November, making way for a 2007 debut for the new Penn Station. Officials now will not project when building can begin.

Meanwhile, federal money secured for the project is not guaranteed: In December of last year, the House of Representatives rescinded a three-year, $60 million grant for building the new Penn Station. Though the U.S. Senate restored it in conference and has reinstated it in this year’s Senate appropriations bill, they have yet to see the House version.

A year after the terrorist attacks, it’s unclear whether lawmakers will see Penn Station as a priority as they continue to provide financial aid for New York.

World’s Greatest Noodge

There are some factors that could help the project. Mr. Bloomberg, along with his deputy mayor for economic development, Daniel Doctoroff, has launched a giant push to redevelop the far West Side. And last spring, the Mayor publicly cited a Penn Station deal as essential to the plan-and later brought in Mr. Moynihan to get it done.

During a news conference at City Hall at the time, Mr. Bloomberg told reporters that the current Penn Station was a “dreary subterranean failure,” and called the Penn Station rebuilding effort “essential to the transportation needs of this city, and to the future security of New York and the entire nation.”

Mr. Bloomberg hasn’t been the only influential politician to take Mr. Moynihan’s lead and push for the project. Mr. Pataki has called the rebuilding of the station the “most important” transportation initiative before the city. Senators Hillary Clinton and Chuck Schumer have both pushed for a redeveloped station to meet new security standards in the wake of last September’s terrorist attacks.

And former President Bill Clinton came to New York in March to unveil Skidmore, Owings & Merrill’s award-winning plan for the site. The plan calls for a restoration of the white marble façade with a central concourse sheathed in transparent glass that, in renderings, glows like a crown from the building’s roof line.

With all that political clout at the table, it nevertheless remains to be seen whether Mr. Moynihan can cut through all the red tape-or whether he needs to. The move by Mr. Bloomberg to appoint him to the board was interpreted by many as a sign that a deal was close, with the retired Senator’s return seen more as a reward for his long work on the project than an essential element of getting the job done.

“Having Moynihan on the board is great,” said one former official who has worked with Mr. Moynihan on the project in the past. “He’s just the world’s greatest noodge .”