Port Authority Could Bridge Fund Gap in Penn Plan

The Port Authority could take a financial stake in the planned redevelopment of Penn Station, and provide a crucial source of funding for the $2.3 billion project, sources say.

The Spitzer administration, which is negotiating with the developers, this week announced a funding gap of more than $1 billion for the $2.3 billion plan to replace Penn Station and spur development on the far West Side. The developers, Vornado Realty Trust and the Related Companies, are expected to contribute $550 million, and the state and city would each contribute $300 million. State officials have said they are seeking federal money and additional funds from the developers.

A source familiar with the project said the developers could make inroads with the Port Authority, the bi-state agency that manages and maintains the bridges, tunnels, bus terminals, and airports in New York and New Jersey.

Despite the Port Authority's reputation as a vast bureaucracy, sources familiar with the project believe that the Port Authority's large coffers and bonding capacity exceeds that of the state, and could help bridge the funding gap. The Port Authority is already involved in a number of large construction projects, including a $7 billion passenger rail tunnel to New Jersey known as Access to the Region's Core. The tunnel's New York City terminus is planned to be near the current Penn Station. The authority also is building a large transit hub for PATH trains at ground zero.

The chairman of Related Companies, Steve Ross, said last night through a spokesman that "there are no discussions going on and there have not been any."

Any involvement of the Port Authority underscores the complexity of the deal, which requires coordination among Amtrak, the Port Authority of New York and New Jersey, New Jersey Transit, the Long Island Rail Road, the city subways, and Madison Square Garden, which owns the lucrative air rights above the arena. Madison Square Garden, which is controlled by Cablevision, also would have to be moved to the western side of the neighboring Farley Post Office.

The Spitzer administration has signaled that it would be averse to ceding any control of the project to the Port Authority, which is governed by appointees of the governors of New York and New Jersey. Earlier this week, the state's top development official, Patrick Foye, said he was aware of discussions between the developers and the Port Authority.

"I have heard about that and it is not a sound idea," Mr. Foye said at a hearing in Albany after being asked to comment on the Port Authority's involvement.

A spokesman for the Empire State Development Corp. said in a statement: "ESDC has been working hard with the City, private developers and railroad to advance the Moynihan project and will continue to do so."

A spokeswoman for the Port Authority declined to comment.