(The following story by Charles V. Bagli appeared on the New York Times website on March 28.)
NEW YORK — The dream of transforming Pennsylvania Station and creating a new financial district around it suffered a potentially fatal blow on Thursday when the owners of Madison Square Garden announced that they would renovate the 40-year-old arena instead of moving to a new location a block away.
The Garden sits over Penn Station, the nation’s busiest rail hub, where 550,000 passengers a day make their way through cramped, crowded and sometimes bewildering corridors. Demolishing the aging, drum-shaped arena is crucial to building a new station and opening up its platforms and waiting rooms to daylight, as advocates of the plan have envisioned.
Proponents of the new station denounced the Garden’s decision and the family that controls the arena, the Dolans. Some city and state officials were also critical, calling the announcement a ploy to improve the Garden’s bargaining position. But they declined to comment publicly in the hope of persuading the Garden to rejoin the project.
City and state officials and many of the city’s civic organizations have been captivated by the three-year-old, $14 billion proposal to a build a grand new train station by moving the Garden to its fifth home in 134 years. But the project, which proponents described as a once-in-a-lifetime opportunity, has been hobbled by a softening economy, logistical problems, political inertia and a shortfall in public financing.
The Garden, which agreed to explore a move after announcing a major renovation in 2004, has grown increasingly impatient over the lack of progress and the sniping by preservationists critical of their designs for a new arena at the landmark James A. Farley Post Office, across Eighth Avenue from Penn Station and the current garden.
“Madison Square Garden has decided to move forward with our renovation,” officials with the Garden said in a statement Thursday afternoon. “After exploring several alternatives, it has become clear that the only viable option is a renovation.”
The current Garden, home to the Rangers and the Knicks, is the second-oldest arena in the National Hockey League and the National Basketball Association, according to Garden executives.
The announcement came on the same day that Senator Charles E. Schumer called on the Port Authority of New York and New Jersey to rescue the faltering project with up to $2 billion in transportation funds. His suggestion was immediately embraced by the Port Authority. Aides to Gov. David A. Paterson welcomed the participation of the Port Authority but stopped short of saying the state would hand off the project. The new governor is concerned about the extent of public financing, the aides said.
Kent Barwick, president of the Municipal Art Society, which has been supportive of the project but critical of the design for the new arena, said the Dolans had chosen an “extremely peculiar” moment to make their announcement, just when it appeared that the project’s financial problems were getting resolved.
“It’s insulting to everybody,” Mr. Barwick said of the Garden announcement. “This is the most significant project on the horizon for the city of New York. There’s no other transportation project that has so much promise to not only strengthen the transportation system but to spark development in a new section of town.”
City Council President Christine C. Quinn went further, saying the Garden’s announcement “demonstrates a callous disregard for both the future of the Moynihan Station project and the future of New York City.”
She also hinted that the Garden’s plans to renovate, which will require city approval, could run into difficulty.
Barry Watkins, a spokesman for the Garden, said the Farley project could proceed without the arena relocating. “We fail to understand why Ms. Quinn would not want to help us deliver a renovated arena to our more than four million annual fans, most of them New Yorkers,” he said.
Amtrak, which owns Penn Station, urged the Garden, which is owned by Cablevision, the cable television company controlled by the Dolan family, to come back to the table.
The Garden’s ostensible partners, a joint venture of Stephen M. Ross of the Related Companies and Steven Roth of Vornado Realty Trust, reacted diplomatically, saying they understood the Garden’s frustration with the lack of progress.
But Vishaan Chakrabarti, a senior executive with the developers, said that they remained “committed” to the project and had “every faith that our city, state and federal leadership will enable this project to become a reality for all New Yorkers.”
The project began in the 1990s, when Senator Daniel Patrick Moynihan first recommended that the Farley Post Office, which also sits over the train tracks, be converted into an elegant adjunct to Penn Station. In 2005, the state selected Mr. Ross and Mr. Roth to do the project and assembled much of the funding.
The developers soon persuaded Garden officials to consider moving to the Farley building so that they could demolish the old arena and build a train station and a set of skyscrapers in the surrounding neighborhood.
The cost of building a new Penn Station, however, soared to almost $3 billion, from the developer’s original $1 billion estimate. The developers agreed to invest $550 million, while the city and the state each agreed to contribute $300 million. They had sought with little success to get the rest of the money from the federal government.
Tiring of the obstacles, both the developers and the Garden sought last December to give the project one final push. Some officials then tried to get the Port Authority involved because it had both the money and the expertise to do the job.
Yesterday, Mr. Schumer said: “It makes eminent sense for P.A. to do this. They have the resources that could help make it happen.” And Anthony Coscia, chairman of the Port Authority, seemed to agree, at least until the Garden announced that it was not moving.