"This history making project will return Pennsylvania Station to its rightful place as a preeminent gateway to New York City, while also opening up exciting new economic development opportunities for Midtown's Westside," Pataki said. "This plan is a win-win for everyone--allowing us to proceed with construction of one of the world's finest transportation hubs, addressing the Postal Service's consolidation and fiscal planning needs, and providing an additional 700,000 sf of the building for new private sector development and investment."

The $230-million purchase is being funded with $145 million from the Port Authority. The remaining $85 million will come from Empire State Development bonding that will be supported by revenues received from the developer of the commercial and retail portion of the redevelopment. New York City is providing $25 million toward the Penn Station redevelopment project through its Economic Development Corporation.

The Ninth Avenue portion of the building will be marketed for mixed-use private sector development. The five-year project will also open up an additional 805,000 sf of air rights that will be transferred to the State and be strategically used as an economic stimulus for the West Side of Midtown Manhattan.