I think its a dumb idea. Penn Station works just fine. They are going to spend $800 million so that we can all say "Gee, isn't it so nice having a pretty train station" when it doesn't work any better than the current one.
How about this: Sell the damn building and let a business pay taxes on the property.
That's assuming that New Yorkers no longer want train service, unlikely considering that Penn Station's main use is for commuters from up and down state,Long Island, Connecticut, Pennsylvania and New Jersey. However, your comment is equally apropos to municipal airports, I think.