The owners of Madison Square Garden -- home in New York City to political and sports legends for so many years -- announced yesterday they will build a new arena three blocks away to be completed in 1990.

The new, fifth Garden, will be one block south of the city's mammoth Jacob Javits Convention Center, which opened this month.

Gulf & Western Industries Inc., which owns the Garden complex, plans to tear down the present facility and replace it with twin office towers. The plan also calls for an extensive renovation of Pennsylvania Station.

Construction of the new Garden is expected to begin in the fall of 1987, said Jerry Sherman, a Gulf & Western spokesman. It will seat up to 22,000 people, slightly more than the present arena, and park 1,500 cars.

Sherman said the cost of the new Garden, estimated to be between $150 million and $200 million, would be provided by funds from private investors other than Gulf & Western. Cost of the entire project -- including the twin towers, renovations and a new garage -- is estimated at $1 billion.

The new Garden will be built on a single level to cut costs, Gulf & Western said. The present Garden is the equivalent of five stories.

The site of the current Garden, 33rd Street between Seventh and Eighth avenues, would be turned into a complex including two large office towers and a 500,000-square-foot transportation and retail facility.

Gulf & Western officials said the new complex will be bounded by 11th and 12th avenues and 31st and 33rd streets. Meantime, Gulf & Western's Rangers and Knicks will continue to play at the Garden.