With a deadline approaching, the Port Authority of New York and New Jersey made a new overture to developer Larry Silverstein in their dispute over the financing of redeveloping the former site of the World Trade Center in Lower Manhattan.
The project has been revised several times and is way behind schedule.
The twin towers of the World Trade Center were destroyed in terrorist attacks September 11, 2001.
The Port Authority is presently building One World Trade Center, which was formerly known as Freedom Tower at the site, which is known as Ground Zero, but the fate of four other smaller but still major towers clustered about a memorial and a new transportation center remains uncertain.
As a result of prior negotiations, Mr. Silverstein, who leased the entire site from the authority not long before the terrorist attacks, was liable only for building three major office towers to the east and south of the Freedom Tower but construction has been held up by delays in demolishing the former Deutsche Bank Building just south of the site and the fiscal crisis that has made normal financing very difficult.
Mr. Silverstein took the authority to arbitration and both sides must reach a new agreement by March 11 or the arbitration panel will make its own decisions.
Mr. Silverstein recently proposed to the authority that he only build two of the three office towers for which he is responsible but that offer was contingent on the authority assisting in their financing.
This week, the authority countered that it would financially support Mr. Silverstein's first tower and said it would back his second one if he had leases signed for about a fifth of its space and that in the meantime it would erect retail space on the site.
In addition, the authority indicated it wanted Mr. Silverstein to invest $300 million of his own money for construction of the two towers, whereas it had previously insisted he invest more than $600 million. According to an article in today's edition of The New York Times by Charles V. Bagli The authority also wanted "the city to put in a significant contribution toward the redevelopment before the Port Authority would put up money to back financing on two towers - Tower 3 and Tower 4 - according to multiple people familiar with the proposal."
"This latest offer," according to an article by Eliot Brown of the observer.com, "seems to narrow what was once a giant chasm between the warring parties. Still, negotiations at the site have long proved tremendously difficult, even in good times, and now neither the Port Authority nor Mr. Silverstein are eager to take the pain involved in finding the extra money to fund the project, which was once envisioned as a privately financed development."
"The Port Authority's proposal would...give Mr. Silverstein two years to pre-lease 500,000 square feet in the second tower, the Richard Rogers-designed Tower 3, as a condition to the agency's backing of the financing. The rents would have to be at least $80 a foot, a rather high level for Lower Manhattan (Most of the higher floors in Mr. Silverstein's 7 World Trade Center were asking $75 a foot at the market's peak) for a large amount of space. Silverstein Properties would also, in the Port Authority's proposal, have to keep paying ground rent while it still has insurance money, an expense not in Mr. Silverstein's proposal. Finally, the agency calls for the city to close the gap, waiving tens of millions worth of payments in lieu of taxes that the Port Authority would pay the city over 30-years. The Port Authority would also seek reimbursement for some of its losses from the city and state should Silverstein ultimately default on either of his towers."
The project has been revised several times and is way behind schedule.
The twin towers of the World Trade Center were destroyed in terrorist attacks September 11, 2001.
The Port Authority is presently building One World Trade Center, which was formerly known as Freedom Tower at the site, which is known as Ground Zero, but the fate of four other smaller but still major towers clustered about a memorial and a new transportation center remains uncertain.
As a result of prior negotiations, Mr. Silverstein, who leased the entire site from the authority not long before the terrorist attacks, was liable only for building three major office towers to the east and south of the Freedom Tower but construction has been held up by delays in demolishing the former Deutsche Bank Building just south of the site and the fiscal crisis that has made normal financing very difficult.
Mr. Silverstein took the authority to arbitration and both sides must reach a new agreement by March 11 or the arbitration panel will make its own decisions.
Mr. Silverstein recently proposed to the authority that he only build two of the three office towers for which he is responsible but that offer was contingent on the authority assisting in their financing.
This week, the authority countered that it would financially support Mr. Silverstein's first tower and said it would back his second one if he had leases signed for about a fifth of its space and that in the meantime it would erect retail space on the site.
In addition, the authority indicated it wanted Mr. Silverstein to invest $300 million of his own money for construction of the two towers, whereas it had previously insisted he invest more than $600 million. According to an article in today's edition of The New York Times by Charles V. Bagli The authority also wanted "the city to put in a significant contribution toward the redevelopment before the Port Authority would put up money to back financing on two towers - Tower 3 and Tower 4 - according to multiple people familiar with the proposal."
"This latest offer," according to an article by Eliot Brown of the observer.com, "seems to narrow what was once a giant chasm between the warring parties. Still, negotiations at the site have long proved tremendously difficult, even in good times, and now neither the Port Authority nor Mr. Silverstein are eager to take the pain involved in finding the extra money to fund the project, which was once envisioned as a privately financed development."
"The Port Authority's proposal would...give Mr. Silverstein two years to pre-lease 500,000 square feet in the second tower, the Richard Rogers-designed Tower 3, as a condition to the agency's backing of the financing. The rents would have to be at least $80 a foot, a rather high level for Lower Manhattan (Most of the higher floors in Mr. Silverstein's 7 World Trade Center were asking $75 a foot at the market's peak) for a large amount of space. Silverstein Properties would also, in the Port Authority's proposal, have to keep paying ground rent while it still has insurance money, an expense not in Mr. Silverstein's proposal. Finally, the agency calls for the city to close the gap, waiving tens of millions worth of payments in lieu of taxes that the Port Authority would pay the city over 30-years. The Port Authority would also seek reimbursement for some of its losses from the city and state should Silverstein ultimately default on either of his towers."
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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