The New York Liberty Development Corp. board Monday approved selling $1.78 billion in mostly tax-exempt bonds to complete 3 World Trade Center.
The bonds will be sold as Liberty Bonds and Recovery Zone bonds in October. Most of them will be tax-exempt, though there may be a taxable portion of up to $100 million.
The vote in favor was 3-0, with three of the six members not in attendance.
The bonds will be sold in three classes. Class 1 bonds will have superior protection to Class 2 and 3 bonds, while Class 2 bonds will have superior protection to Class 3 bonds.
The bond sale will refund the corporation's series 2010 multi-modal recovery zone revenue bonds (3 World Trade Center), series 2011A and 2011B multi-modal recovery zone revenue bonds (3 World Trade Center), and series 2011A and 2011B multi-modal recovery zone revenue bonds (World Trade Center - Towers 3-4).
The bonds will be sold pursuant to a limited offering memorandum. This will limit sales to qualified institutional buyers, accredited investors and sophisticated municipal market professionals.
The maturity is not to exceed 35 years.
The aggregate principal amount could be up to $1.87 billion to accommodate original issue discount.
Goldman Sachs & Co. will be the lead underwriter on the negotiated offering.
Winston & Strawn LLP will be the bond counsel. The Bank of New York Mellon will be the indenture trustee.
In addition to the bond proceeds, money for construction of the building will come from insurance proceeds and equity contributions by the project developer, World Trade Center LLC, an affiliate of Silverstein Properties, as well as financial assistance from the state, city, and the Port Authority of New York and New Jersey.
The New York Liberty Development Corporation is a conduit issuer for Liberty Bonds issued on behalf of New York. The project developer must pay back the bonds.
After the attacks of Sept. 11, 2001, federal law was changed to allow the issuance of Liberty Zone and Recovery Zone Bonds on a tax-exempt basis for projects that would normally have taxable bonds.
Scheduled for completion in 2018, the building is expected to be 1,170 feet tall and will have 2.5 million square feet of office space over 58 office floors.
The first seven floors of the building have been constructed but further work was delayed when the developer, Silverstein Properties, had problems getting private financing. The developer asked the Port Authority of New York and New Jersey to provide loan guarantees, a request that was opposed by some Port Authority board members.
The Port Authority has agreed to provide a "financial backstop" to fund, under certain conditions, construction cost overruns, leasing cost overruns, and operating expense deficits of 3 World Trade Center and debt service shortfalls on the Class 1 and Class 2 bonds.
