The New York Liberty Development Corp. plans to re-offer in three issues around $1.6 billion of bonds that were first sold in 2009 and 2010 to finance development at the World Trade Center site.
Goldman, Sachs & Co. is expected this week to price all three issues, which are comprised of multi-modal liberty revenue refunding bonds and recovery zone revenue bonds.
Winston & Strawn LLP is bond counsel.
Proceeds from previous bond offerings have been held in escrow because they have not yet been put to use and this week's issues will "re-escrow" the funds, according to a source familiar with the matter.
The funds are expected to finance construction of Towers 3 and 4 on the WTC site. Tower 4 was topped out in June at 72 stories and is expected to open in the fall of 2013, which will likely make it the first building on the site to be completed.
Tower 3 still has a long way to go. At 175 Greenwich Street, it stands at eight stories high — 72 stories less than its planned height.
Under an agreement with the site's owner, the Port Authority of New York and New Jersey, the tower's developer must fulfill a 400,000-square-foot pre-lease condition.
So far, Silverstein Properties Inc. has not met that requirement, but remains optimistic that it will meet its target over the next year.
Bud Perrone, a Silverstein spokesman, said that work is continuing at the site, with the steel perimeter expected to reach the seventh floor in the fall. That will be followed by another year's worth of work on the interior.
"If during this period Silverstein Properties is able to secure a pre-lease for 400,000 square feet, then construction will continue uninterrupted to the top," Perrone said in an email.
To finance construction costs for WTC Towers 3 and 4, as well as Tower 2, the LDC sold around $2.6 billion of multi-modal liberty revenue bonds in 2009. Financing for Tower 2 has since been excluded from subsequent bond issues.
The bonds were sold in 2009 and the proceeds escrowed because Silverstein could not use the funds before the original expiration of the liberty bond program at the end of that year.
The program was created following the Sept. 11, 2001, terrorist attacks and authorized $8 billion of private-activity bonds to revitalize Lower Manhattan.
The bonds carried an Oct. 12 mandatory tender date the following year, when the bonds were expected to either be re-offered, the funds taken out of escrow, or a combination of both.
After successive mandatory tenders and re-designations, the Series 2009 were refunded in whole in October 2011 through the issuance of $2.6 billion of liberty revenue refunding bonds.
The following month, a portion of October's refunding bonds was refunded through the issuance of $1.2 billion of liberty bonds for WTC 3.
Another portion of approximately $114 million of liberty refunding bonds was separately issued at the same time for the WTC Project, Towers 3 and 4.
Those two issues are being re-offered this week, where a portion of both issues will be converted to a weekly interest-rate mode, and the rest will remain as term bonds. In weekly mode, the interest rate will be determined by the remarketing agent, Goldman Sachs, each Wednesday. All of the bonds will be remarketed under an amended indenture of trust.
The bonds will mature in 2049, but have mandatory tender dates on May 22, 2013.
The third issue this week will also convert a portion of the bonds to weekly mode and remarket the bonds under an amended indenture of trust, though the bonds were originally issued through the recovery zone facility bond program.
The bonds will mature in 2050, and have the same mandatory tender date. A portion of the bonds, as well as a portion of the re-offered liberty bonds, will be backed by a letter of credit from JPMorgan Chase, which will expire on May 29, 2013.
The RZFB program created a new category of tax-exempt bonds under the American Recovery and Reinvestment Act of 2009, with the requirement that they were issued in a "recovery zone." That includes areas of poverty, general distress, or areas designated as an empowerment zone or renewal community.
The WTC site was designated as a recovery zone in 2010.
In Dec. 2010, the LDC issued $336 million of RZFBs to help finance construction costs of 3 WTC. The bonds were tendered and re-offered in 2011, and are now being re-offered again.
A person familiar with the matter said that the re-offerings usually occur each year.
Fitch Ratings has said it will confirm its triple-A ratings on the term bonds, and the A-plus and F1 ratings on the weekly mode bonds.
