The redevelopment of the World Trade Center site could proceed without an agreement with the private developer, New York Gov. David Paterson said in a letter yesterday. Paterson became personally involved in the negotiations between developer Silverstein Properties and the Port Authority of New York and New Jersey last month when the two entities could not agree over public support for the stalled project.

The developer asked the Port Authority to backstop the financing on two of the three towers it plans to build on the site, citing both the tight credit market and the authority’s delay in readying the site for development.

Paterson said that he agreed that one of the three towers was economically viable with public support and he supported the backstopping of one tower by the Port Authority. However, he wrote that there was not a market for the remaining two towers and that if the developer and private equity were not willing to risk their own investments, then the developer “cannot reasonably expect the public to take the same risk.”

Paterson asked the two parties to meet tomorrow and to make a progress report on Aug. 12. In the meantime, the governor instructed the Port Authority to draw up designs that will allow it to complete the public part of the redevelopment without the developer.

Looming over the talks are the expiration, at the end of the year, of the authorization of $3.29 billion of Liberty bonds to finance the construction of towers on the site.

Janno Lieber, president of Silverstein’s World Trade Center Properties, said in a statement that the developer was committed to rebuild at the site but “our initial review indicates that these ideas will not likely put us on a path to a two-building solution, as advocated by Mayor [Michael] Bloomberg and Speaker [Sheldon] Silver, as well as by Silverstein Properties.”

Lieber also said the governor had not addressed the Port Authority’s “chronic failures” at the site that have delayed construction.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.