The Port Authority of New York and New Jersey decided yesterday to accept bids from private operators to run the agency's landmark World Trade Center property.
The agency will gather requests for proposals on the trade center - whose twin towers rise 110 stories, dwarfing Manhattan's skyline - during the next two to three months.
In the following six to nine months, the Port Authority expects to make a decision on which long-term lease proposal it will accept for the world's largest commercial office space.
Port Authority officials, who are appointed by New York Gov. George E. Pataki and New Jersey Gov. Christine Todd Whitman, hailed the decision as the most important advance of the governors' plans to privatize the agency's non-transportation and non-infrastructure properties.
The privatization process began in 1995 with the Port Authority's sale of the Vista hotel, which is located within one of the World Trade Center's towers.
New York City Mayor Rudolph W. Giuliani had opposed the transaction, fearing that New York and New Jersey would agree to a lease arrangement under which the city would not be able to collect taxes on the full value of the property.
But Charles Gargano, one of Pataki's representatives on the Port Authority board of directors, said that under the agreement reached yesterday, "full real estate taxes will be paid to the city of New York."
The agency currently makes payments in lieu of taxes to the city that are approximately one-fourth of what the taxable value of the property may be.
"We're willing to pay more taxes if we get more money" from the lease agreement, Gargano said.
Port Authority officials would not estimate the full value of the World Trade Center on the open market, but said it would let the lease proposals determine that figure.
Authority officials said it will not be forced to retire debt used to finance construction of the trade center because of the agency's policy of issuing consolidated debt.
Separately, the Port Authority is considering refunding as much as $350 million in debt to take advantage of current low interest rates.
J.P. Morgan & Co. is currently serving as a financial adviser to the Port Authority on decision of how to lease the trade center, as is the real estate firm Cushman Wakefield. Chemical Securities had also advised the agency on privatizing the property before leaving the municipal business in 1996.
