Negotiations to end a dispute over development at the World Trade Center site in Lower Manhattan continued Thursday ahead of an arbitration deadline today. In January, an arbitration panel gave developer Silverstein Properties Inc. and the Port Authority of New York and New Jersey 45 days to reach an agreement on how to proceed with the construction of three towers.
Silverstein Properties, which leases the site from the authority, has been seeking additional financial support from the agency, citing the credit crunch and economic downturn as obstacles to obtaining private financing. The Port Authority has largely balked at the demands.
Speaking at a breakfast sponsored by the New York Building Congress yesterday, Port Authority executive director Christopher Ward said he was “mildly hopeful” the parties would reach an agreement by Friday. Ward’s other remarks were not as positive.
“How do you find that appropriate amount of public resources that isn’t a full bailout but that’s an investment that keeps progress moving forward and at the same time keeps all of our options open?” Ward said. “All we’re trying to say is, let’s build what we know we need today.”
Ward said public resources shouldn’t be used “to simply build monuments that might well be empty buildings.”
The Port Authority plans to put $11 billion into the site, including infrastructure and the construction of One World Trade Center, an office tower that has already reached 20 floors.
In December, New York’s Liberty Development Corp. sold $2.58 billion of Liberty bonds on behalf of Silverstein to partially finance construction of the towers.
Congress created the Liberty bond program following the Sept. 11, 2001, terrorist attacks that destroyed the original World Trade Center. Though neither Silverstein nor the Port Authority have publicly described what is on the table, the outlines of the dispute have been reported by news media citing unnamed sources.
A source familiar with the negotiations said Silverstein wants to build the towers with a combination of insurance proceeds, $250 million of its own equity and debt which would primarily consist of the Liberty Bonds. Another source said Silverstein is seeking a loan from the Port Authority that would be financed through bond proceeds. The developer has sought a guarantee from the authority to pay debt service on bonds if Silverstein defaulted, sources said.
According to news reports, the Port Authority has agreed to finance one of Silverstein’s towers.
A spokesman for Silverstein declined to comment on the negotiations.