After years of often tense and fruitless negotiations, including some searing public recriminations, the executive board of the Port Authority of New York and New Jersey has formalized a deal with real estate tycoon Larry Silverstein to build two towers at the site of the 9/11 attacks. The board, which owns the property, voted unanimously at a special public meeting on Thursday to approve the deal, after discussing the terms of the agreement in a private session.
Silverstein holds a 99-year lease on the property, which he obtained just weeks before the buildings were destroyed. Construction has already begun on one new tower at the southeast corner of the 16-acre site, but Silverstein has requested public backing for the other two. In March, the authority, the city of New York and the state each agreed to kick in $600 million in subsidies if Silverstein could obtain at least $300 million in private investments on his own. New Jersey also agreed to back the plan in exchange for the Port Authority building a new Bayonne Bridge.
The plan unveiled on Thursday includes nearly $1.7 billion in public financing from the board for the two towers, through subsidies and tax-exempt bonds. Construction of the first tower has already reached the 36th floor, and is scheduled to be completed in 2013. “This plan provides a renewed level of certainty over the development of the World Trade Center site, and makes certain it will be rebuilt while sharing risks amongst all the stakeholders,” Philippe Visser, the Port Authority’s assistant director of World Trade Center redevelopment, said in presenting the plan to the board.
There was reportedly some last-minute grumbling among board members about the amount of money the Port Authority would have to dedicate in order to secure the deal with Silverstein. One of the keys to reaching a final agreement, said Chris Ward, the Porty Authority’s executive director, was the implementation of a so-called “cash trap,” which would prevent Silverstein from profiting from the construction of two of the towers, Towers 3 and 4, before the government gets its money back. Tower 5 is already being built, and is scheduled to be completed by 2014.
“The three things that were critical to this deal were, obviously, that we needed to protect public resources, we needed to bring market reality to downtown, but most importantly, we needed to make sure that the public resources that were invested were not invested in such a way that would benefit our private partner in Larry Silverstein,” Ward said after the meeting. “The ‘cash trap’ is for the purposes of ensuring that.”
In a statement, Silverstein applauded the final deal. “The approval today of the World Trade Center development agreement is fantastic news for New York,” he said, pointing out that construction on some parts of the site had already begun. “This agreement will ensure that we continue this momentum with a new generation of cutting-edge, green skyscrapers becoming available starting in 2013.”
That tone is a marked turnaround from the tenor of the dialogue between Silverstein and the Port Authority just a few months ago. In February, Silverstein told “60 Minutes” that the failure to move forward on the World Trade Center project was a “national disgrace.” In return, a Port Authority spokesman lambasted Silverstein for dragging his heels: “It’s really ridiculous for Larry Silverstein to stand on his empty sites, which he refuses to build without a public bailout, and bemoan the lack of progress when the only pit left on the World Trade Center site is his own.”
But the vote on Thursday took place with little fanfare. Silverstein did not attend, nor did any of the city or state officials who had worked so intensely to reach a tentative agreement in March. The only public speaker to offer support for the plan was Catherine McVay Hughes, the chair of Community Board 1 in lower Manhattan. After a brief presentation by Visser, the board voted unanimously to approve the project, and then adjourned.
“A lot of very, very difficult work, and a very complicated project, went into getting us to where we are today,” the chairman of the Port Authority, Anthony Coscia, said after the meeting. “We’re pleased to be here confirming an agreement that will keep the progress that we’re all so happy to be seeing on a daily basis at the World Trade Center site.”