PA’s Foye steps up for 4 WTCNov 08, 2012
The Port Authority’s new executive director, Patrick Foye, is off to a running start at the World Trade Center. Insiders credit him with encouraging his boss, Gov. Cuomo, to sign off promptly on the PA’s agreement with Fidelity Investments on financing construction of 4 WTC last week.
That allowed the PA and Larry Silverstein to sell $1.23 billion in long-delayed Liberty Bonds immediately, rather than endure a 10-day period the governors of New York and New Jersey normally have to review a PA board decision.
“You’re very well-informed,” Foye chuckled yesterday, his first official day on the job. “We wanted to minimize risk [in placing the bonds] with all the unrest in the world economy.”
We were skeptical when Silverstein virtually credited Foye with single-handedly driving through the long-delayed resolution to the PA-Fidelity dispute, which had prevented the agency and the developer from marketing the bonds — essential to completing 4 WTC, which has now reached 54 stories of an eventual 72.
The bond issue, which is to pay about half of 4 WTC’s total development cost, was first delayed a year ago by turmoil in the muni market, and then stalled again last winter when Fidelity — a major holder of PA general-obligation bonds — objected to the structure under which it would be repaid in the event of a default.
Construction of the massive project proceeded, but was on the brink of stalling. While it was hard to imagine that the tower wouldn’t be completed eventually, at least a temporary hiatus appeared more than possible — which would have sent a pessimistic message about the entire WTC site.
Last Tuesday, when Silverstein and the PA announced the successful pricing of the bonds, the developer said in a statement, “A few months ago, [Cuomo] assigned Pat Foye to work with us and the PA” on the bonds issue. “This successful effort is a terrific start to Pat Foye’s leadership at the PA.”
Even allowing for Silverstein’s wanting to be politic, it sounded like an exaggeration — notwithstanding that Cuomo months ago had supposedly tapped Foye, then his top economic adviser, to mediate the PA-Fidelity issue.
Sources told us that neither Foye nor his predecessor, Christopher Ward, had played a direct role in nailing down the deal, which was more the result of good will and hard work by lawyers for the two sides.
Foye, however, is credited with recognizing that a significant issue had to be resolved between the PA and Fidelity, whereas Ward had maintained that Fidelity had merely “misunderstood” the repayment structure. Sources close to both the Ward and Foye camps insisted the restructuring would not increase either the PA’s or Silverstein’s costs.
But whatever took place previously, Foye undeniably stepped up last week. Once the PA board and Fidelity had a deal, he presented it for Cuomo’s signature immediately — as PA commissioner Bill Baroni did to New Jersey Gov. Chris Christie.
As a result, the PA and Silverstein were able to market the bonds immediately to take advantage of market conditions — and before “any havoc in Greece or anywhere else” roiled the waters, an insider said. Although the governors rarely exercise their veto power, PA actions can’t take effect until they formally sign off on any given agreement.
The governors’ swift consent “accelerated by more than a week when they were able to sell the bonds,” according to a source.
The 4 WTC bond offer was oversubscribed 8-1. As reported, yield on $514 million of the bonds maturing in November 2051 fell to 5.05 percent, .05 percentage points lower than earlier in the day on Nov. 1, and yields on debt maturing in 2031 fell 0.1 point to 4.85 percent.
The breakthrough on 4 WTC occurs as sources say Silverstein appears to be moving toward refinancing 7 World Trade Center, the tower he built on spec in the face of widespread skepticism, and which is now 100 percent leased to high-paying tenants.
JP Morgan Securities yesterday advised holders of Liberty Bonds for 7 WTC that “effecting a refunding of the bonds” is currently being considered.
It’s a first step in disclosure that must precede a refinancing, which would be done to reflect the tower’s current successful status.
Silverstein hopes that the saga of 7 WTC will be repeated at 4 WTC, where no private-sector tenant has yet signed a lease.
The PA itself will make its new headquarters there with 800,000 square feet, and the city’s Human Resources Administration is to take 582,000 square feet. Both deals are for somewhat below-market rents.
They still leave nearly half of the tower’s 2.2 million “rentable” square feet up for grabs.
Moreover, as Post City Hall Bureau Chief David Seifman reported last spring, Silverstein — and apparently Mayor Bloomberg as well — is prepared to jettison the HRA deal if a higher-paying private-sector tenant comes along.
There will be plenty of time for that, as the project won’t be finished for two more years.