W.T.C. Talks Focus on Towers & Money, Not PodiumsOct 09, 2009
In the battle between office towers and retail podiums at the World Trade Center site, office towers appear to be winning.
Negotiations over what to build and how to pay for it have been going on for the past three weeks, and the next meeting of top W.T.C. site stakeholders is scheduled for Thurs., June 11.
Going into that meeting, the consensus among the stakeholders appears to be shifting toward developer Silverstein Properties’ goal of building as many office towers as possible with the Port Authority’s help, Assembly Speaker Sheldon Silver told Downtown Express last week.
“That’s the purpose,” Silver said in an interview with editors and reporters last Friday. “Build more, and build more now. That is our purpose.”
Silverstein cannot build his Church St. office towers on his own because he cannot get construction financing. The Port has agreed to help with Tower 4 but refused to backstop much of the financing for Tower 2, saying Silverstein can build it when the economy improves and the Port should not be expected to take the risk of financing offices on spec for a private developer. In place of Tower 2 and the neighboring Tower 3, the Port wants to build temporary six-story retail podiums.
No one is arguing for Tower 3 to be built immediately and Silverstein appears willing to accept a podium there, but he is still fighting for Tower 2.
On Friday, Silver allied himself closely with Silverstein by agreeing that now is the time to build Tower 2. Silver added that Gov. Jon Corzine and Gov. David Paterson are both being “cooperative” in the goal of building more towers now, and Mayor Michael Bloomberg has previously expressed support for building despite the economic downturn.
On Monday, three days after Silver’s comments appeared on DowntownExpress.com, The New York Times’ Web site reported that the city proposed to backstop $100 million of the financing to build Tower 2, which indicates Bloomberg’s support for the tower. However, the Times also reported that Corzine and Paterson are reluctant to make similar financial commitments because of their already tight budgets.
Silver said Friday that an agreement would require all parties to make further investments.
“They’re trying to work through a conclusion that has everybody put in a little more: the Port Authority, the city, the state, and most important, Larry Silverstein,” Silver said. “And I hope to get there.”
The Port Authority has offered additional help to Silverstein on Tower 2, but not as much as Silverstein wants, according to a rebuilding source who confirmed to Downtown Express the financial numbers in the Times article. The developer turned down a proposal in which the Port would help with the financing if Silverstein put in an additional $370 million of his own money and $430 million of insurance money.
“We remain far apart on a second tower because of how much more public money is required to fund this speculative office building,” Stephen Sigmund, a Port spokesperson, said in a statement. “Our position continues to be that the public’s resources are better spent on public projects first, not more private office space.”
In a counterproposal to the Port Authority, Silverstein suggested that he take over much of the infrastructure work on the eastern side of the site, near his towers, including the demolition of the old temporary PATH station and the rebuilding of Greenwich St., another source involved in the rebuilding said. This source said Silverstein, who would charge development fees for the work, would still save the Port Authority money because private companies can move more quickly than government agencies.
The closed-door meetings about the Trade Center site began after an impasse between Silverstein and the Port Authority over the tower financing and delivery of key site infrastructure threatened to halt progress. Alarmed by that prospect, Silver called all the site stakeholders together, and they held their first meeting May 21 at Gracie Mansion, at Bloomberg’s invitation. The meeting included Bloomberg, Silver, both governors, Larry Silverstein and Port Authority executive director Chris Ward.
There had been three major meetings with top stakeholders including Larry Silverstein since then, Silver said last week. Those three meetings were held quietly and out of the public eye, often at odd times of the day, Silver said. In addition, Deputy Mayor Bob Lieber has been chairing daily meetings of lower-level staff representing all the parties, the second rebuilding source said.
The next publicly announced meeting of the principals will be June 11. Although the Port Authority and Silverstein disagree vehemently on the financing for Tower 2, a few people involved said this week that the outlines of an agreement could still come by Thursday.
“We’re not there yet,” Silver said Friday. “It’s a matter of money, it’s a matter of commitment, it’s a matter of saving money, it’s a matter of refocusing so we can get a result.”
Bloomberg’s office and Silverstein Properties declined to comment.
All the parties involved have been reluctant to talk after Bloomberg made it clear he wanted the negotiations to be entirely private.
“We’re all sworn to secrecy,” Silver told Downtown Express, explaining why he could not go into more detail.
But Silver did repeat his position that now is the time to build Towers 2 and 4, even though the economy is down.
“We’ll be in a different business cycle by 2014 or 2015,” Silver said. “And there are some people who think, there is no other development going on in the city, no other office space. If you look at all the studies, everybody will tell you there’s going to be a need for expanded commercial space in New York City.”
Silver listed the other office projects that are falling through, from Hudson Yards to Atlantic Yards, which will make the World Trade Center towers all the more important.
“New York, Downtown Manhattan, ground zero is going to be the place to go,” Silver said. Silver said the rebuilt World Trade Center could follow the example of the original Twin Towers, which initially filled with government offices because there was little demand for commercial space.
Silver’s first district office was in room 5489 of 2 W.T.C., he recalled, and later he was moved down to the 26th floor as the real estate grew more valuable. Finally, he was moved out of the building altogether.
“Hopefully there will be a market for it,” Silver said of the new office towers at the site, “and we can prepare for it.”
With reporting by Josh Rogers