Deal To Build on Ground Zero Could Be Reached Today

After months of intense and sometimes spiteful negotiations, a final deal for development at ground zero could be struck today at a Port Authority board meeting. The agreement could represent a major shift of development rights at the former World Trade Center site to the government from the private sector, and result in the reduction of publicly available commercial space by about a third.True to the pattern and tenor of negotiations thus far, both developer Larry Silverstein and government officials were jockeying last night as each side sought to publicly pressure the other into signing a deal – or taking public responsibility for further delaying construction on the gaping 16-acre hole in Lower Manhattan.At a press conference yesterday and in a letter to the Port Authority, Mr. Silverstein said he would accept the “economic terms” of a government proposal to split up development of the former World Trade Center site, but the 74-year-old developer stopped short of signing onto the plan, saying some remaining objections could be solved in “matter of days.” If those objections are reconciled, Mr. Silverstein indicated that construction on the Freedom Tower would begin immediately.“If the Port Authority enters into this final phase of the process in the same spirit of partnership and cooperation that we are exhibiting today, all parties can reach a final agreement in short order,” he said.Port Authority officials and Governor Pataki responded to Mr. Silverstein’s “acceptance” by encouraging him to sign the proposal so they could put it before the board of the Port Authority for ratification. As of late last night, Mr. Silverstein had not done so, although a spokesman for the developer said negotiations were under way with the Port Authority.The outstanding objections include the sharing of infrastructure costs, a provision about profit sharing between the developer and the Port Authority, accountability for delays caused by other entities, and the date by which the Port Authority must approve the plan. Neither Mr. Silverstein – who has a reputation as a stubborn negotiator – nor government officials appeared to be willing to risk a final deal over those objections.If a deal is approved by the Port Authority board today, it would finalize a major reorganization of Mr. Silverstein’s 99-year lease on ground zero. Until December, it was widely accepted that under the conditions of prior agreements, Silverstein Properties had the right and the obligation to build out and control 10 million square feet of commercial office space in five towers on and around the former World Trade Center site.Critics of that plan, who included the owner of the site, the Port Authority, and the Bloomberg administration, said it would have resulted in the developer defaulting on his agreement and abandoning ground zero with the towers half-built.The proposal now on the table would reduce the developer’s control of the site to about 70%, fill about 22% of the total available space with public sector tenants, change roughly 12% of the planned space into apartments, and speed up the timetable for completing the entire site by three years, bringing the expected completion date to 2012.Under the tentative deal, the Freedom Tower – the architectural centerpiece of the site but the building likely to generate the least enthusiasm among prospective tenants – for the most part will be a government building. It will be controlled by the Port Authority, which will have guarantees from Mr. Pataki to lease about 30 floors to public sector tenants. Silverstein Properties would still be paid to build the 1,776-foot tower.Mr. Silverstein will also build and lease out three commercial office buildings along Church Street, widely considered to be the most commercially attractive development sites. Under the agreement, the city and the Port Authority will commit to lease about 1.2 million square feet of office space at market rates in those towers. That commitment will account for about 18% of the 6.8 million square feet that Mr. Silverstein will control at the site.The developer will share about 40% of his $3.2 billion of insurance proceeds with the Port Authority and the developer that ends up constructing the retail component slated for the site. Mr. Silverstein would be awarded a total of about $2.6 billion in tax-exempt Liberty Bonds; the rest of the bonds, about $740 million, would go to the Port Authority or another developer the Port Authority would hire to build out its portion of ground zero.The rights to build a fifth tower, on the site of the badly damaged Deutsche Bank building that still stands just south of ground zero, will be controlled by the Port Authority, and would likely be sold to a developer to build apartments.Mr. Silverstein said yesterday he has “no clue” how much the deal will earn Silverstein Properties or whether the new deal will earn the company more or less than previous proposals.Yesterday, the vice chairman of the Port Authority, Charles Gargano, said in a telephone interview that he believed Mr. Silverstein’s acceptance to be genuine. “Now it’s a matter of getting what we need in order to bring it to a board,” he said.Mr. Gargano said the Port Authority was familiar with Mr. Silverstein’s objections, which could be solved “in a matter of months.”Mr. Bloomberg said at an unrelated press event: “The one thing we cannot do and will not allow to have happen is you agree in concept and then try to nickel and dime and go on forever.”

Deal To Build on Ground Zero Could Be Reached Today

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