Developer, Government Hammer Out Tentative Deal on World Trade Center

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A tentative deal between the World Trade Center developer and government officials will allow construction to begin as soon as today. The deal is raising new questions about whether the plans for the site make sense for New Yorkers.


After months of bickering with developer, Larry Silverstein, government officials expressed confidence yesterday that they are close to a final deal. Several obstacles remain, including a plan for government entities to lease a quarter of the site’s 8.8 million square feet of office space.


Some observers questioned the wisdom of moving bureaucrats into modern Class A offices at market rates.


Rep. Anthony Weiner, a Democrat of Queens, said: “When you start counting every city, state, and federal employee and assigning them a desk at the ground zero site, you start wondering if there are enough people.”


The president of the Real Estate Board of New York, Steven Spinola, said officials should focus on bringing in federal workers rather than relocating city and state employees who already work in Manhattan.


“I’m hopeful that would come from another state,” Mr. Spinola said.


Mr. Spinola said bringing in government workers has the potential to attract private businesses to the site by offering potential tenants assurance that downtown is rebounding. Mr. Spinola pointed out that the original twin towers were primarily occupied by public sector tenants before the complex became attractive to the private sector.


Under yesterday’s agreement, Mr. Silverstein will relinquish control of about a third of the site. He will still build all four office towers, but he will hand over the Freedom Tower to the Port Authority. The government will seek a separate residential developer for the Deutsche Bank building site across the street.


City officials said they are excited about a portion of the new agreement that they say speeds up the timetable for completing the site by about three years, to 2012. They said the deal imposes stiff penalties if Mr. Silverstein fails to meet their timeline.


On Tuesday, the project director for the World Trade Center site for Silverstein Properties, John Lieber, said there would be construction challenges in building different pieces of the site. More than $7 billion of construction will proceed simultaneously on the Freedom Tower, the Calatrava transportation hub, the memorial, extensive site preparation on the south side of the site, and eventually three more commercial towers.


Mr. Spinola called the plan “aggressive,” but said Silverstein Properties and Tishman Construction have the ability to complete the plan in that time frame.


“Is it doable? Yes. Is it difficult? It is difficult,” Mr. Spinola said.


The vice chairman of the Port Authority, Charles Gargano, who has a background in engineering, noted yesterday that it only took 12 months to build the Empire State Building.


“It can be done,” he said.


Because of the faster timetable, more than 6 million square feet of office space will enter the market at around the same time. Mayor Bloomberg said that scenario was preferable to a longer construction timetable with a staggered marketing of the new buildings.


“One of the great disincentives to rent downtown is if you look at something that is going to be a construction site for the foreseeable future,” Mr. Bloomberg said. “Given that balance, I would just as soon get everything going.”


Mr. Spinola said large commercial tenants tend to look at changing buildings four or five years down the road. By the time the companies are looking to move in, he said, the construction at the site could be winding down.


Some critics worry that the space will compete with millions of square feet of office space slated to be constructed on the far West Side as part of the Bloomberg administration’s Hudson Yards rezoning plan. City officials have said that the West Side will not interfere with downtown because the first development there will not occur until 2012.


A final agreement on the site will be considered in a September meeting of the Port Authority’s board.


Yesterday, Mr. Silverstein said: “Clearly, there are some issues that need to be resolved, but for today, my focus, like that of all New Yorkers, is on getting the Freedom Tower under way.”


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