Volume 18 • Issue 41 | February 24 - March 2, 2006

Editorial

An independent, W.T.C. report is needed and will take time

Gov. George Pataki’s artificial deadline for the Port Authority and Larry Silverstein to resolve their financial dispute at the World Trade Center site is fast approaching. Mayor Mike Bloomberg has sided with the Port and says Silverstein won’t have the money to build five offices at the site and his numbers just don’t add up.

Manhattan Borough President Scott Stringer and Community Board 1 are calling for the city’s Independent Budget Office to shed some light on the dispute and come up with its own financial analysis. Unlike the others who have analyzed this — the mayor, Silverstein and the Port — the I.B.O. has no incentive to shape the outcome and its input would be welcome.

But Stringer, who is on to a good idea, has accepted Pataki’s timeline and has asked the budget office to produce a report before March 14, when the negotiations are scheduled to conclude. The I.B.O. — a non-partisan agency that reports to a board made up of appointees of the city comptroller, public advocate, borough presidents and City Council — is also scrambling to fulfill its primary mission — report to the City Council on the state of the city economy and budget by March 4.

Some of this analysis will be used in its W.T.C. report which will estimate what the Downtown office demand will be over the next few years and how much office rent will be collected at the site. These are important determinations to make and will help the public decide whether Silverstein will have the money to build out the site as he insists, or whether the mayor is right and that the developer will run out of funds and leave sites undeveloped.

But the I.B.O. does not have the time to look at Silverstein’s analysis. Given the parameters, the only conclusion the agency can come up that will have strong weight is if it says Silverstein’s numbers are correct. If the budget office sides with the mayor and Port, Silverstein will undoubtedly say something like this: I was willing to show the I.B.O. my analysis, but they weren’t interested and I am not at all surprised they back the mayor because they looked at his numbers, not mine.

Economists can offer guidance and estimates about future office rents but the only correct answer as to what the rents will be is that no one knows.

Delaying an agreement will not delay construction. The sites we are talking about are for Towers 3 and 4 on Church St., which the Port won’t have ready for construction until mid-2008. The Port says it may be able to speed the timetable for the Church St. bathtub by six months and it is absolutely imperative the agency stop dawdling and make a commitment to building this as fast as humanly possible. The I.B.O. will need at least another month or two to do a more useful assessment and the extra time will not set things back at all.

The city’s arguments sound persuasive — if the Port builds Towers 3 and 4 they can float their own tax-free bonds, Silverstein is relying on dubious Freedom Tower rents to finance the future towers, and has less insurance money remaining than he asserts. Given the time and data, the I.B.O. could assess all of the analysis and assertions to give the public guidance to make the right decision and determine if our suspicions are correct. It’s worth the wait.


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