Insurers appear ready to pay big bucks for Deutsche
The Lower Manhattan Development Corp. appears to be nearing a windfall settlement with two insurance companies over the former Deutsche Bank building, according to sources who have been briefed by the corporation.
The L.M.D.C. has been haggling with the building’s prior insurers for years, hoping to recoup much of the ballooning $200 million cost to decontaminate and demolish the skyscraper. Those negotiations are nearing an end, and the insurers will have to pay “a significant sum” to the L.M.D.C., a source close to the L.M.D.C. told Downtown Express this week. Another source separately heard about the approaching settlement from the L.M.D.C.
Errol Cockfield, spokesperson for the L.M.D.C., declined to comment on the status of the negotiations or give a dollar-figure. To make a significant dent in the project’s costs, a settlement would have to bring in at least tens of millions of dollars.
Cockfield said the L.M.D.C. is also negotiating with the Deutsche Bank, the building’s prior owner, and with Bovis Lend Lease, the project contractor. Bovis will likely have to contribute to the project’s expenses as well, since Bovis was the contractor in charge during the 2007 fire that killed two firefighters and heaped extra costs and delays on the project. (The firm admitted wrongdoing at the end of 2008 and was able to avoid a criminal indictment.) But it appears that the talks with the insurance companies are more active and are more likely to bear fruit sooner.
Under a previous agreement, the insurers are supposed to pay 75 percent of the project’s costs over $45 million. So far, they have paid $63.5 million. Under the formula they would still owe about $50 million.
Both insurance firms, Allianz Global Risks U.S. Insurance Company and AXA Corporate Solutions, declined to comment.
One source who spoke to the L.M.D.C. about the upcoming settlement said the L.M.D.C. was planning to earmark some of the money for the community, because it would likely be more than enough to cover the rest of Deutsche’s demolition.
If the L.M.D.C. receives extra money, it should go back to the community, said Julie Menin, an L.M.D.C. board member and chairperson of Community Board 1. The World Trade Center performing arts center is one important community project that could use an infusion of cash, Menin said.
Cockfield declined to comment on any potential use of the money.
Workers are now demolishing the 23rd floor of the Deutsche Bank building, which was 40 stories tall when it was damaged on 9/11. The building is expected to be down before the end of 2010, though the L.M.D.C. has not set a timeline.