‘A deal to be made’
The World Trade Center must be the most vibrant “stalled” construction project in history. Thousands of workers are there every day and have been there for years working on the 9/11 memorial, a large train station and two office towers. The “stalled” feeling comes from the near certainty that too much of the work will stop long before completion unless the owner of the site, the Port Authority, can make a deal with W.T.C. developer Larry Silverstein.
Allowing the already-protracted, nine-year rebuilding effort to extend for decades would be a devastating blow to the Lower Manhattan community and would have long-term consequences for the regional and perhaps national economy. If the memorial ends up being surrounded by massive construction sites deep into this century, it would be a dishonor to the nearly 3,000 killed nine years ago.
Two weeks ago, the W.T.C. arbitration panel ordered the two sides back to the table to negotiate for 45 days. The panel made it clear that it would impose its own solution if need be, but stressed that the “circumstances cry out for the parties to agree.”
The arbiters took away the Port Authority’s right to take back the three tower sites in three years if Silverstein completes even one building late, but they also forced Silverstein to continue paying full rent and, for now, denied him the billions of compensation he was seeking. The authority no longer has incentive to wait it out, and Silverstein will get no relief from his financial obligations.
Instead of focusing on the parts of the decision that support their respective arguments, the sides should think more about the parts they don’t like. The Port Authority should look harder at the conclusions that even its latest schedule predictions look to be unlikely and that its Plan B to go it alone would add “substantial” costs and time to the project. Similarly, Silverstein should recognize that the authority has offered more than it is obligated to do and that the panel concluded that the authority has been managing things much better since Chris Ward took over two years ago.
The Port Authority’s reluctance to put public money at risk is justified, but it must recognize that the Silverstein tower sites will have much of the key infrastructure needed for the public train station and shopping complex. The authority has been unwilling to guarantee enough financing for Silverstein and has demanded the developer invest more.
In today’s credit market, clearly, Silverstein can’t put much more in on the front end than he has already offered. But as we have said previously, he could offer the Port Authority a lot more on the back end. Silverstein had offered the agency about 30 percent ownership in Towers 2 and 4 in exchange for backstopping loans. That may not be enough but it is a substantial offer and the Port Authority should embrace the negotiations on this track. There is no feasible way to develop the sites without Silverstein, so the Port Authority should start thinking about a percentage that would provide itself and the public enough of a return to justify the loan guarantees.
A broad framework could be agreed to relatively quickly. The sides are scheduled to meet this week with the governor and mayor, and we hope the iciness will begin to thaw. As Mayor Bloomberg said two weeks ago: “One thing is clear…there is a deal to be made.”