By Tom Topousis, March 26, 2010, NY Post
After years of delays and months of negotiations, Ground Zero developer Larry Silverstein reached a tentative deal yesterday with the Port Authority for him to build two of his planned office towers at the World Trade Center.
But the plan, which will take up to three months to turn into a formal agreement, requires that Silverstein come up with $300 million of private financing for his second office tower and that he have leases in place for one-fifth of the building’s space.
“We are in a position where the partners are all on the same page,” said Port Authority chairman Tony Coscia, who cautioned that much work needs to be done to hammer out all the details in a complex agreement.
If Silverstein meets the Port Authority’s requirements, the agency, along with the city and state, will help him finance the $2 billion tower by providing guarantees, or a backstop, for as much as $390 million of the financing.
The city would also agree to forgo $130 million it would expect to collect over 30 years from the building as payments in lieu of taxes.
The state will kick in $80 million in cash.
Silverstein also would use all his remaining insurance money, roughly $600 million, for the construction of his first two towers, instead of saving some for the third.
And he would apply all of his Liberty Bond financing to the first two towers.
Despite the remaining hurdles, Silverstein called the proposal “great news for New York.”
“Today’s agreement between my company and the Port Authority will accelerate the rebuilding of the World Trade Center,” he said.
Under his lease with the Port Authority, Silverstein is to build three towers. He has started work on Tower 4, which will continue and is set to be done in 2013, when it will include the new Port Authority headquarters and office space for city agencies.
Silverstein’s Tower 3 would go ahead under the new proposal, but his largest building at the site, Tower 2, would be delayed until the economy improves.
Initially, Silverstein had wanted to move ahead first with Towers 2 and 4. But he proposed switching to Tower 3, which is slightly smaller and would cost about $250 million less to build.
The Tower 2 site will only be built up to street level as a plaza until that project can move forward, officials said yesterday.
If Silverstein can’t meet the agency’s requirements for Tower 3, that also would be built to street level so that the site wouldn’t be left as an open construction pit.
Negotiations over financing for Silverstein’s towers have been in high gear since a panel of arbitrators set a March 12 deadline to resolve the issue.
Despite missing the deadline, both sides were under pressure from Mayor Bloomberg to reach a deal to move the project forward.
The Port Authority initially wanted Silverstein to come up with $625 million of his own financing for his second tower, while the developer first proposed putting in only $50 million.