By Carter B. Horsley
The Port Authority of New York and New Jersey,
the City of New York and Silverstein Properties announced Marchg
25, 2010 an agreement on the development of Ground Zero, which
has been long mired in controversy and many delays.
The joint statement said the agreement was
an "outline of a development plan for the east side of the
World Trade Center site" and "calls for the immediate
restoration" of that side to "at least street level,
the completion of Tower 4 by 2013 and the phase-in of Towers 2
and 3 over time."
Silverstein Properties is responsible for building
Towers 2, 3, and 4 under agreements entered in 2001 and amended
in 2006. Under the 2006 amendments, the authority assumed responsibility
for development One World Trade Center, which was formerly called
the Freedom Tower, and Tower 5 in addition to the WTC Transportation
Hub, the 9/11 Memorial, the Vehicle Security Center, Greenwich
and Fulton Streets, retail development and related infrastructure.
About 60 percent of Tower 4 has been pre-leased
to the authority and the city and under the agreement the authority
will provide a master lease for the project supporting the issuance
of Silverstein's Liberty bonds to finance a portion of the tower's
construction costs and any payments by the authority under the
lease would be reimbursed by Silverstein Properties.
The agreement provides for the "immediate
construction of the Tower 3 transit and retail podium, with the
construction of the office tower to follow so long as Silverstein
Properties hits the following private-market triggers: (1) Raises
$300 million of private unsupported equity, (2) Pre-leases 400,000
square feet of the office tower, and (3) Obtains private financing
for the remaining cost of the tower without a full public backstop."
"To help Silverstein Properties obtain
this private financing without a full public backstop," the
statement continued, "it would receive a capped public backstop
of $390 million from the Port Authority, New York State and New
York City, together with $210 million of equity from the City
and the State of New York, with each public entity's contribution
limited to a total of $200 million. Any payments under the backstop
would be reimbursed by Silverstein Properties and the public sector
entities would also have a future Tower 3 capital events participation.
The City's contribution is to be paid for using foregone revenues
that will not be collected if the tower does not go forward. Until
the public backstop is removed, Silverstein Properties would not
be entitled to take profits out of Tower 3."
The statement also said that "The Tower
2 site would be built to at least street level under a plan to
be jointly developed by the Port Authority and Silverstein Properties.
This plan would preserve flexibility for the future development
of the office tower driven by market demand."
Over the next 120 days, the statement concluded,
the parties will negotiate agreements consistent with the development
plan and framework and these agreements will then be presented
to the Port Authority Board for final approval.
An article by Eliot Brown today at observer.com
said that the parties had agreed to a $5-a-square-foot hike in
the rent the Port Authority would pay for the 600,000 square feet
it is leasing in one of Mr. Silverstein's towers.
"In all," Mr. Brown wrote, "the
deal come as a victory for Mr. Silverstein, who drew a line at
two towers, demanding that the Port Authority owed him the responsibility
to make it happen on account of the agency's delays. Mr. Silverstein
was in a position of great leverage, as without a deal, infrastructure
on the rest of the site would have been rendered non-functional
without hundreds of millions of dollars in changes, and, if he
defaulted, the Port Authority would have stopped receiving rent
payments, currently around $80 million a year."
The tallest and northernmost
of Silverstein's three towers, which has been known as "Tower
2," has been designed by Foster and generally has been the
best received. It will be 1,254 feet high and is distinguished
by its sloping roof, the only one of the four tower designs now
published that has such a feature, which was part of Daniel Libeskind's
master plan design. Foster's roof slants sharply downward towards
the Ground Zero memorial space.
Tower 3, the middle of the three Silverstein
towers on the east side of the Ground Zero site, has been designed
by Lord Richard Rogers. It is separated from Foster's Tower 2
by Santiago Calatrava's transportation center building, which
is dwarfed by the two towers. Tower 3 will be 1,155 feet high
and have four spires at its corners rising above the tower's screened
roof. The asymmetrical tower will be distinguished by the diagonal
bracing on much of its facades and the overall design is somewhat
similar, but fussier, than the architect's design for the new
New York Times Tower on the east side of Eighth Avenue between
40th and 41st Streets that is being built by Forest City Rattner
and is nearing completion now.
Fumihiko Maki's Tower 4 is the simplest of
the three new towers and bears a strong resemblance to Edward
Larrabee Barnes 599 Lexington Avenue tower at 53rd Street that
was built by Boston Properties in its shearing away of one of
its top's corners. (3/25/10)