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NY builder agrees to World Trade Center deal

Posted on: Tuesday, 25 April 2006, 19:21 CDT

By Joan Gralla and Matthew Robinson

NEW YORK (Reuters) - Rebuilding the World Trade Center site took a leap forward on Tuesday after several years of bickering, when the developer agreed to terms on how to construct four gleaming office towers on what is now a pit in Lower Manhattan.

The breakthrough could kick-start long-delayed construction on the 540-meter Freedom Tower, which would replace the Twin Towers in the New York skyline, and relieve New Yorkers anxious to move past the September 11 hijacked airliner attacks that killed nearly 3,000 people.

Developer Larry Silverstein said construction on the new tower could begin as soon as the landowner, the Port Authority of New York and New Jersey, ratified the deal.

Republican New York Gov. George Pataki said the Port Authority could adopt the deal as early as Wednesday if the developer signed it before then.

Bud Perrone, a Silverstein spokesman, said negotiations had resumed to finalize the details before a Port Authority board meeting on Wednesday.

Earlier, Silverstein's top aide, Janno Lieber, said the developer had accepted the deal despite some tough terms, including a $1.75 billion rent increase over the term of his lease, because "New Yorkers have waited long enough."

Silverstein -- who signed a 99-year lease for the Twin Tower complex two months before September 11, 2001 -- and the Port Authority have disagreed over construction and ownership of the $7.3 billion project, adding to delays over money, security and the architectural vision for the site.

The developer and landowner had been haggling over Silverstein's $10 million-per-month rent for the site, plus how to divide billions of dollars in rebuilding funds, including more than $3 billion in tax-exempt Liberty Bonds and $4.6 billion in insurance proceeds awarded to Silverstein.

There were also clashes over how much residential and shopping space should be built.

Last week the three leading politicians involved -- Pataki, Democratic New Jersey Gov. Jon Corzine and Republican New York City Mayor Michael Bloomberg -- showed a unified front for the first time.

They gave Silverstein two options: rebuild the nearby damaged Deutsche Bank building and get some $50 million in cash, or accept the politicians' terms for rebuilding the four other buildings.

Silverstein agreed to the second option.

"Today in a letter and in a meeting with (Port Authority leaders) ... we agreed to all of the port's economic terms in its proposal to restructure our 99-year lease at the World Trade Center," Silverstein told reporters.

MORE DELAYS POSSIBLE

Among the key terms of the deal, according to Silverstein:

- Silverstein would build the Freedom Tower and three other office buildings on the site, then hand the Freedom Tower over to the Port Authority;

- The Port Authority would to rebuild the Deutsche Bank building on a neighboring property, converting it for residential use;

- Silverstein would get $2.6 billion of the Liberty Bonds and $1.7 billion of the insurance proceeds.

Silverstein also raised several concerns, saying he should not, for example, be penalized if the Port Authority took too long to prepare the site.

The project could be further delayed by long waits for building permits, any court challenges, or conflicts with the construction of a September 11 memorial and transit hub, he added.

Although Silverstein wanted more than $3 billion of tax-exempt Liberty bonds, the new plan only gives him $2.6 billion. That leaves $800 million of the low-cost financing for the rest of the project, Lieber said.

Construction on the Freedom Tower was to begin in mid-April -- the date passed with no deal -- and end in 2011. The rest of the buildings could be finished by 2011 to 2012, Lieber said.

The Freedom Tower would be one of the tallest buildings in the world and help replace the 10 million square feet of office space lost at the World Trade Center. The height of the building in feet is symbolic of the year the United States gained independence from Britain.

Many of the Freedom Tower's tenants are expected to be government agencies.

Silverstein will keep the other three buildings on the 16-acre (6.5-hectare) site, which are expected to be more profitable.

Silverstein has already finished rebuilding 7 World Trade Center, which is set to open soon.

Source: REUTERS

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