CORRECTED: NY builder agrees to World Trade Center deal

In 10th paragraph please read “$50 million” instead of
“$300 million.”

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 1,776-foot (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. A Silverstein spokesman
declined to comment.

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.