The Real Deal New York

Port Authority delays vote on Silverstein’s WTC funds — again

Stalling could lead developer to seek out private financing for 3 World Trade Center

May 28, 2014 11:58AM
By Hiten Samtani

From left: Scott Rechler, a rendering of 3 World Trade Center and Larry Silverstein

From left: Scott Rechler, a rendering of 3 World Trade Center and Larry Silverstein

The Port Authority of New York & New Jersey yet again tabled a vote on whether to provide a $1.2 billion subsidy for Silverstein Properties’ development of 3 World Trade Center. The decision to stall appears to be triggered by a lack of support for the aid package. The lack of action may also mean that Larry Silverstein will now have to turn to the private sector to help him fund construction of the $2.4 billion tower.

This is the third time the vote has been delayed. Port Authority vice chairman Scott Rechler, who is also the head of development firm RXR Realty, said that he had a “very high degree of confidence” that the Port and Silverstein Properties could put together a structure that would allow Silverstein to build the tower and bring its anchor tenant GroupM to Lower Manhattan. Rechler added that the Port Authority’s focus would now be on developing a “hybrid proposal that implements private sector funding, reduces the Port’s exposure, and enables us to move forward with the development.”

“There have been a lot of zigs and zags but ultimately we have been successful,” said Rechler, who commended the developer for “meeting the hurdles that have been put in front of them.”

Silverstein said in a statement that “having agreed to the requests conveyed by Port Authority leadership, we are surprised that the discussions did not yield a successful resolution. We remain committed to working with the Port Authority to reach an agreement that accomplishes our shared mission of building 3 WTC.”

GroupM committed to take about 516,000 square feet at the 2.5 million-square-foot, 80-story tower in December. Silverstein may now be faced with the task of reassuring its anchor tenant that the tower will indeed be built.

Some Port Authority officials, including Rechler and executive director Patrick Foye, had been negotiating last month for the agency to take an ownership interest in the tower, as an additional sweetener to raise its financing guarantee to $1.2 billion from the current $200 million. Other agency officials, most prominently Ken Lipper, have said that the agency has no business backing the tower and should focus its resources on transit projects.

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