THE PORT AUTHORITY OF NY & NJ
Press Release Article
JOINT STATEMENT ON WORLD TRADE CENTER DEVELOPMENT PLAN
Date: Mar 25, 2010
Press Release Number: 15-2010
The States of New York and New Jersey, the City of New York, the Port Authority and Silverstein Properties announced today the outline of a development plan for the east side of the World Trade Center site. The plan calls for the immediate restoration of the east side of the WTC site to at least street level, the completion of Tower 4 by 2013 and the phase-in of Towers 2 and 3 over time. All other projects, including the 9/11 Memorial, One World Trade Center, the WTC Transportation Hub and other public infrastructure, will continue moving forward.
The proposed development plan, presented to the Port Authority Board today, is the result of discussions between Silverstein Properties, the Port Authority, the States of New York and New Jersey and the City of New York over how to finance and build the three office towers on the east side of the WTC site. Silverstein Properties is responsible for building Towers 2, 3 and 4 under agreements entered into in 2001 and subsequently amended in 2006. Under the 2006 amendments, the Port Authority assumed responsibility for developing One World Trade Center 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.
The agreement strikes an important balance between the redevelopment goals, financial risks and rewards between the public and private sector. Further, the public mediators developed private development benchmarks to protect public interests. The proposed development plan and framework would include the following key elements:
- Tower 4: The continued construction of Tower 4, which is expected to be completed in 2013. With approximately 60 percent of the tower being pre-leased to the Port Authority and City of New York, the Port Authority would 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. Any Port Authority payments made under the master lease would be reimbursed by Silverstein Properties.
- Tower 3: 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, 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.
- Tower 2: 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.
- Insurance: Silverstein Properties would use its remaining insurance proceeds toward the construction of Towers 3 and 4 and the payment of ground rent to the Port Authority.
- Liberty Bonds: Silverstein Properties would use all of its Liberty Bonds for Towers 3 and 4.
- Construction Partnership: Silverstein Properties and the Port Authority would jointly develop a plan to better integrate their construction teams given all of the interrelated work on the east side of the WTC site. This would include a more formal process of information-sharing, decision-making and schedule development and implementation, as well as reciprocal mechanisms relating to delay to provide investors, lenders and tenants with reasonable certainty of timely project delivery.
Over the next 120 days, the parties will negotiate agreements consistent with the development plan and framework. These agreements will then be presented to the Port Authority Board for final approval.