Date: Dec 10, 2015
Press Release Number: 198-2015
Accelerates creation of at least $500 million in capital for transportation generated without raising tolls or fares
The Port Authority of New York and New Jersey took a major step forward in realizing untapped value from its real estate holdings at the World Trade Center, authorizing certain modifications to its net lease agreement for the Tower 2 site at the World Trade Center, which will accelerate the creation of at least $500 million in new capital for future transportation projects in the region.
The move advances the monetization of the agency's non-transportation real estate holdings and accelerates the Port Authority's return to its core mission of transportation – key recommendations of the Special Panel on the Future Port Authority – by amending the agency's WTC development plan to attract two anchor tenants at a newly constructed Tower 2, the final tower in the WTC east side development plan. The total private investment is expected to be approximately $3 billion, and create an estimated 10,000 construction job-years.
21st Century Fox and NewsCorp are considering entering into a lease for of approximately 1.5 million square feet of space at new Tower 2 – approximately 1 million for 21st Century and 500,000 for News Corporation – for an initial term of 30 years.
The project will move forward with limited public support from Empire State Development (ESD) to 21st Century Fox and NewsCorp through tax credits for $15 million offered by ESD through its Excelsior Jobs program, which offer credits under established criteria for significant qualifying capital investments by businesses in New York State. After taking into account investment credits provided by ESD, Silverstein Properties will contribute $19 million to support the 1.5 million square foot lease, with the Port Authority bearing the remaining $9 million in net present cost. The proposed public support would total approximately $16 per square foot for Tower 2, spread over a thirty year initial lease term, well below the per square foot level of support provided for tenants in One World Trade Center and Tower 3 in recent years, which ranged as high as $250 per square foot.
In return, the Port Authority is expected to benefit from at least $500 million in new financial capital capacity in the current capital plan window, to fund future transportation projects in the region as it returns to its core mission of transportation.
"Jump starting construction of Tower 2 will not only move us one step closer to finishing the work we began on the World Trade Center site more than a decade ago, but will provide us with another revenue stream to finance more than $500 million worth of critical regional transportation projects," said Port Authority Chairman John Degnan.
"Today's action will go a long way in completing the World Trade Center site and returning the Port Authority to its core mission of transportation," said Port Authority Vice Chairman Scott Rechler. "The Port Authority will receive at least $500 million in new capital to help fund critical transportation projects throughout the region, taking a huge step forward in meeting the recommendations outlined in the report of the Special Panel."
Nearly a year ago, the Special Panel on the Future of the Port Authority, a panel convened by New York Governor Andrew Cuomo and New Jersey Governor Chris Christie, recommended that the Port Authority divest and monetize its commercial real estate holdings at the World Trade Center and to return to its core mission of transportation. Tower 2 is the last of the major skyscrapers under the World Trade Center east side master development plan. One World Trade Center and Tower 4 opened in 2013, and Tower 3 is scheduled to be completed in 2018. In addition, the Port Authority expects to open the World Trade Center Transportation Hub Oculus next year.
Port Authority of New York and New Jersey
Founded in 1921, the Port Authority of New York and New Jersey builds, operates, and maintains many of the most important transportation and trade infrastructure assets in the country. The agency's network of aviation, ground, rail, and seaport facilities is among the busiest in the country, supports more than 550,000 regional jobs, and generates more than $23 billion in annual wages and $80 billion in annual economic activity. The Port Authority also owns and manages the 16-acre World Trade Center site, where construction crews are building the iconic One World Trade Center, which is now the tallest skyscraper in the Western Hemisphere. The Port Authority receives no tax revenue from either the State of New York or New Jersey or from the City of New York. The agency raises the necessary funds for the improvement, construction or acquisition of its facilities primarily on its own credit. For more information, please visit http://www.panynj.gov.