Silverstein Wants $2.6 B. in WTC Bonds—But for What?
Anyone paging through the end of The Times‘ business section Wednesday might have noticed an unusual legal notice nestled in between the commercial real estate classifieds and a bank ad (a reader had to point it out to us):
NEW YORK LIBERTY DEVELOPMENT CORPORATION
Notice of Public Hearing
World Trade Center developer Larry Silverstein, it seems, is eager to issue the $2.6 billion in tax-free bonds he was pledged to rebuild office towers at the site. The reason: the triple tax-exempt bonds meant to spur downtown development, dubbed “Liberty Bonds” in classic post-September 11 style, are slated to expire at the end of the year. The Port Authority, which has its own set of bonds, has been trying to get Congress to extend the expiration date. (The hearing, scheduled for Dec. 3 at the Museum of Jewish Heritage, would authorize final issuance of the bonds.)
So just what does Mr. Silverstein plan to do with the $2.6 billion he’d raise from the bonds?
The economic crisis and a lengthy stalemate have made this crucial question unanswerable, as the choices range from building nothing, to building one tower or building two (the Richard Rogers-designed Tower 3 is assumed to be kaput, at least for the next few years).
While these public hearings on bonds are rarely thrilling spectacle, one does wonder just what will be said about the unknown, given that the state board, the Liberty Development Corporation, is giving its final stamp on bonds worth hundreds of millions in tax savings.
To recap, here’s some background:
For at least the past year, Mr. Silverstein has been locked in a negotiation-turned-dispute-turned-legal fight over the site’s future. Unable to build the three towers he once committed to build (they relied on significant private financing, which is near-impossible, particularly with no private tenants to speak of), he is battling the Port Authority over his obligations.
Back in the spring and summer, the Port Authority, which owns the site, offered to back financing on one of Mr. Silverstein’s towers; Mr. Silverstein demanded the backing of two, saying the agency owed him because of its lengthy delays.
Mr. Silverstein and the Port began a lengthy arbitration process at the end of the summer, consisting of a panel of three arbitrators who ultimately will make some sort of decision on the dispute between the two, though they can be as narrow or broad as they choose.
Settled in the former design studio on the 10th floor of Mr. Silverstein’s 7 World Trade Center, the panel heard day after day of testimony from those involved with the site, and a decision of some sort is expected before the end of 2009.
But even once that decision comes, few expect the arbitrators to prescribe a solution over dates that resolves all the outstanding issues . By the current contract under dispute, Mr. Silverstein must complete all three of his towers within the next five years.