Bloomberg to Port Authority: Put Up WTC Money or ‘Just Get Out of the Way’
Eliot Brown Feb. 19, 2010, 12:38 p.m.
Following a new offer by developer Larry Silverstein to break the stalemate over the World Trade Center redevelopment, Mayor Bloomberg came down on the side of the private developer and lashed out at the Port Authority, insisting the agency put in more money itself.
The comments came as Mr. Silverstein offered between $150 million and $250 million in new equity toward funding construction of two towers at the site, asking the Port Authority to back the remaining financing itself.
“This has just got to stop,” Mr. Bloomberg said of the stalemate on the John Gambling show Friday morning, according to a transcript. “The Port Authority has their constituency, their fiscal responsibility, but it’s time to stop this craziness of everything and we’ve just got to move forward here.
“And if we don’t, you’re going to see me out there beating the drums every day. I’m not going to leave this world with that hole in the ground 10 years from now,” the mayor continued. “Silverstein—we asked him to come up with something, he’s done and the Port Authority, it’s their turn to do this. And I will push as hard as I can—they either should do this or just get out of the way.”
Mr. Silverstein and the Port Authority, which owns the World Trade Center site, have been locked in a fight for more than a year over how to build Mr. Silverstein’s towers, which cannot be financed without financial backing by the public sector. Mr. Silverstein wants the Port Authority to back the financing; the agency has generally resisted, saying it would mean unacceptable cuts to its transportation projects.
The Port Authority’s last offer was in the summer, before a round of arbitration began, which called for Mr. Silverstein to raise $625 million in private money before the Port Authority would agree to back financing on two towers. Port Authority officials scoffed at the latest offer, saying that the $250 million would still be slightly less than the development fees Mr. Silverstein was initially slated to be paid for building the towers. The broader point, in the agency’s view, is that Mr. Silverstein still does not have enough skin in the game to show that he is taking enough risk—Mr. Silverstein is using insurance money to fund the development and debt from tax-exempt bonds—and therefore he is still does not have sufficient incentive to act rationally. With that said, it’s hard to think anyone could raise $625 million in private capital to fund the towers today (the Port Authority gave Mr. Silverstein two years to do it), making it seem as though the two sides are still quite far apart.
That Mr. Bloomberg came down strongly on the side of Mr. Silverstein is not exactly what the Port Authority was hoping. While the mayor repeatedly attacked the authority in the spring and summer, he backed off in his condemnations in recent months, taking a more neutral approach as his office sought to bring the agency and Mr. Silverstein closer together.
But now he seems to have been quite satisfied with the developer’s movement—his administration worked for months to get him to put in an additional $50 million last year—and is now hoping that pressure will be enough to get the agency to throw in more money.
Whether the mayor’s push is enough to move the Port Authority is another question entirely. The agency’s executive director, Chris Ward, and chairman, Anthony Coscia, resisted significant pressure from the mayor and Assembly Speaker Sheldon Silver last spring and summer, refusing to put in enough money to meet Mr. Silverstein’s demands and strike a new deal for the redevelopment. Governor Paterson, who co-controls the semi-independent authority with the New Jersey governor, backed its position.
And even if Governor Paterson flipped, a new governor has come into office across the Hudson River, facing tremendous funding shortfalls throughout New Jersey on transportation-related projects and issues.
Then again, the city has argued that the cost of stalemate, at least in the long term, is far greater than what Mr. Silverstein is asking, as the Port Authority would eventually stop taking in rent on the site; would not have any retail that generates funding; and would have to pay hundreds of millions in extra money to build around Mr. Silverstein.
In a statement, Port Authority spokesman Stephen Sigmund said the agency agrees about the need for progress, “But a public bailout is not the answer. The Port Authority will continue to work for a rational plan that invests public and private dollars to move the site forward.”