Silverstein Properties testimony before the hearing...
http://www.wtc.com/news/john-n-janno...ncil-testimony
Testimony of John N. "Janno" Lieber
President, World Trade Center Properties
August 19, 2009
Good afternoon Chairman Gerson and Council Members. Thank you for this opportunity to address some important issues, as well as to dispel some misinformation, relating to the rebuilding of the World Trade Center site.
We are here today because eight years after terrorists destroyed the Twin Towers on 9/11, the rebuilding effort is in jeopardy because of chronic and repeated delays by the site's owner - the Port Authority of New York & New Jersey.
After 9/11, all the government and private stakeholders agreed that it was urgent - for lower Manhattan, for the City, and for the nation - to rebuild the World Trade Center quickly. We came together and pledged to make it a model in every way with groundbreaking life safety features, world-class architecture and state-of-the-art environmental standards.
We selected a Master Plan - designed by Daniel Libeskind - that called not only for recreating the retail and office space destroyed in the attacks, but also for a Memorial to the victims of the attacks, a new above-ground mass transit hub, and a Performing Arts Center to bring culture to the site of tragedy. The Master Plan also sought to undo the negatives of the original super-block design by restoring historic New York streets - Greenwich and Fulton - and reconnecting the site to the Manhattan street grid.
At Silverstein Properties, we disproved the many naysayers who predicted Downtown's permanent demise by building, financing and leasing 7 World Trade Center in record time. But
at the 16-acre WTC site, we agreed to build five office buildings rather than just two - like the Twin Towers - despite the huge additional costs to my company. And without compensation, we gave up more than half of the land at the WTC site for the Memorial and other public projects - even though that meant we had to wait years for new building sites to be created and excavated on the eastern area of the site, away from the location of the Twin Towers. But it was the right thing to do, because the World Trade Center was - and is - a special project. It is central to the success and future of this neighborhood. It is critical to the recovery of New York City's economy and employment base.
Obviously, we weren't the only ones who recognized that the World Trade Center was unique and warranted some special treatment. The Federal government provided significant funds to rebuild the PATH station and other transportation infrastructure. Congress also put in place tax-exempt financing to make sure the commercial space could be rebuilt - without waiting to satisfy conventional market economics. With Speaker Silver's leadership, the legislature enacted a "Marshall Plan" to speed up the physical and economic reconstruction of the Downtown business district and to help rebuilding. The State leadership stepped in to resolve our longstanding battles with insurance companies, who were holding back resources necessary for rebuilding. Under Mayor Bloomberg's leadership, the City helped trigger a retail and residential boom that transformed Downtown into a model mixed-use neighborhood. Chairman Gerson, you and your committee have always been a strong advocate for the fully rebuilt World Trade Center that our community demands.
So - as you can sense -
I find it deeply troubling that the Port Authority all of a sudden insists that the World Trade Center - or at least the office buildings - be viewed as a conventional real estate project that needs to wait until the "market" makes it possible to obtain conventional financing. Which in the Port's view of the New York real estate market, means waiting until 2037 - a full generation after the attacks of 9/11. That makes no sense for New York, and we won't agree to it - especially since top elected leaders have offered a pragmatic plan that would complete virtually the entire site by 2014-15.
The World Trade Center is not a conventional real estate project. No other site struggles with the burden of having been attacked twice by terrorists. No other office building projects have been made to be so totally dependent on public sector construction projects. No other site has a cost structure increased by cutting-edge environmental, architectural and safety standards totally beyond code. No other site has the potential to create 10,000 union construction jobs when people in that industry - mainstays of New York's middle class - are struggling with a dramatic drop-off of work. No other project can cement Downtown's place as an economic and jobs powerhouse for the Region by providing the only new, green office space being built in New York City.
And, perhaps most significant, no other site has such a huge land cost. As you know,
after 9/11 Silverstein kept paying the Port Authority the same rent as if the Twin Towers were still standing and full of tenants paying us rent every month. All told, since 2001, we have paid the Port Authority $2.75 billion for the right to rebuild 6.2 million square feet. of office space. That is maybe five or six times the market value of those development rights. This tremendous windfall to the Port Authority has eaten up roughly two-thirds of all the insurance we collected from our insurance carriers. So its amazing that the Port has decided to hide behind rhetoric about "market" economics and market discipline.
In 2005 and 2006, the Port Authority - together with the other government stakeholders - forcefully insisted that it was important that the entire WTC be fully rebuilt in one single coordinated effort rather than let the site, and the neighborhood, stagnate any longer. This argument was used by the Port to justify taking back several of our buildings, on the theory that the Port, with its vast economic resources, could get them done quickly and cheaply. The most public debate about that issue took place in a hearing of this very committee.
We signed a legal agreement in 2006 and gave back to the Port the right to build 1 WTC and 5 WTC, totaling 3.8 million square feet. We were asked to design and construct three buildings in a few short years, because the government leaders felt it was important for Downtown. We accepted the challenge, and made good on our side of the deal, completing designs on time over a year ago.
The Port, in turn, committed to give Silverstein Properties construction-ready sites, so we could start to build those three towers. Separately, and in addition, the Port also agreed to complete critical infrastructure - the PATH Transportation Hub, the Vehicle Security Center and underground roadway, Greenwich Street and utilities - so that we could finish and open the new Trade Center according to that schedule.
Of course that's not how it turned out. One year ago, after years of the Port Authority insisting that everything was going just fine, Chris Ward admitted the truth - that every project for which the Port is responsible had fallen years behind schedule and hundreds of millions of dollars over budget, threatening the entire WTC rebuilding effort.
Around that time, the leaders of the Port Authority gave us their personal assurances that the agency would work in good faith with us to quickly craft a new rebuilding agreement - one that reflects the true cost and impact of the Port's failures, yet still would allow for a prompt rebuilding. They understood that the $2.75 billion we have paid the Port since 2001 wasn't conventional market "rent" in any sense. That's money that is no longer available for rebuilding.
In addition to getting billions of dollars from our rebuilding coffers, the Port Authority has collected more than a billion dollars from its own insurance policies and received over $2 billion from the federal government, plus hundreds of millions from the 9/11 Memorial Foundation.
So it is frustrating to watch the Port Authority, after collecting over $6 billion from outside sources, take to the airwaves to claim extreme poverty as an excuse not to lift a finger to rectify its own mistakes at the World Trade Center.
The Port Authority insists that it hasn't made any mistakes, that everything is on schedule and that nothing is delayed. These Orwellian denials further undermine the little credibility the Port has left as it relates to the World Trade center site. Less than a year ago, Chris Ward stood before Governor Paterson and New Yorkers and delivered what he described as an accurate, realistic schedule for the project. Now, less than a year later, despite the Port's quarterly pronouncements that they are on schedule, the Lower Manhattan Construction Command Center conducted an independent study that shows that the Port will not likely finish critical WTC work until years past its own deadlines. Freedom Tower - January 2018, WTC PATH Hub - September 2018, 9/11 Memorial & Museum - May 2013, Vehicle Security Center - August 2014.
Where does that leave the office buildings at the Trade Center? Since January, we have built Tower 4 from its foundations 80 feet below grade up to street level. Although we are on schedule to finish the building in 2012, we don't know if the Port will be able to deliver the critical infrastructure necessary to finish, open and operate the building.
The Port Authority owns the World Trade Center site and is responsible for its redevelopment. It has been almost eight years since New York City's historic downtown was attacked by terrorists and the Port has an obligation to the entire nation to do everything possible to ensure the entire site is rebuilt. Now, not 30 years from now. As the Mayor and the Speaker have pointed out, the Port should make rebuilding the WTC a priority rather than invoking false choices between projects as an excuse for it failure in this once-in-a-lifetime rebuilding.
Chairman Gerson and Council Members, we at Silverstein Properties remain absolutely determined to see the World Trade Center fully rebuilt as the centerpiece of the new world-class mixed-use community that is emerging Downtown - the greenest and most exciting place to work, live, shop and visit in our wonderful City. Thank you for your continued efforts to help realize that shared vision. I would be happy to take any of your questions