http://www.capitalnewyork.com/articl...ebates-subsidy
Future of 3 W.T.C. up in the air as P.A. debates subsidy
By Ryan Hutchins
Apr. 24, 2014
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The Port Authority postponed a vote Wednesday that would have doubled the public subsidy for Larry Silverstein's long-stalled 3 World Trade Center project, saying that after six months of talks, negotiators are still seeking a better deal for the bistate agency.
Executive director Pat Foye said he hoped to have a final plan for commissioners to consider at their May meeting, but acknowledged there were still some “significant” issues to resolve and that his staff “have not yet received enough total value for the Port Authority to justify a vote today.”
“Experts who have briefed the board have expressed optimism about the prospects of the downtown Manhattan market for Class A office space,” Foye told commissioners at the meeting in New York. “While I, too, am optimistic about downtown, the city and the region in general, I personally don't know what the vacancy rate will be downtown in six months, or six years for that matter... So as a result we have crafted a transaction which, I believe, provides the Port Authority fair upside participation but—as important—substantial new downside protection in the event the optimists are wrong or premature in their thinking.”
Silverstein Properties has been unable to sign enough tenants to attract substantial outside financing, though advertising firm GroupM has signed on as a marquee resident at more than 500,000 square feet of space. So Silverstein has turned to the P.A., which owns the land, for help finding loans. It is attempting to re-negotiate a similar arrangement reached in 2010.
Under the deal being arranged by the developer’s advisors at Goldman Sachs, the Port would guarantee about $1.2 billion in construction debt. Silverstein would be required to put up some $450 million in equity, or $150 million more than it had committed under the 2010 agreement.
The board's vice chairman, Scott Rechler of RXR Realty, has championed the arrangement. He he has said he's not concerned that it could be difficult to fill some of the space in the building, said it would provide an infusion of cash for the Port Authority and argues the agency is duty-bound to ensure the tower is built. He pointed out on Wednesday that GroupM is waiting to see what happens.
“As stewards here, the worse thing we could do is not act and lose this tenant that's making a commitment to lower Manhattan and our World Trade Center site,” he said. “It's imperative that we do it.”
Commissioner Kenneth Lipper, an investment banker and former deputy mayor, has been leading the fight against the deal. He considers it a risky move for the agency – one that could jeopardize its capital plan and would prevent it from investing in a replacement for the aging Port Authority Bus Terminal or repairs to John K. Kennedy International Airport. He also argues it takes the Port, yet again, away from its core transportation mission. What's more, he suggests Silverstein could and would come up with the money himself if left to his own devices.
“He's a noble man to devote his life to building this,” Lipper said during the meeting. “But it doesn't mean that every electrician and school teacher and everybody else has to pay a toll to support a billionaire getting more billions of dollars. I'm all for billions of dollars. I'm all for people getting rich. I guess I aspire to that myself. But there is absolutely no logic at all, no rational basis at all -- and I've never been able to say this during three terms in government – for this money to be given by the Port Authority to Silverstein. Let him get it in the market by surrendering a portion of his equity.”
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http://www.bloomberg.com/news/2014-0...s-debated.html
Port Authority at Crossroads as World Trade Funds Debated
By Martin Z. Braun and David M. Levitt
Apr 23, 2014
Quote:
The Port Authority of New York and New Jersey’s failure to agree to a loan guarantee for World Trade Center site developer Larry Silverstein shows agency leaders are wrestling over its direction as they seek to fix the dysfunction exposed by the George Washington Bridge scandal.
The agency’s nine commissioners yesterday postponed until May a vote on a $1.2 billion backstop for a third skyscraper at the 16-acre (6.5-hectare) site it owns in Lower Manhattan.
The Port Authority has been involved in real estate since the start of the World Trade Center project in the 1960s.
New York Governor Nelson Rockefeller pushed the agency to build the twin towers, saying he was concerned that Lower Manhattan was being left behind Midtown as a business center. In exchange for his sign-off, New Jersey Governor Richard Hughes persuaded Rockefeller to have the Port Authority take over the privately owned Hudson & Manhattan Railroad, now the Port Authority Trans-Hudson rapid transit system.
Janno Lieber, president of Silverstein’s World Trade Center unit, who attended the packed meeting, said afterward that he was “optimistic” the deal would go through. The developer has already paid more than $1 billion in ground rent to the authority since the 2001 terror attacks, which helps reduce pressure on the agency to raise tolls to fund transportation projects. Silverstein has also given the Port Authority $3 billion in insurance proceeds, he said.
“The presentation about money coming from tollpayers is exactly wrong -- the World Trade Center exists in part to give the Port Authority a windfall,” Lieber said. “We and the Port Authority need to join forces to get the buildings up so we can continue to pay these huge ground rents.”
Port Authority Executive Director Pat Foye said the commissioners will discuss ways to reduce the authority’s risk and get more favorable terms from Silverstein.
Lipper spoke out in opposition to the loan guarantee, saying the authority shouldn’t be taking a risk to back the third tower, which would add 2 million square feet of office space.
Silverstein should either put in more of his own money or seek other investors willing to put in more equity, Lipper said. The developer wants to change the deal because he can’t find investors who will loan him the money on favorable terms without the guarantee, he said.
“Why aren’t the public debt markets willing to put up the money?” Lipper said. “The reason they’re doing that is there’s a 13 percent vacancy rate downtown right now.”
Concerns that Silverstein won’t be able to fill the vacant space are misplaced, said Mitchell Moss, a professor of urban policy and planning at NYU’s Rudin Center. Four million potential workers live within 45 minutes of the site, which is close to a dozen subway lines, he said in a telephone interview.
“This is the most accessible site on the American continent,” he said. “The building is going to be built. The question is whether you wait for the economy to take over or whether you try to build before it does.”
In 2000, the twin towers generated $33 million in net revenue for the Port Authority.
The governors of New York and New Jersey each appoint six people to serve as Port Authority commissioners. Chairman David Samson, appointed by Christie, resigned last month after a report commissioned by the New Jersey governor on the bridge affair recommended changes at the agency. Another New Jersey commissioner, Anthony Sartor, resigned last week. New York has one vacancy on the commission.
When asked if he supported the financing plan for 3 World Trade Center, New York Governor Andrew Cuomo said yesterday at a press briefing in Albany that the decision was up to the commissioners.
That the agency was holding a contentious internal debate over the 3 World Trade Center financing plan in public was “extraordinary” and a sign of change at the agency, said Commissioner William “Pat” Schuber from New Jersey.
“If there’s any doubt that the authority hasn’t changed,” he said, “this should go a long way to indicate that it has.”
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This show they're putting on for us basically comes down to this translation: "See, look at us, we're a transparent agency now, and the governors do not control us."
What a joke. Cuomo should have ended this show by now. But of course, its his show.
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Last edited by NYguy; Apr 24, 2014 at 12:43 PM.
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