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Settlement on Ground Zero Insurance Claims
Gov. Eliot Spitzer, right, with developer Larry A. Silverstein during a news conference today.
By CHARLES V. BAGLI
May 23, 2007
The Spitzer administration announced this afternoon the settlement of insurance claims at ground zero, ensuring that $4.55 billion will be available for rebuilding the World Trade Center site and ending an often bitter, five-year battle with insurers over payouts related to the terrorist attack.
The settlement with seven of the two dozen insurers — Allianz Global Risk, Travelers Companies, Zurich American, Swiss Re, Employers Insurance, Industrial Risk Insurers and Royal Indemnity — that provided coverage for the World Trade Center is the culmination of a two-month campaign by the state insurance superintendent, Eric R. Dinallo, involving meetings in Geneva, Paris and Delaware.
In recent weeks, Gov. Eliot Spitzer joined the negotiations, which lasted until the early morning hours today. The other insurers made good on their claims.
The agreement removes a dark cloud over the rebuilding effort, although the insurance money represents only about half of the $9 billion cost of rebuilding the office towers and retail space at ground zero.
Without the money, officials say they might not have been able to obtain private financing or the use of tax-free Liberty Bonds. The dispute, officials say, could have dragged on for some time without a resolution, while eating up millions of dollars in lawyers’ fees.
“The unsettled insurance claims were the last major barrier to rebuilding and have been bitterly and intensely contested for almost six years,” Governor Spitzer said in an interview. “This means we can now fund construction, access the financial markets and move on to what should be our primary focus: rebuilding.”
He said the agreement, which ends all the litigation, was part of a collaborative effort on the part of many officials who had lost “patience with the ongoing fighting that didn’t serve the public interest or the effort to rebuild.” Mr. Dinallo was working in tandem with the retired judge Albert Rosenblatt, who was overseeing an arbitration proceeding in the case.
Business leaders downtown, who have been frustrated by years of delays and political and legal wrangling, were elated by the news.
“The downtown business community is pleased that the efforts of the governor and the insurance superintendent in removing the remaining uncertainty over the financing of the World Trade Center site,” said Eric J. Deutsch, president of the Alliance for Downtown New York. “In conjunction with a strong office market, the settlement will ensure success.”
So far, the two dozen insurers at ground zero have collectively paid about $2.55 billion on a maximum claim of $4.68 billion.
Under the settlement, the seven insurers who disputed some of the claims will pay an additional $2 billion. All parties to the settlement have signed confidentiality agreements concerning the specific amounts paid by each company.
The Port Authority of New York and New Jersey, which owns the land at ground zero and built the trade center, will get about $870 million from the settlement, which will go toward the cost of erecting the $3 billion Freedom Tower, the tallest and most symbolic skyscraper planned for ground zero, as well as the retail space at the complex. the developer Larry A. Silverstein will get the remaining $1.13 billion for three large office towers to be built along Church Street, between Vesey and Liberty Streets.
The Port Authority and Mr. Silverstein, who had leased the trade center complex six weeks before Sept. 11, had to relinquish their claim that the companies owed in excess of $500 million in interest relating to delays in making the payments.
This is not to say that nothing has happened at the 16-acre trade center site. The Port Authority is building a $2 billion PATH train station and work has begun on the Freedom Tower. The authority expects to turn over the eastern portion of the site to Mr. Silverstein at the end of this year.
“Look how far we’ve come in the last year,” Mr. Silverstein said.
“A year ago today, we opened 7 World Trade Center, a huge success and a validation of downtown as a world class business district,” he said. “We’ve started construction on the Freedom Tower. We reached an agreement on who would build what and when. And now we have resources to rebuild as quickly and spectacularly as possible.”