Port Authority Is Negotiating To Avoid Paying Silverstein Fees
By PETER KIEFER
May 16, 2008
In order to avoid paying millions of dollars in late fees, the Port Authority of New York and New Jersey is seeking to adjust part of the layout of a building planned for ground zero to accommodate developer Larry Silverstein, sources said.
It is unlikely the Port Authority will be able to meet the June 30 deadline to turn over a building site at ground zero to Silverstein Properties, which controls a lease on the property.
When a development deal was signed in September 2006, the Port Authority agreed to pay the developer a late fee of $300,000 a day until it could hand over cleared building sites.
In February, six weeks after a similar deadline, the Port Authority owed Silverstein Properties about $14 million in late fees because it failed to prepare another building site by the agreed-upon deadline. Now, the Port Authority is said to be negotiating with Silverstein Properties to waive the late fees in exchange for several possible concessions, including altering the floor plates of the future office building known as Tower 3. Enlarging the floor plates would make the office space more amenable to major financial service companies, which need open space to accommodate trading floors. Mr. Silverstein is said to be attempting to lure Merrill Lynch to be an anchor tenant in one of its towers.
One possible use that is being negotiated, according to a source with knowledge of the talks, is an expanded or even multilevel trading floor — an idea that had been floated by Mr. Silverstein in the past. It would be in keeping with his stated goal of turning the World Trade Center site into a new financial center that would rival Midtown.
In March, Mr. Silverstein laid out a detailed construction schedule that stretches across the next four years. Silverstein Properties would build towers 2, 3, and 4, with all three expected to reach street level along Church Street within a year. By the middle of 2010, towers 3 and 4 would reach their maximum heights, with Tower 2 following in 2011, according to the plan.
The three skyscrapers would offer a total of 7.6 million square feet of office space. Last month, construction commenced on towers 3 and 4 at the World Trade Center site after years of delays.
If the Port Authority did incur new late fees, it would add to the increasing number of financial penalties tied to delays in rebuilding ground zero. The state is attempting to renegotiate a deal with Goldman Sachs, which could be refunded up to $321 million from the city and state for construction delays at the former World Trade Center site. Mayor Bloomberg said the city would avoid paying its share of the penalties for development delays at the site, but he left open the possibility that the state could owe Goldman Sachs tens of millions of dollars.
“We are working to meet the deadline,” a spokeswoman for the Port Authority, Candace McAdams, said yesterday.
A spokesman for Silverstein Properties, Bud Perrone, declined to comment.
Port Authority officials have indicated they are interested in taking control of the troubled Moynihan Station project in Midtown, and Governor Paterson and Senator Schumer have encouraged the bistate agency to do so. Mr. Bloomberg has said the Port Authority’s delays in rebuilding at ground zero are proof that it should not take on another large construction project.