Facing decades of W.T.C. delay, Silverstein firm blasts Port
By Julie Shapiro
April 17 - 23, 2009
A Silverstein Properties executive slammed the Port Authority at a community meeting Monday night, an early public sign of what became an increasingly public battle as the week wore on. At the center of the battle is the suggestion that it could take a few decades to rebuild the World Trade Center.
On Monday night, Janno Lieber, president of Silverstein’s World Trade Center Properties, accused the Port of falling behind on its W.T.C. projects, including Greenwich St., a key corridor that will house utilities for the entire site. The infrastructure delays could force Tower 4, which Silverstein is building on the southeast corner of the site, to fall behind schedule, Lieber said.
“We’re trying to figure out if you can finish, open and operate a building given where they are in the infrastructure,” Lieber said.
The Port released new deadlines for key projects last fall, but Silverstein is still waiting for a detailed schedule that shows how those deadlines will be met. Lieber said it’s hard to trust the deadlines without seeing the plans behind them — especially, Lieber said, since a detailed schedule for the project does not even exist.
“They’ve got a contractor [Phoenix Constructors] who is still developing their own schedule and has not shared it with us or the Port Authority, to my knowledge,” Lieber told Community Board 1’s W.T.C. Redevelopment Committee. “We need to see the contractor’s schedule, we need to see their logistics plan, and we need to come to an agreement as professionals about the schedule implications of some of the construction issues the Port Authority continues to struggle with.”
Several Port Authority representatives attended the community board meeting and sat silently behind Lieber without offering an alternative view. The Port has released some quarterly milestones for the project, but only one quarter at a time, so it is impossible to trace the projects from start to finish and see how realistic the overall timeline is.
A source familiar with the W.T.C. project said the Port has never signed an overarching contract with Phoenix that includes a budget and timeline for the site’s major projects. Instead, the Port contracts with Phoenix on each individual piece of the project, paying for time and materials.
“It’s the most inefficient way you could possibly do anything,” the source said. The longer it takes the contractors to do a job, the more they get paid, the source said.
“It’s like the emperor’s new clothes,” the W.T.C. source added of the absence of a schedule, “but this is seven years after 9/11…. Larry [Silverstein] is absolutely frustrated.”
Steve Coleman, a Port spokesperson, said the Port is reviewing Phoenix’s long-term schedule and will share it with Silverstein once it is finalized later this year. He said the Port is focusing on keeping all the projects on schedule and on budget.
Transparency about deadlines is supposed to be a hallmark of the Port’s policy under executive director Chris Ward, but C.B. 1 members had a tough time getting straight answers out of the Port at the meeting Monday night.
Board members asked when the Liberty St. crossing of West St. would reopen at grade, when the Port would turn over the sites for Towers 2, 3 and 4 to Silverstein Properties and when the Vehicle Security Center would open — and each time they got vague answers.
“Can you bring your calendar with you to the next meeting?” Catherine McVay Hughes, chairperson of C.B. 1’s W.T.C. Redevelopment Committee, finally asked the Port representatives.
Lieber’s comments at the community board Monday came as details emerged of the financial battle Silverstein and the Port are fighting behind the scenes. The faltering economy has made it impossible for Silverstein to finance Towers 2, 3 and 4, which he is supposed to build along Church St. Silverstein wants the Port to serve as guarantor for the construction loans.
But the rebuilding source said the Port balked at the suggestion that they back Silverstein’s tower financing. The Port presented a counterproposal: The Port would help Silverstein build Tower 4 in exchange for a stake in the building, if Silverstein agreed to put Towers 2 and 3, which have no tenants, on hold.
Silverstein asked for a compromise: Put Tower 3 on hold and build Tower 2 now, since that would make it easier to coordinate with the construction of Greenwich St. and the memorial. The Port replied that under that deal, construction for Tower 3 would not start until Tower 2 was entirely leased, which the Port said would take until 2026. That means Tower 3 would not open until 2030. Under the same schedule, work on Tower 5, the Port’s oft-forgotten skyscraper on the south side of the side, would not begin until 2038, when Tower 3 was entirely leased, the source said.
The Port would not confirm these schedule proposals.
The sites for Towers 2 and 3 cannot remain empty pits for decades because they are supposed to house necessary infrastructure for the PATH hub, including plumbing and emergency exits. So the Port wants Silverstein to build the towers to grade now and add retail-filled podiums on top, which would later be replaced by the planned skyscrapers.
Silverstein, unsurprisingly, does not like the Port’s proposals to delay the towers and build podiums.
“If the Port Authority wants stumps, it means those stumps are there forever, and Larry will never agree to that,” the W.T.C. rebuilding source said.
The source pointed out that the Port Authority bus terminal in Midtown was supposed to eventually be topped by a skyscraper, but the current stump is all that was ever built.
“It’s the ugliest building in New York,” the source said.
The source said the Port Authority is partly to blame for Silverstein being unable to get financing. Had the Port turned the sites for the towers over to Silverstein on time, Silverstein would have sought loans earlier, when the economy was better, the source said.
The only tenants Silverstein has so far are for Tower 4, and they are the city and the Port Authority. But Lieber said all three towers are too important to wait for tenants to sign on, which could take years.
At a conference on Lower Manhattan’s future one week earlier, Larry Silverstein said the time to build his office towers is now, so they will be ready when the economy revives.
He acknowledged that Downtown is seeing a glut of commercial space vacated by failing financial firms and banks are still not lending, but he said that extra space would get absorbed within three years.
Then, Towers 2, 3 and 4 “will come on line in 2012, 2013, 2014, 2015 here at the World Trade Center,” Silverstein said. “This is where the spatial needs for business…will come when the market comes back.”
If the Port Authority came through with the financial support and infrastructure Silverstein needs, Lieber said Silverstein could still get Towers 2, 3 and 4 open on that timeline.
“We could still do it,” Lieber told the community board this week.
One place Silverstein has been making rapid progress recently is at Tower 4, where the lowest subgrade level is nearly complete and concrete pouring on the other three levels is well underway. The Port recently finished clearing the western portion of the site and turned it over to Silverstein, Lieber said.
The Port also claims to have finished clearing the sites for Towers 2 and 3, but Lieber said this week that the sites need a couple months more work. Until the Port excavates the sites to Silverstein’s satisfaction, the Port will continue paying Silverstein a $300,000-a-day penalty.
With so much acrimony between the Port and Silverstein, regular meetings are becoming increasingly important. The Port created a steering committee comprised of the project stakeholders last June but stopped holding meetings at the end of the summer. After pressure from Silverstein and others, the Port resumed the stakeholder meetings last month and now plans to hold them quarterly.
After hearing from Lieber about his concerns Monday night, C.B. 1’s W.T.C. Committee passed a resolution asking the Port to release a detailed construction schedule by June 30, one year after the Port most recently disclosed that the project was behind schedule and over budget.
“We need another one-year reality check on what’s going on,” said Hughes, chairperson of the committee. “Sept. 11 was over seven-and-a-half years ago. The community has been patient for a very long time, walking around and through a very large construction site.”
The board has not taken a position on whether the Port should back the financing of Silverstein’s towers, and Hughes said she was wrestling with the concept of more public money going into the private towers, with substantial risk to the Port Authority.
“It’s really important that our neighborhood gets built back and we want to make sure there’s money to do it,” she said.