The private developer of three buildings at the World Trade Center, Larry Silverstein, is taking a legal action to break an impasse over the rebuilding of the site destroyed in 2001. The move is a significant change in course, as it comes after the top elected officials in the city and state attempted, and failed, to broker a revised deal amid the economic crisis.
In a letter sent Monday to other stakeholders involved with the project, Silverstein claims the Port Authority, which owns the site, is in default on numerous aspects of its development agreement. The letter starts the formalized arbitration process, which will ultimately put the matter before a three-person panel to rule on the issue.
It seems Silverstein is hoping that arbitration will provide a broad resolution for the project. The economic crisis has made it impossible to finance Silverstein’s three planned towers, and he has refused to start construction on two of his towers, a move that would further delay other portions of the site, including the PATH terminal and the museum.
In the recent set of talks—called by Mayor Bloomberg—and in the letter to officials, Silverstein has been driven by a contention that the delays under the Port Authority’s watch (of which there have been many) have made it impossible for him to get financing. Port Authority officials have denied this as, even before the delays were announced, the lending markets were clamped tightly, and the economic crisis that began last fall made it impossible to build any large speculative office space, delays or not.
“If not for the Port’s failures, the project clearly would be much, much further along – and we would have had the opportunity to finance in a much more positive economic climate,” Silverstein wrote in Monday’s letter. “The agency has failed to make good on these promises, repeatedly dragging its heels in the negotiations. And despite the new schedule announced in October 2008, the Port Authority hasn’t accelerated its key projects at the site. The Port has no realistic schedule for its construction work and no integrated logistics plan.”
He said he has been left with “no choice but to utilize the agreed procedures” for a “swift” arbitration to set a new course. This would seem to imply that Silverstein wants substantial monetary damages from the Port Authority.
“We believe [arbitration] provides perhaps the last and best hope for providing a fair and equitable outcome that everyone can live with, and – most important – for finally getting the World Trade Center rebuilt.”
The question now becomes just how much can be resolved in arbitration. While Silverstein seems to be working under the impression that it can expeditiously deliver him what he wants, the Port Authority believes the scope of the arbitration is too limited to do so, according to a Port Authority official. If the Port Authority position proves right, the next step would likely be litigation, should Silverstein choose to go there.