Port Authority Wants Two Buildings At Ground Zero

Accord, again, at Ground Zero?

Officials of the Port Authority have apparently handed Larry Silverstein two proposals: a sweetened version of what was offered earlier and a tuck-your-tail-between-your-legs-and-get-the-hell-out-of-here option that would leave the developer with little profit and no glory.

The real news is that Mayor Bloomberg, until now a hold-out, has reached an agreement with Governor Pataki and that the rift between the New Jersey and New York contingents of the Port Authority has healed, as Charlie Bagli’s lede in the Times shows:

After months of political bickering and false starts, officials from the Pataki, Corzine and Bloomberg administrations said last night that they were finally in agreement on a workable financial plan to rebuild at ground zero and have the Port Authority of New York and New Jersey take control of the Freedom Tower.

The first option resembles the one that crumbled March 14: Silverstein gives up the Freedom Tower and Tower 5, and retains his right to develop Towers 2, 3 and 4. The difference here is that the city is on board, and will pitch in more of its Liberty Bonds, for a total of $2.6 billion low-interest financing, The Sun reports.

The Times says that Silverstein would act as the developer of the Freedom Tower, which means he gets to charge a fee–typicaly 3 to 5 percent of a building’s cost–without taking on any of the risk of leasing it.

In addition, the city and the Port Authority would rent 1.2 million square feet in Tower 4 at market rates, The Sun reports, assuring Silverstein of a major tenant there. (This is odd: 4 is supposed to be one of the most commercially viable buildings.)

Silverstein’s rent payments to the Port Authority would be reduced but The Sun says only in proportion to the space that Silverstein loses. In addition, $100 million would go towards the World Trade Center memorial next door, which has been having some trouble raising money, as we reported yesterday. It is not clear if this money would come from Silverstein or the Port Authority.

In a second scenario, Silverstein’s development activity on the site would be scaled back even more dramatically. Here’s Tom Topousis in the Post:

Under the option that would trim Silverstein’s role, he would be given the right to build only the 57-story Tower 5 a block south of the main World Trade Center site, and he would get $50 million in cash.

The Port Authority would take over development of the remaining four towers at the World Trade Center, including the Freedom Tower.

And then:

“The reason that option is in there is to be as fair as possible to Larry,” said PA Chairman Anthony Coscia.

Which is like telling someone you are whipping that you are really giving them a massage.

Silverstein’s folks haven’t yet responded to the proposals.

– Tom McGeveran and Matthew Schuerman

Port Authority Wants Two Buildings At Ground Zero