The Next World Trade Center Delay

Since August, developer Larry Silverstein and the Port Authority have been clashing in an extensive, binding arbitration over the redevelopment of the World Trade Center site. And, throughout, key sections have been stalled, with giant holes for two towers on the site going unfilled as the two sides await a ruling from the arbitrators, expected soon, that could chart a path forward.

But as the ruling nears, another option looms: more arbitration, and, with that, likely more delays.

The terms of the arbitration have remained mostly private, but buried in bond documents filed by the Port Authority, the site’s owner, is a suggestion that if no satisfactory settlement emerges after the first round, Silverstein Properties will undergo the lengthy process again, seeking damages in the billions of dollars.

“Absent a settlement, the Silverstein net lessees plan to commence a second arbitration in which they will show that the Master Development Agreement was the product of the Port Authority’s negligent misrepresentation and/or fraud,” a bond document filed in the fall and examined by The Observer says, “in which they will seek an award of monetary damages, including rescission damages totaling at least $2.75 billion, which will be dedicated to the project.”

Predicting exactly what the arbitrators will say is a lost cause, as the three-person panel of a judge, a construction executive and a lawyer are given broad discretion in how they rule. But it’s clear that whatever the ruling, it will be a crucial time for the site, with renewed pressure for the sides to strike a deal and ward off further delay.


Held on the 10th floor of Mr. Silverstein’s 7 World Trade Center, the arbitration has been a mostly private affair that’s dragged on through the fall and into the winter, as executive after executive involved with the site trekked up to the lawyer-filled room to testify. (In an ironic twist, the room used to be the design studio for the delayed towers.)

Citing the Port Authority’s substantial delays at the site, Mr. Silverstein called for the arbitration after months of talks over how to finance development of his towers in the recession went nowhere, becoming more of a two-way public mudslinging than a negotiation.

The Next World Trade Center Delay