The Port Authority of New York and New Jersey on Wednesday approved an agreement with developer Larry Silverstein to finance the completion of the stalled 3 World Trade Center project, ending months of negotiations that revealed deep splits among board members over the bistate agency's role.
Port Authority executive director Pat Foye said the deal won't require the authority to guarantee funds raised by Silverstein. Under a previous plan, the Port Authority would have guaranteed $1.2 billion in loans. Foye said Silverstein will raise the money from the private sector and no public money will be used to guarantee the loans.
The agreement will give Silverstein's company, Silverstein Properties Inc., $159 million in previously escrowed insurance proceeds. A 2010 agreement between the developer and the Port Authority had earmarked that money as a completion deposit. The money will now be freed up for construction, Foye said Wednesday. Up to $50 million will be released immediately.
Silverstein is expected to raise about $1.2 billion in bonds and $300 million in private equity, to go along with $463 million in insurance proceeds and $210 million in state and city funding, according to the Port Authority. The public commitment, and that of the Port Authority, is unchanged from the 2010 agreement, Foye said.
About seven or eight floors of the planned 80-story building in New York City have been completed. Advertising company GroupM has agreed to lease about 515,000 square feet in the tower.
The issue had split the Port Authority in recent months, and some board members had expressed strong opposition to the earlier proposal to guarantee the $1.2 billion, saying the agency should get out of the real estate business and focus on its core mission of transportation.
On Wednesday, Port Authority board member Kenneth Lipper, a staunch critic of the earlier deal, called the new agreement "excellent" for the Port Authority.
In an email statement, Silverstein praised the deal.
"Today's action, which frees up a portion of our insurance proceeds to be used for the construction of 3 WTC, permits us to immediately jumpstart vertical construction, employ 3,000 construction workers and stay on target for an early 2018 completion," he said.
Foye said the improving economy and increased leasing activity in downtown Manhattan had been important factors in the parties nearing a deal that would involve more private-sector funding.
"(SPI) has done outreach to the market, they have been advised by both Goldman Sachs and JPMorgan, and we would expect in the next weeks and months that they'll be going to the market," he said. "Market conditions are favorable, and I would think they'd want to take advantage of that."