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WTC Developer Threatens Arbitration at Ground Zero

Wed July 15, 2009 - Northeast Edition

NEW YORK (AP) The private developer of the World Trade Center site threatened July 6 to go to an arbitrator unless he and the site’s owner quickly settle a months-long impasse over how much each should pay to build office towers at ground zero.

Larry Silverstein, who wants to rebuild three office towers at the site of the Sept. 11 attacks, gave the Port Authority of New York and New Jersey two weeks’ notice before he would go to an arbitrator to resolve issues with his lease.

Terms of the 2006 lease require Silverstein and the Port Authority to go to arbitration before going to court.

The two sides have been squabbling for months about how quickly to build the office towers and how much each should pay to do so. Silverstein has asked for the agency to front as much as $3.2 billion in financing to build two of the three towers; the agency has said it would back financing for one.

Interventions by Mayor Michael Bloomberg, Assembly Speaker Sheldon Silver and two governors who control the Port Authority have failed to reach an agreement.

Silverstein said the arbitration notice is “designed to inject a renewed sense of urgency to these discussions.’’

“One way or another, we must take any and all steps necessary to resolve, once and for all, the disputes that have arisen as a result of the Port Authority’s continued and admitted delays,’’ he said.

Silverstein said the agency won’t meet construction deadlines that were set in a lease agreement to build a multibillion-dollar transit hub, a vehicle security center and support for a city subway line. The earliest deadlines for that are two years away, when the agency would be in default on the agreement.

If the case went to arbitration, Silverstein would seek financial damages from the agency for delays.

The Port Authority has said it can’t use billions in government money to back the private developer’s venture, even though the project is on the land it owns and largely funded with Sept. 11 insurance money.

The executive director, Christopher Ward, said an arbitrator’s ruling wouldn’t resolve how many towers the agency would agree to finance, since it’s not part of the latest lease.

“That is why the Port Authority has offered several different proposals that would give Mr. Silverstein the ability to build a rational amount of office space while protecting scarce public resources for the public projects on the site,’’ Ward said.

The agency has said it wouldn’t be able to pay for other projects like a rail tunnel serving Penn Station or improvements to LaGuardia Airport if it guaranteed financing for Silverstein towers.

The impasse threatens to stall construction of a half-dozen projects on half of the site, including the transit hub and office towers, all surrounding the Sept. 11 memorial.

The two sides hadn’t spoken directly in more than two weeks, when meetings spurred largely by city officials stopped. They have spoken behind the scenes to Bloomberg administration officials. The city doesn’t own the 16-acre (6.5 ha) site in lower Manhattan but has agreed to lease office space in one of Silverstein’s towers.

The mayor has been more critical of the Port Authority’s position in the talks; he called Silverstein’s move “one step closer to stalemate.’’

“Unfortunately, not everyone has worked as hard as necessary to find a solution,’’ Bloomberg said. “No one disputes that the Port Authority is engaged in many projects important to our region, but pitting those projects against the development of the World Trade Center site creates a false choice.’’

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