Compromise Fails to Settle WTC Dispute

NEW YORK CITY-The deadline has been postponed for the two sides in the World Trade Center development to either resolve their differences or take the matter to binding arbitration, following the failure of a compromise proposal to settle the matter. Gov. David Paterson said in a conference call late Monday afternoon that the deadline, which was triggered by the filing of a notice of dispute by Silverstein Properties Inc., has been pushed off “basically indefinitely, but certainly at least a couple of weeks.”

SPI’s filing two weeks ago was intended “to inject a renewed sense of urgency to these discussions” between SPI and the Port Authority of New York and New Jersey over the financing and timetable for the developer’s planned three towers at the Trade Center site, CEO Larry Silverstein said at the time in a statement. Paterson said Monday that the decision to put off the arbitration deadline resulted from a two-and-a-half-hour meeting he had with Silverstein and SPI president Janno Lieber earlier that day.

Late last week, Silverstein sent the authority a letter rejecting its proposal to backstop up to $1.2 billion of financing on SPI’s Tower 2 provided that the developer raised $625 million of subordinate equity or mezzanine debt, “something that we all know is essentially impossible” in the current credit climate. In its response, which went out over the signature of chairman Anthony Coscia and executive director Chris Ward, the authority charged that Silverstein’s letter “continues to demand that the public fully subsidize two private office buildings that the private market is unwilling to undertake and will sacrifice critical public transportation projects in favor of speculative office space. It is unrealistic of SPI to demand this extraordinary level of public subsidy and it is not going to happen–not when the region has so many pressing transportation needs and when our revenues continue to be impacted by the severe economic recession.”