NEW YORK CITY—The future of Silverstein Properties' 3 World Trade Center may be in jeopardy. On Wednesday the 11-member board of the Port Authority of New York and New Jersey will vote on whether to double the level of subsidies and support for the building, and the group is “sharply divided,” according to the New York Times.
Proponents, led by Silverstein chairman Larry Silverstein and Scott Rechler, the authority's vice chairman and chief executive and chairman of RXR Realty say that the tower would herald the completion of the new trade center and help facilitate Lower Manhattan continuing renaissance.
Critics contend it makes no sense to subsidize another downtown office tower with an abundance of vacant space that would compete for tenants with other nearby buildings and the Port Authority's own, half-empty tower at 1 World Trade Center, one of the world's most expensive skyscrapers, the Times notes.
Kenneth Lipper, a Port Authority commissioner and an investment banker, says Rechler's proposal to guarantee up to $1.2 billion in construction loans for Silverstein could hurt the authority's credit rating and even its budget, which is partly reliant on bridge and tunnel tolls.
“The idea of giving a $1.2 billion subsidy to a private developer at a time when the market downtown is in a state of glut defies the public interest and the economic interest,” says Lipper, a former New York City deputy mayor. “It would turn a patriotic gesture into a vanity project. And it could jeopardize our mission, which is to improve the transportation system in the region.”
The financing troubles for this building aren't new. Silverstein has been working to negotiate with the Port Authority since at least January. At that time, Silverstein Properties executives told government officials that the company needed to renegotiate a four-year-old municipal financing package. Silverstein Properties declined to comment.
The building does have at least one tenant: adversting firm Group M signed a sizeable lease for a 516,000-square-foot space at the $2.3 billion tower back in December.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
