NEW YORK CITY—The Port Authority of New York and New Jersey Thursday approved subsidies for 2 World Trade Center, a move that the agency says will accelerate the creation of at least $500 million in new capital for future transportation projects in the region.
The move amends the agency's WTC development plan to attract two anchor tenants at Tower 2, the final building in the WTC east side development plan. The companies of 21st Century Fox and News Corp. are considering entering into a lease for about 1.5 million square feet at the building—which breaks down to about one million square feet for 21st Century and 500,000 for News Corp.—for an initial term of 30 years.
The project will move forward with limited public support from Empire State Development to 21st Century Fox and NewsCorp through tax credits for $15 million offered by ESD through its Excelsior Jobs program, which offer credits under established criteria for significant qualifying capital investments by businesses in New York State.
After taking into account investment credits provided by ESD, Silverstein Properties will contribute $19 million to support the 1.5 million square foot lease, with the Port Authority bearing the remaining $9 million in net present cost. The proposed public support would total approximately $16 per square foot for Tower 2, spread over a 30-year initial lease term, well below the per square foot level of support provided for tenants in One World Trade Center and Tower 3 in recent years, which ranged as high as $250 per square foot.
In return, the Port Authority is expected to benefit from at least $500 million in new financial capital capacity in the current capital plan window, to fund future transportation projects in the region as it returns to its core mission of transportation.
"Jump starting construction of Tower 2 will not only move us one step closer to finishing the work we began on the World Trade Center site more than a decade ago, but will provide us with another revenue stream to finance more than $500 million worth of critical regional transportation projects," says Port Authority chairman John Degnan.
Adds Janno Lieber, president, World Trade Center Properties, an affiliate of Silverstein Properties, "This is a deal that always made sense for the Port Authority. As their leaders acknowledged prior to a unanimous vote today, the Port Authority will receive $500 to $600 million over the next four years in exchange for a modest adjustment to 21st Century Fox and News Corp's long-term ground rent, that would cost the Port Authority $9 million dollars over the 30-year lease. And it's a deal that makes sense for the City, the State and the entire region because it will generate 10,000 construction jobs and 12,000 to 15,000 permanent jobs, as well as allow us to finally put back all of the office space that was destroyed by terrorists 14 years ago."
"Today's action will go a long way in completing the World Trade Center site and returning the Port Authority to its core mission of transportation," notes Port Authority vice chairman Scott Rechler. "The Port Authority will receive at least $500 million in new capital to help fund critical transportation projects throughout the region.
Commenting on the move, Association for a Better New York chairman William Rudin says, "The action taken today by the Port Authority's Board of Commissioners puts New York City one step closer to realizing a fully-rebuilt World Trade Center as the anchor of a rejuvenated Lower Manhattan. Such a move would complete the rebuilding and generate hundreds of millions of dollars in revenue to the Port Authority, while also ensuring Downtown's future as a media, entertainment, and tech hub for the city."
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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.
