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Port Authority May Help Financing of Tower

wtc.jpgThe Port Authority of New York and New Jersey is considering giving the developer Larry A. Silverstein financial backing to help pay for one of three office towers that he is required to build at the World Trade Center site, people with knowledge of the negotiations said on Saturday.

The move is a reflection of the flailing economy and the clenching of the credit markets that has made it difficult for builders to obtain financing. But it may not be enough to satisfy Mr. Silverstein, who wants help with at least two of the three towers, the people said.

The authority, which owns the 16-acre ground zero site, has balked at that request. But hoping to push forward a project long stalled by delays and bureaucratic conflicts, it is willing to use its revenue streams essentially as a guarantee to satisfy potential lenders, easing the way for Mr. Silverstein to finance the construction of one of the towers, a government official familiar with the negotiations said. The Wall Street Journal reported on the negotiations on Saturday.

The authority is reluctant to provide assistance for more than one tower in a period when it is facing declining revenue and widening budget gaps, said the official, who spoke on condition of anonymity because the negotiations were continuing. Any help it offers Mr. Silverstein would mean that much less borrowing capacity for its own capital projects, including a new Hudson River rail tunnel.

Complicating matters is the interwoven nature of the trade center reconstruction project, parts of which cannot proceed until Mr. Silverstein’s towers are built to at least street level. The project includes a $3.2 billion transit center, an underground vehicle screening center, an 8-acre memorial plaza and museum and the $3.1 billion Freedom Tower, being built by the Port Authority. Mr. Silverstein’s towers are estimated to cost about $2 billion apiece.

Bud Perone, a spokesman for Silverstein Properties, declined on Saturday to discuss the negotiations. But in a sharply worded statement, he criticized the authority for delays in preparing sites for construction. The authority has incurred about $86 million in penalties, payable to Mr. Silverstein under a 2006 agreement, for missed deadlines in turning over sites that are fully excavated and ready to build on.

“New Yorkers have been patient enough already,” he said, “and tens of thousands of New Yorkers are counting on jobs that the rebuilding will produce.”

Stephen Sigmund, a spokesman for the Port Authority, said in an e-mail message that the agency was making progress in the development of the site, and he added that the agency would continue discussing with Mr. Silverstein how to go forward in a changing market while looking out for the public’s interest.

With the economic crisis sharply reducing demand for office space in Lower Manhattan, questions have surrounded Mr. Silverstein’s ability to finance the three towers and find tenants.

The city and the Port Authority have committed to leasing a million square feet in one of the towers. But Mr. Silverstein has had difficulty attracting commercial tenants for the other two.

(Source: NY Times)

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