Pact May Mean Rebuilding Delay At Ground Zero in New York

By Alex Frangos
From

Several buildings at Ground Zero may not be completed for another seven years -- a year longer than previously promised -- under terms of an agreement approved yesterday to rebuild the World Trade Center.

The pact between developer Larry Silverstein and the Port Authority of New York and New Jersey, which owns the site, is the most definitive rebuilding blueprint to date. It divides control of development rights for the five planned towers at the site between Mr. Silverstein and the Port Authority. Mr. Silverstein will build three office skyscrapers on the east side of the site. The Port Authority will own the signature Freedom Tower, one other tower, and a shopping mall.

Amid the din of earth-moving equipment in the 90-foot-deep pit where the Twin Towers stood, New York Gov. George E. Pataki hailed the deal as "the last major hurdle toward the completed redevelopment of the World Trade Center site."

Details of the pact show, however, that completion of Mr. Silverstein's three office towers may take longer than previously anticipated. He received a one-year "grace period" beyond the 2012 deadline earlier agreed upon, according to Port Authority Chairman Anthony Coscia. Should Mr. Silverstein fail to deliver the three skyscrapers by the new deadline, around the end of 2013, he could lose the properties entirely.

A Port Authority official said Mr. Silverstein's potential construction lenders were uncomfortable with the more-aggressive timeframe.

Construction of the Freedom Tower also remains uncertain. Tentative commitments with federal and state agencies to take space in the Freedom Tower must become actual leases, and Congress needs to approve the federal lease. Preliminary work on the Freedom Tower's foundation is continuing, and the lack of signed leases isn't likely to halt the project right away, but could affect its long-term prospects.

The City of New York agreed to take 581,000 square feet of office space in Mr. Silverstein's Tower 4, for a starting rent of $56.50 a square foot. The city's rent is 5% lower than a deal struck by the Port Authority for the same building because the city is taking lower floors. Mr. Silverstein has an option to cancel the city's lease over the next two years if he finds higher-paying tenants.

Some issues that could halt development remain unresolved, most notably several lawsuits against the Twin Towers' insurers.

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