The Rebuilding of Ground Zero, Part 91

While construction continues throughout Ground Zero on the Freedom Tower, 4WTC, the memorial/museum, and the transit hub, there are still lawsuits to be had and an arbitrator ruled today that Larry Silverstein was not entitled to money for the Port Authority's failure to meet deadlines. He had sought $2.75 billion and free rent from the Port Authority for delays that led to problems with Silverstein obtaining tenants and financing for two other towers at the site.

The long-simmering dispute pitted Mr. Silverstein, backed by Mayor Michael R. Bloomberg and Assembly Speaker Sheldon Silver, against the Port Authority and the governors of both New York and New Jersey.

With the two sides deadlocked, Mr. Silverstein, chief executive of Silverstein Properties, or S.P.I., took the matter to the arbitration panel in August, claiming that long delays by the Port Authority in rebuilding the infrastructure at ground zero had undermined his ability to attract tenants and get the financing. He asked the panel to rule that the Port Authority had breached its obligation and sought 10 years of free rent and billions of dollars in damages as a remedy.

But the arbitrators ruled that Mr. Silverstein “has not shown any action or inaction by the P.A. to date has actually delayed or damaged S.P.I. in its construction of the towers.” Indeed, the arbitrators said that witnesses for Mr. Silverstein acknowledged that construction of the towers could proceed “if the funding problem did not exist.”

The arbitrators did say that the Port Authority performed inadequately in 2006 and 2007 in meeting its obligations under the development agreement at the site. But since Christopher O. Ward became executive director of the Port Authority in 2008, the arbitrators said “much has changed, contracts have been let, and the infrastructure work is moving head. Meanwhile, the P.A. has invested or committed over $2.3 billion to redevelopment of the site.”

They also said that the authority had made “significant concessions and adjustments” for Mr. Silverstein.

The arbitrators did, at Mr. Silverstein’s request, eliminate a “cross default” provision in the development agreement that would have put him in default on all three towers if he failed to meet the construction schedules for any one building. The Port Authority had sought an order directing Mr. Silverstein to begin construction immediately.

The Port Authority and Silverstein are expected to go back to the drawing table to work out a timetable for construction of 2WTC and 3WTC, which run along the eastern side of Ground Zero.

The arbitrators pretty much point to the fact that rebuilding was delayed under the prior head of the Port Authority, and that current head Chris Ward has managed to get things back on track.