Thursday, August 26, 2010

The Rebuilding of Ground Zero, Part 112

Silverstein Properties and the Port Authority are set to make a deal to complete financing on two of the office towers planned for the site.

The deal has been in the works since a handshake agreement in March. How did the Port Authority agree? Well, it was simple horsetrading.
According to multiple people familiar with discussions, in order to win the support of the Christie administration and the New Jersey side of the Port Authority board, the New York side of the Port Authority agreed to commit significant funds toward New Jersey regional transportation projects when the agency reevaluates its priorities for its capital plan in the fall.

The funding is justified as a means of achieving balance after the new World Trade Center deal, which is valued by the agency at about $1.2 billion in new subsidy and foregone rent. That expenditure is being treated as a New York-specific project, and thus, by the one-for-one logic often employed in Port Authority capital plans, corresponding money should go into New Jersey.

This is not all that unlike the trading that went on for years in the New York Legislature, when a governor and lawmakers wanting to spend money on a large project in New York City would need to devote an equal sum to some project upstate in order to make it politically palatable. (Former Senate Majority Leader Joe Bruno has boasted that this is how he won the money to rebuild the Albany airport.)

Still, it's hardly the cleanest system in the world to have deals such as this one. In the extreme, such trading paints a portrait of the Port Authority as an entity that is simply a vehicle for two separate governors who spend money on two separate sets of priorities. This is opposed to the ideal: an agency that solely has at heart the interests of the region as a whole, and prioritizes spending on transportation projects accordingly.

The result in the fall, particularly if there is a revenue increase, will likely be more money devoted to projects such as the renovation or replacement of the Bayonne Bridge, a top infrastructure priority of New Jersey (they want it raised up, or replaced with a higher bridge). Presumably this means there will be comparatively less to go around for New York priorities, such as Moynihan Station.
Since the Port Authority is a bistate agency, New Jersey interest demanded something to offset the expenditures at Ground Zero - so they got $1.6 billion or so in projected money over the next couple of years for projects that would benefit New Jersey. This is how business is done at the bistate agency and makes a mockery of the whole notion of a coordinated policy of improving infrastructure to benefit the region (the purpose of the agency in the first place).

Instead of treating the World Trade Center site as a separate entity not subject to the typical bistate bickering, it's fallen into the same politicking that has caused incessant delays in rebuilding. The problem had nothing to do with Silverstein Properties, and everything to do with the behind-the-scenes politics within the Port Authority.

The deal will enable construction of Tower 3 and Tower 4 (which is already underway at and above the pedestal base across the street from Russell Simmons' loft).

This is what's being built at Ground Zero except that the Foster and Partners designed 2WTC, which would have been at the corner of Vesey and Church has been delayed indefinitely. The financing deal will not cover that site.

It's a huge mistake and consigns the site to construction for the indefinite future because that building will eventually be built - the only question is when. Since the site construction is ongoing, it would have been best to build the site out at one time so as to minimize the impact on the surrounding community as much as possible. Instead, the immediate vicinity (including the 9/11 memorial and museum and transit hub will be adjacent to an empty hole/work-site for the foreseeable future.

Considering that the real estate market is showing signs of strength in Manhattan, with Vornado getting approval to build a skyscraper rivaling the Empire State Building in height two blocks from the iconic tower and an ongoing demand for Class A office space, this is a serious mistake on the part of the Port Authority. The funding should have been made available to ease Silverstein's access to financing to rebuild the site in a timely manner.

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