Vote delayed on loan guarantee for World Trade Center developer

by Reuters
Wednesday, 23 April 2014 21:48 GMT

(Recasts with vote delay)

By Hilary Russ

NEW YORK, April 23 (Reuters) - The board of the Port Authority of New York & New Jersey on Wednesday delayed a scheduled vote on whether to provide $1.2 billion in loan guarantees to World Trade Center developer Larry Silverstein, the latest holdup for the project.

The request from Silverstein, who needs Port Authority backing to secure a construction loan for 3 World Trade Center, the complex's next skyscraper, recently became entangled in a debate over the agency's mission after the "Bridgegate" scandal rocked New Jersey Governor Chris Christie's administration.

Wednesday's delay came after the Port Authority's chief of staff told the board he had not yet brokered a good enough deal to recommend approval.

The loan guarantee is meant to be part of an agreement that would provide hundreds of millions of dollars more to the Port Authority and allow it to foreclose on the $2.4 billion tower if Silverstein cannot pay debt service costs.

By not reaching a final deal, an existing 2010 deal with Silverstein remains in place, one that Silverstein has not been able to meet because he has been so far unable to raise the senior debt required to build the tower.

Silverstein has made progress on two of the other four planned towers at the site. The "Freedom Tower" at One World Trade Center is slated to open later this year, and the smaller 4 World Trade Center opened in November.

He has spent about $500 million of insurance proceeds to build the lower eight floors of 3 World Trade Center under the 2010 agreement because some of the below-ground infrastructure there was needed to support a Port Authority transit hub.

In recent days, the Silverstein loan guarantee deal became enmeshed in a fierce debate within the agency over its mission, including whether it should be in the real estate business.

Many of those questions have arisen since the so-called Bridgegate scandal this year, in which operatives loyal to Christie's administration are accused of causing traffic jams on the George Washington Bridge in retribution for a New Jersey mayor not endorsing Christie's reelection.

The controversy has led to scrutiny of Port Authority's operations and the resignation of its deputy executive director and board chairman, both Christie appointees.

Most pertinent to Silverstein, it has led to rare open debate at the authority, and to creation of an internal oversight committee examining operations, governance and political meddling.

Critics argue that rebuilding the World Trade Center, which was devastated on Sept. 11, 2001 in hijacked plane attacks, has taken too much time and energy away from other projects that are critical to its bi-state transportation mission. (Reporting by Hilary Russ; Writing by Dan Burns; Editing by Richard Chang)

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