The Board of Commissioners at the Port Authority ratified a plan Thursday that gives developer Larry Silverstein up to $1.6 billion in public money to build two office towers at the World Trade Center site.
The plan, tentatively agreed to in March, calls for the Port Authority to provide about a billion dollars in financing for a tower already under construction that is scheduled to be completed by 2013.
If Silverstein is able to raise at least $300 million for the second tower and sign leases with tenants, another $600 million in subsidies would come his way.
Potential plans for a third tower are on hold until market conditions improve.
"It provides for the immediate restoration of the east side of the site while phasing in the office development as follows -- completion of Tower Four by 2013, Tower Three built to at least podium level and the Tower Two site built to grade, and a cash trap to ensure that the public gets paid back before cash flows to Silverstein Properties," said Philippe Visser of Port Authority.
The "cash trap" allows public investors to be paid back before Silverstein profits from the development.
"The three things that were critical to this deal were obviously that we needed to protect public resources. We had to bring market reality to downtown, but most importantly we had to make sure that the public resources that were invested were not invested in such a way that would benefit our private partner, Larry Silverstein," said Port Authority Executive Director Christopher Ward. "The cash trap is for the purposes for ensuring that."
Presumably, the new agreement will do much to heal the often adversarial relationship between the Port Authority and Silverstein; one he acknowledged in an exclusive interview with NY1 earlier this month.
"I think everybody came to the realization that this had to get done and the Port came to realize they cannot do this without us, we realize we can't do this without them," Silverstein told NY1.
Meanwhile, news of the deal was welcomed by Governor David Paterson who says the project will "responsibly restore the World Trade Center site in a manner that does justice to the victims of September 11th."
"We remain as committed as ever to working with all of the parties to make sure the momentum we’ve achieved is sustained," added Mayor Michael Bloomberg.
In a statement, Silverstein called the deal "fantastic news for New York," and expressed "deep appreciation" to the mayor, the governors of New York and New Jersey, State Assembly Speaker Sheldon Silver and the Port Authority.