Port Authority Approves Subsidies for 2 World Trade Projectby
Agency forgoes $9 million to get $500 million, Foye says
Fox, News Corp. haven't reached final agreement to relocate
The Port Authority of New York and New Jersey approved subsidies to help expedite the construction of lower Manhattan’s 2 World Trade Center, where Rupert Murdoch’s 21st Century Fox Inc. and News Corp. companies have a tentative deal to move their headquarters from midtown.
Developer Silverstein Properties Inc., which leases the sites for 2 World Trade Center and two other towers from the Port Authority, would receive a rent break that amounts to $9 million over the life of the lease, Authority Director Patrick Foye said, just before the agency board unanimously approved the proposal.
The subsidies will help the tower generate $500 million to $600 million of revenue that will support authority transportation and other projects, Foye said. Silverstein would forgo paying a part of the rent only if the tower is built. Completing 2 World Trade would also raise the value of 1 World Trade Center, in which the authority holds a majority equity stake, and would help the agency eventually exit that investment, Foye said.
The revenue gained “in my mind represents an extraordinary opportunity for the Port Authority and the people of the region,” Foye said.
Janno Lieber, president of Silverstein’s trade center subsidiary, called the rent assistance “a modest reduction” in payments that would have been made by Fox and News Corp. The companies have yet to commit to the project.
“This is a deal that always made sense for the Port Authority,” Lieber said in an e-mailed statement. The agreement “will generate 10,000 construction jobs and 12,000 to 15,000 permanent jobs, as well as allow us to finally put back all the office space that was destroyed by terrorists 14 years ago.”
The agency had previously maintained that 2 World Trade would be built entirely without public assistance. It took over 1 World Trade from Silverstein in 2006. The developer received tax-exempt government Liberty Bonds to aid in the construction of 4 World Trade Center, which opened in 2013.
Last year, New York approved as much as $1.8 billion of bonds to build 3 World Trade Center, which is now under construction. The authority balked at Silverstein’s request to guarantee payment of that debt.
The revenue gain consists of three parts, Foye said. They include payments due to the authority from Westfield Corp., its partner on the retail portion of the project, that are contingent upon completion of the tower. He also said the agency would receive $174 million from Silverstein for work done to prepare the site for construction, and increased ground lease payments should the Fox and News Corp. agreements be completed.
With tolls at the Port Authority’s interstate crossings having just gone up again, the ability to expedite 2 World Trade means the need for future increases will be reduced, Foye said.
“Our original assumption was we wouldn’t be able to build this until the early to middle 2020s,” he said at a press conference after the vote.
The authority operates the region’s bi-state tunnels and bridges, airports and shipping terminals, as well as the Port Authority Bus Terminal.
In June, the developer unveiled a design by architect Bjarke Ingels for a 1,340-foot (408-meter) tower, which would make 2 World Trade Center the second-tallest of the four skyscrapers on the site. A deal with Fox and News Corp., parent company of the Wall Street Journal and New York Post newspapers, would further cement lower Manhattan as a center for major media companies, which already include Conde Nast next door at 1 World Trade Center, and Time Inc. at Brookfield Place.
Nathaniel Brown, a spokesman for Fox, and Daisy Dunlop of News Corp. declined to comment on Thursday.
Leases have “not been agreed to by Fox,” said Jeffrey Lynford, a Port Authority board member. “It’s not time to take a celebratory lap.”