World Trade Center Redevelopment
Redevelopment efforts for the 16-acre World Trade Center (WTC) site began almost immediately after the attacks of September 11, 2001. Though the site was being leased to developer Larry Silverstein at the time of the attacks, the property was owned entirely by the Port Authority of New York and New Jersey (PANYNJ). While the Port Authority continues to own nearly all of the property, the two parties currently hold development rights to different plots and Silverstein exclusively owns the plot at 7 WTC. Shortly after 9/11, then-Governor George Pataki created the Lower Manhattan Development Corporation (LMDC) as a subsidiary of the Empire State Development Corporation (ESDC). The LMDC was charged with coordinating the reconstruction of the World Trade Center site, administering the bulk of the public sector funding allocated for recovery from the federal government, and engaging the public in the commercial and memorial developments of the site.
Daniel Libeskind’s master plan for the WTC site won the design competition organized by the LMDC in 2003. His plan established an outline for the site’s redevelopment, which could be completed in stages by different architects. The plan provided for approximately 10 million square feet of office space, memorial space, and ground-level retail, a feature absent from the original site yet desired by many residents of the community. Also, the master plan regrided the City streets which had been eradicated by the original Twin Towers’ superblock design.
Since the unveiling of Libeskind’s master plan, the competing interests of the Port Authority, Silverstein, the LMDC, and retail developer Westfield Properties have resulted in amendments to various elements of the plan, including changes to the vision for the Freedom Tower, now referred to a 1 WTC, and memorial space and the addition of a fifth office tower over the proposed transit hub entrance. Development on the site is technically exempt from the City’s public review process which typically governs large redevelopment projects (the Uniform Land Use Review Procedure, or ULURP), because land owned by the Port Authority is not subject to city and state zoning and building regulations.
The project is funded through a combination of insurance claims (money collected from insurers of the Twin Towers following the destruction), large public subsidies from all levels of government, and private investment. Good Jobs New York estimates that the redevelopment package will cost $300 million in direct subsidies and foregone taxes.
The funding plan permanently eliminates the Commercial Rent Tax for all businesses located on the WTC site. Also, the first 750,000 square feet of space rented at the site, excluding 7 WTC, will receive a $5.00 per square foot subsidy from New York State. The first 750,000 square feet of space rented at 7 WTC will receive a $3.80 per square foot subsidy. These subsidies were put into place to encourage tenants to move back to the World Trade Center site. In addition to state subsidies, in 2002 the federal government appropriated $21 billion in aid, primarily for cleanup, reconstruction, transit, and business incentives.
A number of factors have led to construction delays and budgetary overruns, which have plagued redevelopment of the site. First, the 6-year legal battle over $2 billion in outstanding WTC insurance claims halted progress. In addition, excavation of building remnants, demolition of crumbling structures, and remediation of the toxins left by the attacks posed tremendous and unforeseen barriers to the construction process.
Competing visions for the site among various stakeholders – victims’ groups, Mr. Silverstein, the Port Authority, the Governor’s Office, the Mayor’s Office, the LMDC and the general public – have created tensions and controversies that have stalled the decision-making processes governing construction.
Several stakeholders have advocated for changes to the government structure responsible for oversight of the redevelopment. State Assembly Speaker Sheldon Silver has suggested that an oversight entity independent of the Port Authority should oversee the redevelopment. However, the Port Authority has rejected the idea. In addition, Mayor Bloomberg advocates closing down the LMDC, claiming that it merely functions as an unnecessary layer of bureaucracy. Bloomberg suggests that the Lower Manhattan Construction Command Center (LMCCC), a subsidiary of the LMDC that is run by the City and New York State, should instead take on a more expansive role. The LMDC defended its 50 employees and $5 million budget by pointing to their continued role in disbursing funds to cultural and community projects. Silver and Governor Paterson continue to support the LMDC.
In April 2009, a report by Cushman and Wakefield commissioned by the Port Authority, predicted that the World Trade Center site would not be fully occupied with tenants until 2037.
The plan for the World Trade Center site includes:
Originally known as the Freedom Tower, 1 WTC will be the tallest building in Manhattan, rising with an illuminated antenna to 1,776 feet. Designed by David M. Childs of Skidmore Owings & Merrill, the 2.6 million square feet building will include office space, an observation deck, and roughly 500,000 square feet of retail. The Port Authority holds development rights to 1 WTC, and construction will be funded largely by insurance proceeds from the original Twin Towers. Construction costs are now estimated to be above $3 billion. Expected completion of WTC 1 remains unclear, as the Port Authority estimates 2013 while the LMCCC estimates 2018.
Towers 2, 3, & 4
Developer Larry Silverstein holds the development rights to Towers 2, 3, & 4, which will constitute 7.6 million square feet of space and are considered to be the most valuable plots on the WTC site. The Port Authority will occupy 1.2 million square feet in Tower 4. The Port Authority missed a Jan. 1, 2008 deadline to complete site preparation and infrastructure work and turn over parcels for towers 2, 3 and 4 to Silverstein. As a result, the Port Authority reportedly was required to pay $132 million ($300,000 a day) in ongoing penalties to Silverstein before turning the final parcel over to Silverstein at the end of August 2009. Silverstein now must complete construction of Towers 2, 3 & 4 within 5 years (by 2014) or cede development rights back to the Port Authority.
Disagreement between the Port Authority and Silverstein has persisted, threatening the progress of development. The faltering economy has hindered Silverstein’s search for tenants and financing. Further, Silverstein maintains that the Port Authority’s delays in handing over the sites on- time, prevented him from obtaining financing for the towers. Silverstein maintains that the project should not be viewed as a conventional real estate project that needs to obtain conventional funding, given its significance.
In March 2010, an arbitration panel mandated that the Port Authority and Silverstein come to an agreement about how to move forward with financing and ownership. The tentative deal agreed upon allows Silverstein to build two office towers. The Port Authority will help with construction of the first tower by committing $1 billion to the Church Street building. If Mr. Silverstein can secure $300 million in cash and leases, government and the Port Authority will provide $600 million. If Silverstein cannot secure $300 million for the second tower, he will have to build a smaller, five-story building. The agreement stipulated that the foundation will be laid for a third tower, but no construction timeline will be established at this point. Profits from the first office tower will be shared with the city, in exchange for accepting public benefits. Silverstein also agreed to waive the development fees he would have received for the second building while he repays the public subsidy.
Plans for the redevelopment of Tower 5, sited where the former Deutsche Bank building still stands, have been plagued with problems since the existing building was heavily contaminated by the 9/11 attack and thereafter condemned. Two firefighters died in a fire in 2007, in part because a water standpipe in the building had been illegally shut down and stairways sealed off by the demolition company. Work resumed soon after the 2007 fire under a new subcontractor. Decontamination of the former Deutsche Bank building was completed in August 2009. The LMDC expects demolition of the remaining 26 floors will be complete in 2010.
In June 2007, the Port Authority sold its development rights for Tower 5 to JP Morgan Chase for $290 million in a non-binding agreement. JP Morgan Chase committed to building a 40-story, 1.3 million square feet office space for its investment banking headquarters. As part of the World Trade Center Job Creation & Retention Grant Program (a federally-funded initiative administered through the State and City), JP Morgan Chase was to receive $20 million in subsidies when the building reached its capacity of 7,000 employees. However, in the spring of 2008, the company absorbed Bear Stearns and acquired Bear Sterns’ midtown investment banking headquarters putting into the question the need for a new investment banking headquarters downtown. Because the Port Authority’s deal with JP Morgan Chase is non-binding, the future of Tower 5 is unclear, though JP Morgan Chase claims that it still has plans to use the site for other purposes. There is some speculation that the Port Authority hopes to develop Tower 5 into hotel and residential space as the Authority tries to limit the amount of commercial space, due to the market.
The first building associated with the WTC redevelopment to be completed is 7 WTC, which opened in May 2006. The building is owned and managed by Larry Silverstein, and was designed by Skidmore Owings and Merrill. It features 1.7 million square feet of commercial space, a small public park with benches and fountains, and a Jeff Koons sculpture.
WTC Transportation Hub
The new WTC Transportation Hub will include a PATH station, 200,000 square feet of retail space and a massive East-West Corridor that provides underground access to 13 subway lines through the Fulton Street Transit Station and nearby buildings. Designed by Santiago Calatrava, the new Transportation Hub has been likened to the opening wings of a bird. Though the PATH station was originally supposed to open by 2009, the Port Authority now expects it to open by 2014. The East-West Corridor, which is being constructed 60-feet below ground, is scheduled to be complete by early 2014.
A report released by the Federal Transit Authority in May 2009, said that costs for the Hub will go over budget and could rise to as high as $4.3 billion. The FTA is funding part of the construction as part of the federal government’s $4.55 billion Lower Manhattan Transportation Recovery Effort.
9/11 Memorial and Museum
In 2006, construction began on “Reflecting Absence”, the design by Michael Arad and Peter Walker that won the international competition to memorialize the events of September 11th. The three-acre design, which has been adjusted to be less austere, includes a landscaped plaza at street level and two recessed pools of water 30-feet below in the footprints of the original Twin Towers. A museum filled with artifacts from the site will occupy the space below the plazas and the names of victims will be etched into the walls around the recessed pools for visitors to view. The Port Authority is contributing $195 million to the memorial. The 9/11 Memorial and Museum Foundation, led by Mayor Bloomberg, is responsible for generating the remaining $530 million. The memorial is slated open on September 11, 2011, to commemorate the 10-year anniversary of the attacks. However, the space will likely thereafter be closed until the 9/11 Memorial and Museum officially opens in 2013, three to four years after the original target opening date.
The Joyce International Dance Center
Original plans for a Frank Gehry-designed Performing Arts Center were estimated to cost $700 million. In the current economic climate, the Mayor’s Office, the LMDC, and New York State have been collaborating to decrease costs to $500 million or less, though it is unclear what impacts the reduction would have on the Gehry designs. The Joyce Theater will be the sole inhabitant of the 1,000-seat center. The Libeskind's original WTC master plan placed the performing arts center adjacent to 1 WTC at Ground Zero, however, the media reported in July 2009 that the center may be moved to the site of the former Deutsche Bank building a few blocks away. Though the site for the Center has not yet been determined, the Port Authority and the city agreed to a plan wherein the Port Authority will begin laying the structural foundation and the city will reimburse the Authority up to $44 million.
Last Updated: June 24, 2010