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NEW YORK CITY-The Port Authority of New York and New Jersey says it plans to speed up construction at the World Trade Center site in Lower Manhattan. In fact, the Port Authority is saying it can turn over the future sites for Towers 2 and 3 to Silverstein Properties Inc. in around four to eight weeks. And, once that handover’s complete, the Port can stop paying the $300,000 a day in public funds it’s been paying in late fees to SPI for over a year now.

Thursday’s announcement came three days after New York Gov. David Paterson intervened in the long-running dispute between the two parties. Paterson now says he’ll oversee negotiations, however he canceled previously set deadlines “indefinitely.” The governor said he would personally work with developer SPI to figure out how to finance two of the three towers.

In what sounded like a snarky rebuke to the Port Authority’s latest volley, an SPI spokesman says in a statement “it is nice to hear that–32 weeks after the arbitration panel mandated the removal of the Port Authority’s wall in the middle of the Tower 3 site, they are now taking ‘aggressive action,’ which may result in this work getting done after a couple of months.”

When told of SPI’s tone, a Port Authority spokesman says, “I’ll decline comment on that one.” But, he adds, “we’re taking this action, so we can complete the last remaining piece that they claim they need to get buildable sites.” Of what happens once the sites are turned over to developer Larry Silverstein, “that’s his responsibility,” the spokesman says adding, “if he doesn’t comply, the penalty is on SPI.”

On Thursday, PA executive director Chris Ward pointed out that under the 2006 Master Development Agreement, upon handover of the property, if Silverstein does not deliver the towers “basically” five years later, he would be in default of the agreement. This would clear the way for the Port Authority’s taking over title of all three tower sites.

The Port spokesman clarifies saying, “It’s three years, plus there’s around a year’s worth of time he gets because of quote-unquote lost time, the lack of ‘turnover time,” plus a one-year grace period, so that comes down to about a five year period,” Both sides refer to the 2006 MDA, although requests from GlobeSt.com to another Port Authority spokesman were met with advice to file a Freedom of Information Act request to see the MDA.

For its part, SPI maintains that all of the Port’s delays have led to a situation where now in a world of frozen credit, it’s not possible for SPI to get financing to build the towers, so it’s been pressuring the PA to chip in with its own liquidity. So far, the Port Authority has said it would finance only one tower and backstop financing for one other.

When asked about financing, the Port spokesman says “that’s right now in the hands of the Governor.” The governor’s office did not answer a request for comment by deadline.

Nonetheless, a source familiar with SPI says Silverstein can’t be held responsible for building and opening towers when the infrastructure is going to be late. The source says that’s been clear since the Port first released a report admitting delays in its projects at the site, delays they say were in violation of the MDA.

According to a May 22, 2008 statement from the Port Authority, the MDA set firm deadlines for the completion of all elements of the WTC site, holding all parties accountable to those deadlines. However, that same month, the Port says it gave SPI an extension for the completion of WTC towers 3 and 4 so that SPI could “facilitate negotiations” with Merrill Lynch & Co. for full occupancy of Tower 3.

But in June 2008, the Port Authority acknowledged to Paterson that there were significant delays and cost overruns from its end at Ground Zero. As a June 30, 2008 GlobeSt.com article noted, the PA report to the governor found 15 fundamental issues critical to the overall project’s progress had yet to be resolved.

They included issues as basic as a lack of a final design for the transportation hub, the Vehicle Security Center’s dependence on the protracted de-construction of the Deutsche Bank building at 130 Liberty St. and the lack of an efficient, centralized decision making structure steering committee. The Port told the governor that once all the issues had been resolved, it could give him clearer, achievable time-lines.

After missing a Jan. 1 2008 deadline, a February arbitration panel decision led to the Port being ordered to pay Silverstein $14.5 million in late penalties. By that following December 2008, the Port lost another arbitration decision, costing it $49.5 million. Even still, a Port Authority spokesperson told GlobeSt.com on July 7 that the PA has met its obligations under the 2006 MDA, and continues to meet them.

On Friday, a source close to SPI said the Port has not been able to live up to its end of the 2006 MDA agreement, and, that in fact, both sides agree the terms need to be ‘re-worked.’ The source adds, regardless of negotiations over financing, the Port has a powerful incentive to move the retaining wall and get the access agreement that’s meant to turn over the Tower 2 site: the $300,000 a day in fines for each day it’s not in compliance.

Incentives or not, the Port did hire E.E. Cruz & Co./Nicholson Construction Co. LLC, who will relocate the wood retaining wall adjacent to the Tower 3 site that’s been just one of many points of contention at the site. The contractor will also build a temporary concrete wall that bisects the Vehicle Security Center site allowing for excavation to begin on the VSC’s foundation while the years-long, scandal-ridden, deadly deconstruction of 130 Liberty St. building continues, a process that has already cost millions of dollars more than it cost to build.

Also, the Port said it authorized an agreement with Tishman/Turner, a joint venture of Turner Construction and Tishman Construction to provide construction management support services for the World Trade Center Transportation Hub at an estimated cost of $105 million.

The Port says that firm takes the place of Phoenix Constructors, a consortium that was let go this past April. By July, when SPI filed a Notice of Dispute which could have led back to the arbitration panel, the company said the authority’s letting go of Phoenix appears to “have been taken without a coherent construction or construction management strategy in place going forward.”

To which the Port spokesman responds, “We’ve said, that’s a function of changing market conditions. We think we can get better prices by bidding these contracts individually. Now we have a manager, but in essence, we’re acting as general contractor.”

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