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NEW YORK CITY-Although Gov. David Paterson has indefinitely postponed the deadline for either side in the World Trade Center dispute to commence arbitration proceedings, Silverstein Properties Inc. has decided to go its own way, serving the Port Authority of New York and New Jersey with yet another “notice of arbitration” letter on Tuesday. SPI says the latest move is in direct response to the Port Authority’s “inability to meet its rebuilding obligations” at the site, all “in keeping with the 2006 Master Development Agreement” between the two parties.

In a statement, SPI says that on Oct. 2, 2008, the Port publicly acknowledged that it would not complete “key elements” of the WTC infrastructure until years after the dates required in the 2006 MDA. SPI says it believes those delays “remain grossly understated” and have “adversely affected” the cost and schedule of its three office towers while hindering the organization’s ability to finance, market, complete and ultimately open them as previously planned.

In response to GlobeSt.com inquiries, Assembly Speaker Sheldon Silver issued a statement saying “So far the Port Authority has been intransigent. Larry Silverstein is reacting to that intransigence.”

For its part, the Port issued a statement contending that SPI “has now rejected four offers that put on the table significant amounts of public investment to move their private office towers forward. All that was asked in return was for Mr. Silverstein to take on the same risk he was asking of the public and he could not even agree todo that. It is clear SPI will accept nothing less than two fully subsidized office buildings and that is irresponsible and unacceptable.” The Port reiterates its confidence that it’s meeting its obligations under the MDA.

Paterson says in a statement that he’s “deeply disappointed” that SPI took the matter to arbitration. “Both the Port Authority and I remain committed to negotiating a framework to resolve this impasse, and I hope that Silverstein Properties will continue to negotiate with us in good faith.”

He adds, “During this time of historic economic crisis, we simply cannot put the private interests of a single developer above the interests of the hard-working taxpayers of this state. Ultimately, any agreement must ensure that our limited public dollars are protected.”

After the Port missed a Jan. 1, 2008 deadline, a February arbitration panel decision led to the authority paying SPI $14.5 million in late penalties. By the following December, the Port lost another arbitration decision, costing it another $49.5 million. For every day the Port does not comply with the 2006 MDA, it is obliged to pay SPI $300,000 of public monies.

SPI’s latest NOA letter comes one day after Paterson presented the developer with an ultimatum. As GlobeSt.com reported, in a letter to SPI chairman and CEO Larry Silverstein, the governor said he had directed the Port to produce WTC designs that would allow construction with or without SPI’s participation. Paterson also set August 12 as a deadline for the Port and SPI to send him a progress report on negotiations.

Downtown reaction to the Governor’s action was swift, including a statement from Silver, who said Monday that the path outlined by the governor would result in yet another standstill at the WTC site. On Tuesday, the New York Daily News published a report saying the Lower Manhattan Development Construction Command Center, a unit of the Lower Manhattan Development Corp., was contradicting the Port’s latest “aggressive yet realistic” schedules touted by executive director Chris Ward.

In response, New York City Mayor Michael Bloomberg issued a statement saying that the dispute and standoff “cannot continue. Last year, when the Port announced its new plan that would fix the problems at the site and lead to progress, it asked us all to hold it accountable. We are.”

He adds, “We must see immediate changes, starting with genuine, independent and constant oversight of the Port Authority’s progress.” Bloomberg also says the LMCCC must be “de-linked” from the Port and LMDC and have it provide regular, public audits on what is happening at the site.

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