X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

NEW YORK CITY-The sidewalks surrounding the 16 acres in Downtown Manhattan known as Ground Zero are still covered by tourists, who are forced to hold cameras high above their heads in an attempt to peek over the blue-shrouded fence guarding the construction site. Eight years after the event that drew those tourists there in the first place, construction at the site has been slow to come, marred by inefficiency and public frustration, and for the last year or so, a very public dispute between politicians, a massive public agency and commercial retail interests.

Over the past few days, the Port Authority of New York and New Jersey, Silverstein Properties Inc. and the politicians who support them, have all raised the volume higher. The main players, including Gov. David Paterson, Mayor Michael Bloomberg, SPI and the Port Authority have issued statements and counter-statements that appear to point the finger at the other parties involved.

“If you get anyone involved who is part of the political process, or the construction process, you’ll get the same old tired answers,” says construction attorney Barry LePatner, author of Broken Buildings, Busted Budgets: How to Fix America’s Trillion Dollar Construction Industry. “There should be huge outrage over this, but we’re in the middle of recession which draws our attention to a zillion other problems.”

Others agree that that the volleying between the involved parties has grown confusing. “The political ping-pong game is very disconcerting to tenants and the brokerage community at large, because people are seeking clarity and specific direction in this marketplace,” says Robert D. Goodman, senior managing director at FirstService Williams.

Goodman, who worked at the World Trade Center, says he’d just left his office one minute before the events of 9/11 unfolded. He says that personal history, plus a career centering on the Downtown market, has contributed to his keen interest in what happens at the site.

He says the current state of ambiguity at the site creates more and more questions about the viability of the project. Goodman adds that the sequence of building at the site is less important than developing “a master plan that people can understand, that people can communicate and that companies can plan for.”

Right now, “there’s nobody out there who can talk with any conviction as to what the ultimate WTC development will even look like, including Silverstein and the Port Authority.” Goodman says. “It’s been a shambles, and it absolutely needs to be addressed sooner rather than later in this environment.”

He argues that both businesspeople and the public are thrown off by the plethora of voices in the mix, and that more consensus-building by politicians will only lead to more players in the picture. That, he says, only distorts what the ultimate objective is.

Goodman adds, and other real estate players seem to agree, that having a single voice would be helpful to the tenant and brokerage community, so they can hang their hat on some entity that can provide direction, a move he calls “absolutely necessary.” But, as history shows, getting there won’t be easy.

“Nobody in Albany or New York City who is [in] control right now is ever going to give up the power that comes with controlling the billions of dollars at stake at the site,” says LePatner, founding partner of LePatner & Associates.

“From the outset of the decision to re-build at Ground Zero, what the public never understood was that this would always be a fight between the two largest competing interests that exist in New York City,” says LePatner. “One is a major, sophisticated real estate developer who has commercial interests at heart, and the other is a government which lacks any ability to understand how to build, but wants to do the right thing.”

Looking back, LePatner says that appointing the Port, an agency with no recent history of successfully developing projects of this scope and complexity, as the lead meant that this project was doomed to be an ongoing battle between those competing interests. He adds that there should be a sign hanging over Ground Zero that says “the public be damned.”

“There is no one involved in the project that serves as the true ombudsman for the public,” Le Patner tells GlobeSt.com. He calls for a “construction czar” at Ground Zero.

As Nicole Gelinas, Manhattan Institute scholar and City Journal contributing editor, tells GlobeSt.com, “the original sin of Ground Zero goes back to decisions the Pataki administration made in the early days of the project.” She says that in 2002 and 2003, emotions still ran strong over the future plans at the site. “You’d go to community meetings, and people would show up and act like this was the opportunity to build anything from parks to green energy at the site to nothing at all.”

She says government should have gone to SPI with a “force majeure” argument but instead, it got “ridiculously involved in building office towers, getting involved in architecture, holding beauty pageants for building designs that nobody liked, then doing it all over again.”

In the meantime, Gelinas says, “Silverstein kept paying on a lease that was just not economical after the attack,” a move that she says “is his fault for putting up with it.” She says if it’s not economical to build the towers right now, the Port should give SPI more time to wait until it is and just get the infrastructure done.

Nonetheless, by June 2008, the Port Authority had candidly told Paterson that there were significant delays and cost overruns on infrastructure at Ground Zero. As a June 30, 2008 GlobeSt.com article noted, the PANYNJ report found 15 fundamental issues critical to the overall project’s progress had yet to be resolved.

Along the way, cost estimates had increased anywhere from $1 billion to $3 billion, according to a PANYNJ report. Added to that is a clause in the 2006 Master Development Agreement which required the agency to pay SPI $300,000 a day for each day it’s late turning over the site to the developer. According to the agency, the late fines alone could go well over $100 million.

This past February, when Assembly Speaker Sheldon Silver suggested an independent monitor to oversee construction at the site, Port Authority executive director Christopher Ward called WTC construction “one of the most transparent projects in the region.” When Silver pressed, Ward again reiterated that there would be “no independent oversight.”

Earlier this week, Bloomberg said “we must see immediate changes, starting with genuine, independent and constant oversight of the Port Authority’s progress,” adding that he thinks the Lower Manhattan Construction Command Center should be “de-linked” from the Port Authority and the Lower Manhattan Development Corp., so it can provide regular public audits on what’s happening at the site.

On the other side, SPI continued paying rent at a site with no tenants, and the credit markets disappeared, making financing next to impossible, led to the current squabble over financing. Just this week, SPI said it was headed once again for an arbitration panel over the delays.

The governor released his own statement this week arguing that “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.”

But LePatner says the powers that be have to move beyond their limited spheres of influence, and look to a business approach that stops the hemorrhaging. Preaching fixed-pricing, LePatner says that would involve creating a defined scope, making sure drawings and specifications [that] are precise, complete, then getting competitive bids that are fixed in price, with guaranteed completion dates where contractors bear the risks of their own inefficiencies if they don’t complete on time and at that price.

“That should have been baseline from day one, and it was not,” he says. Calls to the Port were not returned by deadline, and an SPI spokesman declined further comment aside from reaffirming the statement the company issued when it filed the notice of arbitration.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.