Five months after the granite cornerstone was laid for the Freedom Tower, the financial cornerstone for a second new World Trade Center tower was fashioned on Monday by the federal jury that decided that Larry A. Silverstein, the commercial leaseholder on the site, was entitled to collect up to $2.2 billion from nine insurers.
This is twice as much - $1.1 billion more - than the amount of coverage he carried for a single occurrence from the nine insurers. Mr. Silverstein's lawyers argued that the two airplane attacks on the twin towers on 9/11 were separate occurrences and, for the first time in his legal battle with his insurers, a jury agreed.
The total possible payout for Mr. Silverstein from all insurers is now $4.65 billion, still considerably less than the $7 billion he sought.
As to what an extra $1.1 billion would buy for the trade center and for Lower Manhattan, it might provide much of the financing Mr. Silverstein would need to undertake the second of five planned office buildings, Tower 2, at Vesey and Church Streets. It is envisioned as having about 65 stories and 2.2 million square feet of space.
By increasing the likelihood that Tower 2 will be constructed, both supporters and opponents of the project said yesterday, this $2.2 billion award - should it be upheld if appealed - would also increase the momentum for the overall commercial redevelopment and, in turn, might attract more private investment.
It could also quiet some of the behind-the-scenes talk about easing Mr. Silverstein, who is 73, out of the project, although critics say that this moment of financial reckoning provides the ideal opportunity for reassessing the entire commercial program.
To the extent that it helps Mr. Silverstein pay his share of the cost of the common underground infrastructure at the trade center site, including ramps and roadways and loading docks and an air-cooling plant, the award may also take some pressure off state officials to use public money for that project, which could cost $1.5 billion even before the first building reaches street level.
"It's helpful to know that Larry has some money he might be able to put in there," said Madelyn Wils, the chairwoman of Community Board 1 and a board member of the Lower Manhattan Development Corporation. "I think it also, frankly, in the long term, takes a little pressure off the idea of trying to do some residential on the site."
Richard T. Anderson, president of the New York Building Congress, an association of developers, contractors, architects and others in the construction and real estate business, said it was too early to tell what the impact would be on other investors.
"The market still looms out there," he said. "But won't the thing be viewed more favorably with an additional $1.1 billion than without it?"
Mr. Anderson added, "The point is, now the plan has much more apparent financing behind it, so you can see more of the light at the end of the tunnel."
Carl Weisbrod, the president of the Alliance for Downtown New York and a board member of the development corporation, said improved prospects for Tower 2 would enhance the attractiveness of the Freedom Tower and 7 World Trade Center, which Mr. Silverstein is also building, neither of which has tenants yet.
"It makes the buildings much more marketable to new tenants, who will not have to worry about being there alone," Mr. Weisbrod said. Also, he said, the cost of space in the new buildings ought to be somewhat less because they will be financed through insurance proceeds rather than a mix of equity and borrowing, which require higher rates of return.
"Clearly," Mr. Weisbrod said, "it strengthens both the downtown revitalization and probably Larry as well, although Silverstein was always moving forward here."
David Dyssegaard Kallick of the Fiscal Policy Institute, a critic of the redevelopment process, welcomed the jury's decision for a different reason.
"Finally, we can have a clear picture of what money is available for rebuilding," he said. "Now, what we need is a clear accounting of how much the different pieces of reconstruction will cost and what the market demand truly
http://www.nytimes.com/2004/12/08/nyregion/08towers.html
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