World Trade Center Rebuilding Plan Faces Finance Gap (Update3)
April 30 (Bloomberg) -- World Trade Center leaseholder Larry Silverstein may face a financing gap of at least $3.5 billion for rebuilding at New York's Ground Zero after a jury decided yesterday in favor of eight insurers that challenged his claims for Sept. 11, 2001, losses.
The insurers, including a Lloyds of London syndicate and Warren, New Jersey-based Chubb Corp., argued successfully that policy language barred Silverstein, 72, from collecting double damages under their combined $1.1 billion of coverage. The federal court panel is to resume deliberations Monday on an $877.5 million policy held by Swiss Reinsurance Co.
The verdicts won't jeopardize a memorial, a transportation center or the 1,776-foot Freedom Tower, planning officials said. Barring successful appeals by Silverstein, who contended the two- plane attack on the twin towers was two distinct events, the New York developer will be short of cash to complete the remaining 7.4 million square feet of office space.
Charles Gargano, vice chairman of the Port Authority of New York and Jersey, which owns the site, said Silverstein may still be able to fulfill his role. ``We have an agreement with the Silverstein group,'' Gargano said in an interview. ``That agreement is in place until we're told otherwise,'' he said.
Gargano said he hoped the Swiss Re payout question ``can be resolved without having a negative impact on the project.''
The amount Silverstein collects from insurance companies is ``significant to the pace of the rebuilding,'' Kevin Rampe, president of the Lower Manhattan Development Corp., a state agency, said during a pre-verdict interview about the possibility the leaseholder would lose. ``Silverstein's going to have to rely on more traditional financing mechanisms.''
That may prove difficult, given a glut of Manhattan office space and the fact that no companies have committed to occupy the new buildings, said Stephen Spinola, president of the Real Estate Board of New York, a trade group.