The Port Authority of New York and New Jersey has approved $43 million in tenant subsidies for Silverstein Properties’ 2 World Trade Center, backtracking on its earlier position that the project would not receive public funding.
In a press release, the agency said that the move is meant to boost monetization of its non-transportation real estate assets, which in turn would help create $500 million in capital for new transportation projects in the region.
“Jump starting construction of Tower 2 will not only move us one step closer to finishing the work we began on the World Trade Center site more than a decade ago, but will provide us with another revenue stream to finance more than $500 million worth of critical regional transportation projects,” said Port Authority Chairman John Degnan.
The subsidies are also meant to attract two anchor tenants. Two Rupert Murdoch companies, News Corp. and 20th Century Fox, are said to be considering long-term leases in the property.
The companies, which are said to be in talks for 30-year leases, may occupy 1.5 million s/f in the tower (one million for 20th Century Fox and 500,000 for News Corp.).
If News Corp. and 20th Century Fox relocate to Lower Manhattan, they will receive subsidies from Empire State Development amounting to $15 million.
The subsidies will come in the form of tax credits under the Excelsior program, which provides capital investments for businesses in the state. The two firms will also receive $19 million from Silverstein Properties and another $9 million from the Port Authority. In total, the subsidies come to about $16 per s/f.
With the subsidies, the Port Authority is looking to ensure that the property gets built. The agency is operating on the notion that the cost of the support it provides will eventually be offset by the revenue that the tower will generate. The building, which may cost about $3 billion, is expected to create 10,000 job years.
The decision has so far inspired optimism from trade and business organizations. Kathryn Wylde, who heads a group of corporate CEOs called the Partnership for New York City, said that the “goal is in sight” in terms of ensuring that Lower Manhattan remains a destination for businesses.
“Immediately following September 11, 2001, many feared that Lower Manhattan would never recover. Confidence in the future of Downtown was restored, however, as redevelopment of the World Trade Center site, the transit system and the surrounding area moved forward. Thanks to strong leadership and aggressive public and private investment, Lower Manhattan today is stronger and more vibrant than at any time in modern history. Its continued resurgence, however, depends on completion and full occupancy of the World Trade Center and the infrastructure that supports it. That goal is in sight, but will require a last push that all New Yorkers have a stake in achieving,” she said.
“The Building Congress applauds the Port Authority, the State of New York and Silverstein Properties for crafting a prudent, yet modest, package of incentives design to help finalize a tentative deal to bring 21st Century Fox and News Corporation to the World Trade Center. Such a deal would ensure the full construction of 2 World Trade Center and complete the rebuilding by 2020,” added New York Building Congress President Richard Anderson.
When Silverstein and the Port Authority finalized a deal for developing office towers in the World Trade Center site five years ago, both sides agreed that there would be no tenant incentives for Tower 2.
The two other towers mentioned in the agreement, Tower 4 and Tower 3, received millions of dollars in tax breaks. Tower 3 also received $200 million in public funds from the Port Authority, the city and the state.
According to a 2010 press release, Tower 2 was planned as a development “based solely on market demand and no public support.”
In spite of its reversal on public funding, the Port Authority is providing minimal support for Tower 2. The $16 per s/f figure for the building is miniscule compared to the $250 per s/f in public support for Tower 3.