World Trade Center Redevelopment

Almost immediately after the attacks of September 11, 2001, plans began for the redevelopment of the 16 acre site of the former twin towers. Just months before the attack, the Port Authority of New York and New Jersey (PANYNJ), the owners of the site, reached an agreement with developer Larry Silverstein for a 99 year ground lease of the site. This agreement technically left Silverstein with the right to develop the site in the wake of the attacks.

However, shortly after 9/11, New York State created The Lower Manhattan Development Corporation (LMDC) as a subsidiary of the Empire State Development Corporation. LMDC was charged with coordinating the reconstruction of the World Trade Center site and administering the bulk of the public sector funding allocated for recovery. In addition, LMDC was tasked with engaging the public with regards to the commercial and memorial developments on the site.

Daniel Libeskind’s master plan was selected through a design competition organized by LMDC for the site in 2003. Together with Silverstein’s architectural firm of Skidmore, Owings and Merrill, a development plan for the site emerged in 2004, which included the 1776 foot tall Freedom Tower. Also in 2003, LMDC sponsored a design competition for the World Trade Center Memorial. The winning design, “Reflecting Absence” by Michael Arad and Peter Walker, was chosen in January 2004.

Construction at the site stalled for several reasons. The most basic was the competing visions for the site that were held by the various stakeholders – victim’s groups, Mr. Silverstein, the Port Authority, the Governor’s office, and LMDC. Many victims groups thought more money and attention should be spent on the memorials than was proposed. Many of the stakeholders, including PANYNJ and some in LMDC, saw the design as a chance to improve upon the condition of Lower Manhattan by reintroducing parts of the street grid and constructing a world-class transportation facility.

Some, including Mayor Bloomberg early in the design process, thought that the design should have placed more emphasis on housing and community facilities, instead of office space. They claimed that Lower Manhattan actually had a glut of office space and that even before the attacks, many former office buildings were being converted to housing, reflecting the needs of the current market.

In 2006, the Port Authority reasserted its dominance in the reconstruction process and was able to reach a deal with Mr. Silverstein in which full construction of Mr. Silverstein’s buildings would be completed in 5 years. Before the 5 year clock could begin, however, the Port Authority had to complete the excavations for several sites.

Originally scheduled to be complete by the end of 2007, PANYNJ could not finish the excavation work until February 2008 and was forced to pay Mr. Silverstein a fine for the delay. As part of the agreement, Mr. Silverstein ceded rights to develop the Freedom Tower and Tower Five (which will be located on the site of the Deutsche Bank building) in exchange for financing from the sale of Liberty Bonds for towers Two (200 Greenwich St), Three (175 Greenwich St), and Four (150 Greenwich St), which are considered to be the most marketable properties of the site.

Another reason for delay at the site was that the New York City Police Department requested modifications to the Freedom Tower’s design to improve security. Further delay was caused by the refinement of the design and cost of the memorial. Originally designed as a more barren plaza, the current design includes vegetation as well as additional cultural buildings. This process pushed back the anticipated completion of the memorial to 2011 from 2009. The lack of a comprehensive insurance settlement from the attack further frustrated construction.

Though several insurers had paid a cumulative $2.55 billion, the outstanding insurers, that owned the most liability, did not reach a settlement until more than 5 years after the tragedy. In May 2007, with the help of the State Insurance Commissioner and the Governor, the outstanding insurance claims were finally settled for another $2 billion. With that major piece of the financing taken care of, the pace of construction activity quickened at Ground Zero.

In late 2007, Westfield, a company specializing in retail development, signed an agreement to develop a major portion of the retail at the WTC site. While some of the retail will be inside, a large portion of it will be at street level. This is in marked contrast to the former development in which most of the retail was located underground. Having active street level retail was a goal of many residents of the community.

In addition, the City and State are in negotiations to lease out major portions of the new facilities’ office space. By agreeing to leases now, before construction is complete, the governments hope they can secure favorable lease rates. Such pre-leases would also benefit Mr. Silverstein who would have some guaranteed leasing income.

While these developments were occurring at the WTC site, several other linked projects were also underway. In 2006, Mr. Silverstein completed construction of 7 World Trade on land controlled by him and not the Port Authority. A temporary PATH station, largely following the layout of the original, has reopened and is serving approximately 80,000 riders per day during the massive construction project.

This temporary station will be replaced with a permanent World Trade Center Transportation Hub, which is being built by PANYNJ and is scheduled to be completed by 2011. Spanish Architect Santiago Calatrava, designer of the station, said the new station will resemble a bird being released from a child’s hand.

Another related project is the demolition of the Deutsche Bank building, immediately across the street from the WTC site. The building was deemed not suitable to reoccupy, or even rebuild, due to the damage and the high level of contamination it incurred after the attacks. Remediation of the contamination there has been delayed. The delays were due, in part, by the sensitive recovery of human remains as well as operations by contractor, Bovis Lend Lease, and subcontractor, Galt.

Budget overruns and serious safety problems slowed the cleanup process for the contractors. These safety problems culminated in a fire in August of 2007, in which two firefighters were killed. Bovis and Galt were fined almost half a million dollars for safety-related infractions as a result of the fire. Work was allowed to resume at the site with a new subcontractor, LVI, taking over the work.

There are several strands of criticism of the redevelopment project. Some view it as poorly designed for corporate tenants and far too costly overall. Others are critical of the slow pace of the project, which some contend is putting upward pressure on the project’s overall costs. In addition, there are still concerns about the safety of the site and the nearby neighborhoods. Some residents are concerned about the air quality and fear it is being negatively impacted by construction at the site and by dust and dirt being tracked through their neighborhoods by construction trucks.

PANYNJ agreed to new dust and dirt control measures as a result of this criticism and insist that air quality measurements show levels of contamination are still below EPA guidelines. However, many residents and workers in the area are still skeptical about the air quality. This skepticism is partly fueled by the feeling among many that immediately after the attack, the EPA did not sufficiently safeguard public health for dangers related to air quality in the surrounding neighborhoods or on ‘the pile’ itself.

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