WTC Groundbreaking Set
For Independence Day
May 6, 2004 -- NEW YORK -- Construction of the tallest building in the world - the Freedom Tower - will begin July 4 at Ground Zero in Lower Manhattan despite the ongoing insurance court battle, New York Gov. George Pataki announced Wednesday.
The rebuilding effort will mean overcoming "traditional turf battles and parochial interests" and not being "derailed or delayed by the uncertainty of litigation," Pataki said during a lunch speech to the Association for a Better New York at a downtown New York hotel. He said the rebuilding will be done in partnership with the Port Authority of New York and New Jersey, World Trade Center leaseholder Larry Silverstein, and others.
His comment appeared to allude to the multibillion-dollar insurance court battle being waged between Silverstein and more than a dozen insurers. Earlier this week, a jury delivered Silverstein a major blow when it decided that 12 of 15 insurers bound their coverage on an insurance form that views the terrorist attacks as a single event. The decision significantly derailed Silverstein's legal bid to have the attacks deemed two events, entitling him to collect two payments of the insurance policy's face value of $3.55 billion.
The jury found that 12 insurers, who accounted for more than $1.9 billion of the coverage, were governed by a form that considered the plane attacks as a single event - therefore resulting in a single payment.
Another trial will be held in August to determine what forms, if any, 10 other insurers were bound on, and if those insurers must make one payment or two. These insurers represent another $1 billion of the coverage.
If Silverstein wins that phase, the most he could collect would be about $4.7 billion, which is far short of the $8 billion to $10 billion needed to rebuild the 10 million square feet of office space at Ground Zero. Besides the Freedom Tower, four other towers are planned for the site.
Speculation has been swirling that the Port Authority might renegotiate Silverstein's role in the rebuilding effort if he doesn't win the insurance battle. But Pataki's comments Wednesday gave no indication that this was in the works. "It's premature" to talk about that, said Pataki's press secretary Lynn Rasic. "Mr. Silverstein is committed to (rebuilding and) the Freedom Tower," she said. "And we're taking him at his word."
The cost of building the Freedom Tower has been pegged at about $1.5 billion, although some experts speculate the price tag could exceed the $2 billion mark. The glass structure, which will include 70 floors of office space, will be topped off with energy-generating windmills and a 176-foot spire, making it the world's tallest building.
Some wonder if Silverstein will have the cash to build the Freedom Tower if he loses the August trial. If he loses, the maximum payment will be $3.55 billion. But more than $1.4 billion of this total already has been spent paying rent to the Port Authority, buying out his mortgage lender and on legal fees.
"Silverstein hasn't even paid the less than $3,000 he still owes my business for the rent we had already paid on our World Trade Center office from Sept. 11 through the 30th," said Jonathan Hakala, chairman and chief executive of venture-capital firm Threshold Capital, which leased space on the 77th floor of One World Trade Center. Hakala said he has sent several letters requesting the refund, but has yet to get a response.
"It's strange that he's trying to project financial strength when he hasn't even taken care of loose ends," he said.
But Silverstein dismisses the concerns. "Mr. Silverstein has enough to do the first tower and second tower, no problem," said Silverstein spokesman Howard Rubenstein. After that, he said, he may use "traditional means of financing" to construct the remaining buildings, using the first two towers as collateral.
"He's been building for 50 years," Rubenstein added.
He added that Silverstein was "very encouraged by the governor's determination to move forward and not let the litigation stand in the way" and is pleased the governor talked about "rebuilding together."
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