A new offer from the Port Authority to Larry Silverstein for construction financing at the World Trade Center site may be the closest the two sides have come to an agreement in more than a year.

Still, it may not be enough to bring the warring camps to an accord by a court-ordered deadline of March 12.

The Port Authority has offered to guarantee construction loans for two of Silverstein's buildings—Towers 3 and 4—if the developer can raise $300 million in private funding. That is $50 million more than Silverstein Properties offered the Authority last month in his latest proposal, sources familiar with the offer said. But the Authority’s offer is much more generous that its last one, which asked Silverstein for $625 million, and only offered to back loans for one tower.

 

Initially, Silverstein intended to build three towers in the eastern half of the site, along Church Street, but a weakened credit market has kept him from raising money in the private market. The developer offered to put up $250 million of his own money toward the construction of Towers 3 and 4—and suspend indefinitely construction of the more costly Tower 2—on Feb. 10, but the Port rejected the proposal.

In January, an arbitration panel gave Silverstein and the Port Authority until March 12 to produce a new construction schedule and financing plan for the site’s eastern half, or have the panel impose one of its own. In addition to the 1,776-foot office tower at One World Trade Center and $3.2 billion transportation hub, the Authority is responsible for almost all the underground infrastructure and utility work on the 16-acre site, projects critical for Silverstein because they will determine when his buildings are ready for occupancy.

While there has been no indication that Silverstein will accept the Port Authority’s latest offer, it has the distinction of being the first in months that did not draw an immediately negative reaction from Silverstein.

"We are pleased that the Port Authority has responded to our February 10 offer with their own proposal, which we are currently studying," Bud Perrone, a spokesman for Silverstein Properties, said in response to the offer. "We will continue to work with the Port Authority and other stakeholders in order to achieve an agreement that will protect the public’s interests and ensure the World Trade Center is rebuilt in a timely manner."

For Silverstein, the devil may be in the details. The Authority’s offer stipulates Silverstein must:

• Pre-lease 500,000 square feet of the tower's office space—about a quarter of its total 2.1 million square feet—within two years of signing a new construction agreement before the agency will back any loans, at rates almost double the average asking rent for high-grade office space in Lower Manhattan.

• Rework the tower’s design to bring down construction costs.

• Continue to pay ground rent on the proposed sites for his three towers until his insurance proceeds—collected after the destruction of the original World Trade Center—run out.

 

In addition, the Authority insists that the city financially contribute towards construction at the site. It wants the city to wave its payments in lieu of taxes due over the next 30 years. That would save the agency millions of dollars that could be rededicated to Trade Center projects. Mayor Michael Bloomberg has yet to comment directly on the Port's latest offer.

In a statement released Thursday evening, New Jersey Gov. Chris Christie he hoped the latest offer from the Authority—control of which Christie shares with New York’s Gov. David Paterson-—would be looked at as a fair compromise.

“We simply cannot delay any longer on the World Trade Center site, which is why I have worked with the Port Authority to put together a thoughtful and substantive counter-proposal," Christie said in a statement. "This is a good first step we must all quickly build upon so we can come to a timely and meaningful conclusion.”