Posts tagged with "public-private":

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The Public-Private Pit

The most recent deal to get the final pieces of the World Trade Center site off the ground was supposed to be, or so the players involved made it seem, the final one. No more handouts, no more delays. But as our colleague Eliot Brown over at the Observer points out, this is far from the first deal that has been brokered between the Port Authority and Silverstein Properties. It is in fact the fourth, and it quite possibly has brought the public's total investment in the private portion of the site—to say nothing of such public expenditures as the $3.2 billion (formerly $2 billion) PATH station—to possibly $2 billion. "While the ultimate public tab may never come to be that high, what is clear is that the amount of public assistance for what is now to be two private World Trade Center towers with 4 million square feet is exceptional, and far more than ever advertised or anticipated when the rebuilding plan was sold to the public," Brown writes.This quickly turns into a lose-lose situation:
One development plan is sold to the public with promises of a certain subsidy level and an expected long-term gain from rent. But conditions change, costs increase, the market worsens, and once it seems too late to turn around and scrap a deal, a developer needs more aid, and the public sector is in a tough place to refuse.[...]The site, of course, is laden with emotion and politics, and the desire to rebuild after a terrorist attack sets the site in a different category than the traditional public-private partnership. But in layering on the assistance at various different points over the past nine years, what is clear from the latest deal is that the total amount of public assistance is extraordinary and tremendous, and one wonders if the current plan would ever have gone forward had the public known its full contribution from the start.
It's a pretty sad reality for what was supposed to be a grand gesture in the face of tragedy. But pulling back from all that good will and high hopes, with the comfort of hindsight, it becomes clear this was just another development deal in New York City, possibly the granddaddy of them all. Look no further than Atlantic Yards or Columbia or, hell, the original World Trade Center itself to be reminded that this is just the way business gets done in this town. Which only begs the question, "How long until the next bailout?" Say, maybe, once the now indefinitely delayed Foster tower gets going again?
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Everybody Wants a Bailout

With the news today, reported by The Observer, that Larry Silverstein has begun legal proceedings against the Port Authority to end the gridlock at Ground Zero, as well as the developments two weeks prior at Atlantic Yards, it seems obvious to us what's going on here. Having witnessed the financial titans across town receive hundreds of billions of dollars in bailout money, these developers now want theirs. Granted, so did Larry Flint and the porn industry, but the comparison bears consideration. To begin with, the market has failed for both finance and real estate--to say nothing of every other industry--leaving "free market" options closed. Where the bankers have turned to the Treasury and the federal government, Silverstein and Bruce Ratner, in one form or another, have turned to local pols. At Ground Zero, Silverstein is having difficulty finding financing for Towers 2 and 3, so he wants the Port Authority to provide it, or at least back it, on those projects. The story at Atlantic Yards has been much the same, with Ratner unable to afford the full amount for the Vanderbilt Yards nor go through a complete public review process for a new general project plan to ensure there is time to qualify for already dubious tax-exempt bonds. In both cases, public agencies that are already hard up for cash have been asked to foot the bill or undersign considerable amounts of risk to ensure projects with uncertain futures go forward. In the case of Atlantic Yards, the MTA and ESDC have already rolled over. It remains to be seen whether the Port Authority will cave to the abiding political and now legal pressures surrounding the Ground Zero deal. It would not be surprising if the authority did, though, given the examples set in Brooklyn and Washington.