Silverstein Wins Arbiter’s Nod in WTC Construction Dispute

Settling a dispute over construction conditions at Manhattan’s World Trade Center, an arbitration panel has ruled that the public agency that owns the site has not finished preparatory work necessary for construction of two office towers. The decision will require the Port Authority of New York and New Jersey to pay developer Silverstein Properties Inc. millions of dollars in additional penalties because progress on the towers is being hampered. But both the agency and the developer also won high marks from the panel for their willingness to work together. The Port Authority of New York and New Jersey declared on Oct. 5 that preliminary work was done for the parcel known as Site 4, where Silverstein will build 150 Greenwich Street, a 64-story tower that will include 1.9 million square feet of office space plus 144,350 square feet of retail. But the panel found that the agency slowed work by building a pile wall several hundred feet long in the path of 150 Greenwich’s planned foundation. Silverstein has said that the project will be complete in 2012.The panel also determined that the Port Authority had incorrectly certified another parcel, Site 2, as partly complete on Oct. 5.  That parcel will be the location of 200 Greenwich Street, a 79-story tower that will include 2.3 million square feet of office space and 138,000 square feet of retail.As a result of delivering the parcels late, the Port Authority will have to resume paying Silverstein $300,000 per day in penalties dating back to Oct. 5. The penalties, also known as liquidated damages, are intended to offset Silverstein’s daily rental payments to the Port Authority plus the cost of the delays. Including back payments incurred since Oct. 5, missed deadlines have cost the Port Authority $63.9 million this year. In the midst of the costly dispute, the arbiters praised Silverstein and the Port Authority for their spirit of cooperation. “The panel notes that in developing the design for the redevelopment of the World Trade Center . . . the parties have admirably cooperated in facing and resolving many of the conflicts and problems that arose,” the arbiters said in a statement. “Now that they are into actual construction, that level of cooperation must not only continue but increase, particularly in communicating with respect to problems as soon as they arise.”