Port authority and City Spar Over Escalating World Trade Center Expenses

This post has been read 1965 times!

If you thought the construction progress at the new World Trade Centers and 9/11 memorial was stalling, you were correct. After duct taping together the 9/11 Memorial to meet the deadline of the tenth anniversary opening, the whole site has ground to a halt. There simply is no money left and the overruns are now being passed between the city and the states of New Jersey and New York.

November 21, 2011 The Wall Street Journal


The planned 2012 opening of the Sept. 11 museum at the World Trade Center is in jeopardy amid a dispute over hundreds of millions of dollars in unexpected costs related to redeveloping the site, people familiar with the matter said.

Construction has slowed on the Sept. 11 museum, foreground.

Construction on the sprawling museum has slowed considerably since September, when the Port Authority of New York and New Jersey stopped approving new contracts and extensions of existing contracts, people familiar with the matter said. Its planned September 2012 opening will likely be pushed back, the people said.

Rob Bennett for The Wall Street Journal

The $800-million-plus project is the latest pressure point in a series of funding disputes at the World Trade Center site, where the redevelopment tab has reached more than $11 billion.

The fight puts the Port Authority—controlled jointly by New York Gov. Andrew Cuomo and New Jersey Gov. Chris Christie—at odds with the administration of Mayor Michael Bloomberg, the chairman of the National September 11 Memorial & Museum foundation.

Fueling the battle is $156 million that the Port Authority—which is building the museum—says the foundation owes for construction costs. Port Authority officials have said privately they are concerned about the museum having enough money to finish the job, people familiar with the dispute said.

The foundation denies it is responsible for the cost overruns, and for its part believes it is owed more than $100 million on account of delays, a person familiar with the matter said.

The two sides are negotiating a set of conditions for arbitrating the dispute outside of court.

Representatives for all sides on Sunday said the issues would ultimately be resolved.

“The Port Authority, the city and the museum are working collaboratively to resolve these matters,” said Patrick Foye, the Port Authority’s executive director.

Julie Wood, a spokeswoman for Mr. Bloomberg, said in a statement that funding disputes have been overcome before. “We’re confident we will work them out again,” she said.

The World Trade Center redevelopment has been plagued by near-constant disputes among public agencies as well as with private developer Larry Silverstein, who has the rights to develop three towers.

Most of the billions in added costs over the years have been absorbed by the Port Authority, which owns the site and is in charge of the rebuilding.

The overruns at the museum have been in dispute for months, but those and other problems were left unresolved until now, in part because officials wanted to avoid a public fight before the 10th anniversary of the 2001 terrorist attacks, people familiar with the discussions said.

The city and the Port Authority also have recently been fighting over who will pay for up to $300 million in security costs related to the site, people familiar with the discussions said.

Mr. Cuomo has begun to take a more active approach with the Port Authority, a typically cash-rich agency that has been weighed down by the costs of rebuilding. He recently installed Mr. Foye, a former economic development aide, as its new executive director, and put four new appointees on the agency’s board.

The agency appears to have taken a more aggressive approach with funding issues lately, and it has added pressure on the memorial foundation by not approving the contracts for the museum.

The dispute is partially over whether the $156 million in overruns are the responsibility of the museum, or whether they are broader infrastructure that the Port Authority should pay for. Generally, the foundation is responsible for the museum’s cost. The Port Authority is paying for site-wide infrastructure.

The Port Authority claims the foundation is responsible for such unexpected costs. But the foundation denies it is responsible and is preparing a claim of more than $100 million against the Port Authority, for additional costs caused by construction delays and the operational complications of opening the memorial when the surrounding streets and sidewalks weren’t yet open, one person familiar with the situation said. Talks have been active. Mr. Foye met Friday with city officials including Deputy Mayor Robert Steel.

The Port Authority has raised broader concerns about the foundation’s ability to pay for the full cost of the museum. Mr. Foye told members of the agency’s board earlier this month that Joseph Daniels, the foundation president, said he expected a “cash squeeze” early next year, a person familiar with the board meeting said.

Michael Frazier, a foundation spokesman, said it “has reached its funding commitments and will continue to do so.”

This entry was posted in - 1 The Good News and Greer Report, Real estate, State Government. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *