Port Authority Could Owe Larry Silverstein $12 M.-Plus for Delays

The Port Authority acknowledged today that it will miss its deadline of Jan. 1, 2008 to finish up excavations on the bathtub for World Trade Center Towers 3 and 4, thereby owing developer Larry Silverstein more than $12 million in delay penalties given the agency’s current timeline.

The Port Authority will owe Silverstein Properties $300,000 for every day until the excavations are done, and in a statement, the agency said that the bathtub would be ready for complete handover to Mr. Silverstein in about two to four weeks after mid-January (when they expect to finish excavations for Tower 4).

The Port Authority, which owns the World Trade Center site and is leasing the land for Towers 2, 3, and 4 to Silverstein, said in the statement that the hit from the penalties will in part be passed along to its contractors.

Silverstein, in a statement, said it will begin “pre-construction activities” as the firm waits on the Port.

Release below:

Statement by Port Authority Regarding Preparation of Towers 3 and 4 Bathtub

At WTC Site to Allow Silverstein Properties to Begin Construction in January

The Port Authority announced today that it has substantially completed the excavation of the basement area for Towers 3 and 4 at the World Trade Center site, and that it would complete the entirety of the excavation of Tower 4 by mid-January, and Tower 3 two to four weeks later. In keeping with this timetable, Silverstein Properties will advance procurement and other preconstruction activities in preparation for full-scale construction.

The construction of the Towers, including below- and above-grade retail and subterranean transit concourses, is expected to be completed by Silverstein Properties in 2011.

The unprecedented 12-month excavation and construction project - which involved the removal of nearly 300,000 tons, or enough concrete, soil and rock to fill Giants Stadium - will be completed within weeks of its original schedule established in an agreement with Silverstein Properties in mid-2006. Fifty miles of trucks was required to remove the material from the “bathtub” in recent months. In addition to clearing the site, the work involved the intricate installation of approximately 400 tiebacks, which if placed end-to-end would stretch down Interstate 95 from Manhattan to Philadelphia, and the pouring of enough concrete to pave a sidewalk from Wall Street to Rockland County, N.Y.

As a whole, the project is more than 90 percent complete. The excavation for the bathtub for Towers 3 and 4 must be dug to elevation 240. To date, 80 percent of the site for Tower 4 has reached elevation 240, and the remaining portion ranges from between elevations 241 and 248. The site for Tower 3 has been excavated to as low as elevation 264.

Under a master redevelopment agreement approved by the Port Authority Board of Commissioners in September 2006, the bistate agency agreed to take over development of 1 World Trade Center, the Freedom Tower and the Tower 5 site. Silverstein Properties is responsible for construction of Towers 2, 3 and 4.

The Port Authority’s agreement with Silverstein Properties calls for it to make payments of approximately $300,000 per day if any section of the excavation is not completed by January 1.

The Port Authority expects these costs will be largely offset by reduced payments to its contractors, and Silverstein Properties will reinvest these payments in the ongoing $16 billion of construction throughout the site.

The Port Authority is on schedule to complete the below-ground excavation for the Tower 2 site by the end of June 2008. Currently, nearly every section of the 16-acre World Trade Center site is under construction. There are currently more than 700 construction workers and 100 pieces of heavy equipment on the site.

Major construction on 1 World Trade Center, the Freedom Tower began in mid-2006. The tower’s footings and foundations are nearly complete, and steel will begin to rise above street level during the first part of 2008.

Construction of the foundations for the World Trade Center Transportation Hub and Memorial also are under way. Major steel beams for both projects are scheduled to be erected during the upcoming year.