Govs. Andrew Cuomo and Chris Christie are seeking to carry out their pledge to reform the embattled Port Authority of New York and New Jersey through the sale of its real estate, the Wall Street Journal said.
A report released over the weekend highlights a plan to sell off many of the New York Port Authority’s sprawling property holdings, by far the most notable of which is the World Trade Center site in lower Manhattan, the report said.
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That concept has long been pushed within the agency, and it has been implemented gradually over the past decade and a half.
Now, real estate sales are at the center of a plan to overhaul the Port Authority by reorienting the agency to its core mission of transportation projects, the Journal said.
The Port Authority oversees airports, bridges and tunnels in New York and New Jersey, including John F. Kennedy International Airport, the George Washington Bridge, the World Trade Center sites, the Holland Tunnel and Newark airports, AP said.
John Degnan, Port Authority chairman, said it wasn’t clear how the authority would carry out the plan. The agency could pursue outright sales, lease the properties or partner with private companies. He said it could take years to figure out how to sell the authority’s roughly 90% stake in One World Trade Center. The Durst Organization owns the remainder, the Journal said.
“We’ve spent billions of dollars to build the World Trade Center—I’m not getting rid of it on a fire sale, ” Degnan said. “I believe in the end it is going to be a profitable venture and will result in the Port Authority financially benefiting from its sale.”
While the Port Authority long debated privatizing the Twin Towers after they were built in the early 1970s, the agency ultimately signed a 99-year lease to transfer the site to developer Larry Silverstein in mid-2001, just six weeks before the terrorist attacks destroyed the buildings on the site, the report said.
After, the agency reinserted itself by putting billions of dollars into site infrastructure and taking over development and ownership of One World Trade Center. Silverstein kept a 99-year lease on the sites for three other towers; the Port Authority continues to own the land under the towers, the Journal said.
Just how much One World Trade Center is worth will depend on how well the tower attracts new tenants in the coming years. It has leases for 61% of its space. The agency and Durst have projected it would have an operating income of $144 million by 2019, when it is projected to be 95% full. Depending on the strength of the sales market, that means the building would likely be worth at least $3 billion and perhaps substantially more, according to the report.
In addition, the Port Authority could theoretically sell the land under Silverstein’s towers, trading a lump cash sum from an investor for the tens of millions of dollars in annual rent the towers pay to the Port Authority, the Journal said.
Turning over a site with such symbolic meaning as the World Trade Center, where more than 2, 700 people died on Sept. 11, 2001, to private hands is also a sensitive subject.
There is also a stigma from the agency’s torrid relationship with Silverstein. Since 9/11, there has been frequent infighting between Silverstein and the Port Authority, the report said.
