Schumer asks City to use Liberty Bonds for WTC.

New York's senior senator Charles Schumer has spoken out against Mayor Bloomberg's intent to withhold the remainder of the Liberty Bonds money from the World Trade Center redevelopment project.

In his speech before the Association for a Better New York on February 27, Schumer unveiled a new proposal for getting ahead with the reconstruction process and called on City officials to stop giving out the remaining $3.345 billion in Bonds to projects outside the immediate World Trade Center zone.

After the 2001 terrorist attacks, Congress issued $8 billion in Liberty Bonds to help the City get back on track. $1.6 billion of that money was earmarked for residential developments, $1.7 billion was committed by Governor Pataki to the rebuilding of the WTC site, $1.65 billion was given to Goldman Sachs for its downtown headquarters and the rest went to a number of commercial projects around the City, including the Bank of America tower in midtown and the Altantic Terminal building in Brooklyn. Larry Silverstein has asked for at least $3.5 billion in bonds to complete the five-building WTC complex. The rest of the money would come from his insurance proceeds, totaling approximately $4.5 billion.

"Holding the remaining Liberty Bonds hostage and threatening to use them for other projects, either inside or outside downtown, throws the future of redeveloping Ground Zero into doubt and uncertainty," Schumer said. "We are also sending the wrong signal about how serious we are in redeveloping the World Trade Center site."

Schumer's comments come about two weeks after Bloomberg called on Silverstein to give up his rights to WTC Towers 3 and 4 in exchange for reduced rent payments and made clear his intent not to dedicate any more bonds to the site. The City claims that Silverstein does not have the financial wherewithal to complete the project on his own and the Mayor insists that he does not want to invest more money in a development that might not be completed.

"We're not going to put Liberty Bonds into something that would, two or three years from now, come to a grinding halt and I think the time to address this issue is before construction starts, right now, not when you're halfway done," Bloomberg said in response to Schumer's statement. "The City is going to use its Liberty Bonds the way the federal legislation permitted. It says, I remember, something about 20% of them can be outside of lower Manhattan, although at the moment we really don't have a lot of plans to use much outside of lower Manhattan. There's no place in the legislation, I think, that requires us to use it at the World Trade Center site."

Silverstein has ruled out the possibility of giving up development rights to any portion of the Ground Zero site, but following Schumer's call for the dedication of additional Liberty Bonds to the rebuilding project and a commitment from the Port Authority to relocate to the Freedom Tower, instead of Tower 3, Silverstein said that he and his staff would be happy to work out a deal.

"Senator Schumer has long been a stalwart supporter of the rebuilding effort and one of the first to address the acute need for office space in New York City prior to 9/11," Silverstein said in an official statement. "I welcome his constructive comments, and my company is prepared to work with our partners in government to do everything possible to speed up the rebuilding process."

Schumer's proposal demands some sacrifices from Silverstein as well, including drastically reduced development fees and a tight construction schedule, but unlike Mayor Bloomberg's plan to hand over a large portion of the development rights to an outside company, makes the deal a trade-off between Silverstein and the City.

"Larry Silverstein is a very fine developer and a good New Yorker, but because this is Ground Zero and be cause he would be using Liberty Bonds, there are special responsibilities for all parties," Schumer noted.

In Schumer's view, the redevelopment efforts would move along faster if the Port Authority would agree to take space at the Freedom Tower, leaving the more desirable Tower 3 to commercial tenants.

"I feel very strongly that it is a mistake of great proportions to give up the most desirable building, Tower 3, to a government entity and that doing so could sink the whole project," he said. "Tower 3 will have the advantages of a location on Church Street and being next to a transportation mega hub. Its layout will be designed to attract top notch firms and we should be saving this space for those kinds of tenants."

Steve Coleman, a spokesman for the Port Authority, said that a relocation to the Freedom Tower is possible, though the agency won't commit to a particular building right now.

"We have been saying for four years that we intend to move to the World Trade Center site, but we don't know which tower, so we can't say that it will be the Freedom Tower, but we can't rule it out either," he commented.

More importantly, however, Schumer called for the dedication of more Liberty Bonds to WTC and criticized City officials for giving away the coveted money for developments outside the immediately impacted zone.

"Billions have been committed to residential projects and commercial projects outside of lower Manhattan, but no money has been officially designated to Ground Zero," Schumer said. "Not many bonds are left and many fear that the remainder will not be spent wisely."

"We are making the easy choices, funding the projects that the market favors, instead of helping build the challenging projects that the City needs. And today, we are at risk of further depleting the entire pot of Liberty Bonds before we even put a shovel in the ground at the World Trade Center site."

"That was our intent and the intent of Congress and I do not want to have to go back to my colleagues and explain that all of the bonds have been issued and we still have an empty construction site in lower Manhattan."