Who are the 'Port Authority 30?'.

An apt metaphor may be Tap Day at Yale. You were tapped to join a prestigious secret society, therefore ensuring your elite social standing for perpetuity; or you weren't, and you fell back into the crowd.

Anonymous developers wooed to net-lease WTC 

Thirty developers around the world received the equivalent of a multi-billion-dollar tap this week when they were invited to submit bids to sign a 99-year net-lease for the World Trade Center.

Make that, THE World Trade Center.

The Port Authority of New York and New Jersey, owner and operator of the WTC since it's opening nearly 30 years ago, is officially soliciting a private lease arrangement for its signature property. According to published reports, 30 companies have received an outline -- read, an invitation -- for leasing requirements, but the Port Authority would not reveal who the companies were, citing confidentiality agreements. And the companies themselves were being just as coy. When asked by Real Estate Weekly if his firm had received the "offering memorandum," Robert Selsam, senior vice president and New York office manager for Boston Properties, replied, "Yes, and that's all I'm going to say about it."

Insisting the Port Authority would not release the names of the chosen, Allen Morrison, a spokesman for the Port Authority, said "All of our potential bidders have signed a confidentiality agreement, and we do not want to violate it, though I understand some have already let it slip."

But when asked if confidentiality agreements were a common practice, Morrison said, "There is nothing common about any single part of this. It's the World Trade Center. It's the largest, most uncommon, most unique deal we know of."

The WTC hasn't been this hot a topic with the New York Real Estate crowd since the Johnson Administration, when the smart money said the project would flop faster than a diesel Edsel. Maligned at the time for dumping 10 million square feet of then-unneeded office space on the Downtown market, today the Center is poised to start the bidding war for the ages.

And while the winner can charge market rents in what has become the East Coast's most prestigious office complex, it will also face a tax burden the Port Authority has to date avoided. For years, the interstate agency made "Payments In Lieu Of Taxes" (PILOTs) in a deal struck in the early 1970's which amounted to roughly half of the assessed rate. The city is on record as saying a private leasing agent would be made to charge the full rate, which could force some of the smaller tenant companies out.

And there have been other benefits to the Authority's being a public agency. Not as well known is the cheaper energy WTC tenants enjoy. Because the Port Authority is not a city landlord, it does not use Consolidated Edison and can import its power from the New York Power Authority, a state agency, and pay an estimated $1.30 per square foot compared to the $3 per square foot else-where downtown. Morrison said the agency has never revealed the actual prices paid, but the next landlord will keep that arrangement, while charging tenants whatever it pleases.

So given all this, will there be a real interest in taking over the center?

"Positively," said Richard I. Selig, Chief Financial Officer of Hunter Realty Organization, LLC. "It's the World Trade Center. It's still one of the most famous and undervalued spaces. The retail mall is undervalued. It's the hub of Lower Manhattan with 40,000-square-foot floors and no columns."

The center, he said, has its issues and its assets. The difference between the PILOT payments and actual taxes, Selig estimated, was roughly half, but the current rents were at about market value. The rare available space in the complex, which is 97 percent rented, goes for no higher than $51 per square foot, while 1 Liberty Street, the new home of NASDAQ and a neighbor, rents at about the same.

Then there are the 900,000 square feet currently occupied by the Port Authority, which Morrison said they pay proper rent for, albeit to themselves. Morrison said the Port Authority would keep "most" of that space under the terms of the memorandum, but every little bit they give up counts.

"The Downtown market is less than three percent available," Selig said. "There's just no space."

Morrison said this is the latest of the Port Authority's moves to ease itself out of the real estate management business.

"Since 1995 the agency has been redirecting itself, at the behest of Governors Pataki and Whitman, who we answer to, back towards our original transportation mission," he said. "Privitazation makes the most sense. To a very high degree at JFK airport, most of the employees there work for private contractors. We've sold off most of the Yonkers Industrial Park. A large part of the Elizabeth (N.J.) Industrial Park has been taken over and is now a very successful Ikea. The Bathgate in the Bronx is fully leased out, and we've already done a net-lease with the Vista Hotel at the Center."

Morrison said the Port Authority runs the WTC with a staff of "less than 200," though hundreds more work at the center for private contractors.