At Ground Zero, a Battle's Decisive Moment

NEW YORK (March 11) -- A longstanding battle that has stymied construction at the site of the World Trade Center comes to a head this week.

Barring a last-minute deal, arbitrators are set to impose a solution Friday on the financial spat that pits the Port Authority of New York and New Jersey, which owns the site, against Larry Silverstein, the developer who leased the World Trade Towers only weeks before the Sept. 11, 2001, attacks.

"It's a disgrace that nine years after the attacks we are still looking at a hole in the ground," New York City Council Speaker Christine Quinn said Tuesday, according to the New York Daily News.

Four new towers are planned for ground zero. One World Trade Center, the 1,776-foot centerpiece of the site, formerly known as the Freedom Tower, is already 20 stories tall; the Port Authority is building it at a cost of $3 billion, along with a $3.2 billion transit hub, also already in the works.

Silverstein is responsible for the three others, one of which is already under construction. But the financing for Silverstein's three buildings has caused months of deadlock, with the developer demanding financing from the Port Authority to build then and the Port Authority refusing.

"I describe this as a national disgrace," Silverstein said on "60 Minutes" in February. "I'm the most frustrated person in the world."

"We should not define downtown as a disgrace," Port Authority chief Christopher Ward countered today. His central concern is that Silverstein hasn't lined up tenants for his buildings. "Let's build what we know we need today," said Ward. "Let's not use public resources to simply build monuments that might be empty buildings."

An arbitration panel gave the two sides until today to resolve the issue on their own. If they don't, the parties will have to accept the resolution the panel works out Friday. Ward said today he was "mildly hopeful" that a negotiated solution could still be reached.

Silverstein has argued that tight credit markets and a lack of interested corporate tenants have blocked him from the financing he needs to build the three towers. He has demanded the Port Authority back at least two of them.

Last week, The New York Times reported that the Port Authority had offered to finance one of Silverstein's towers now and a second one if the developer could rent out a fifth of its space in the next two years. Also slated for the site would be a five-story retail space, which could be used as a base for a future tower.

But that plan came with strings attached: Silverstein would have to pony up $300 million more of his own money, and the New York city and state governments would also have to add funding.

The disagreement has caused a political rift in New York. Mayor Michael Bloomberg and State Assembly Speaker Sheldon Silver -- who represents the area in Albany -- side with Silverstein, saying the project was always meant to be both public and private.

"The parties have one day to produce a realistic schedule, a budget and a financing plan for the World Trade Center. The future of Lower Manhattan -- and a piece of our national pride -- depend on it," Bloomberg and Silver wrote in an op-ed in the Times today.

The New York Times sides with the Port Authority, saying the city doesn't need three empty office buildings and that the authority has more pressing issues to spend its money on.

"[T]he Port Authority should not be obliged to provide what the market and Mr. Silverstein cannot," said a Times editorial Wednesday. "It must keep its finances safe for the region's transportation facilities and concentrate on making sure that the memorial is available to visitors by Sept. 11, 2011."

On Tuesday, thousands of union workers rallied outside the site to protest the stalemate. They stand to lose 10,000 jobs if the construction doesn't proceed.