Today, a panel of arbitrators ruled against Ground Zero developer Larry Silverstein in many respects on his longstanding dispute with the Port Authority, which owns the land. But the arbitrators also handed Silverstein a big victory — one that ultimately should go a long way in allowing the full project to go forward.
As Silverstein’s people note in a press release (not online, I don’t think), “Silverstein’s cross default obligations under the 2006 Master Development Agreement are eliminated. This is the provision that would confiscate all three of Silverstein’s towers if any one was delayed in being completed.”
Cross-default would have been a financing killer in any rational market, because potential lenders would understand that a problem with any building could lead to a loss of all the assets.
Letting each building stand on its own financially, on the other hand, will give Silverstein a reasonable chance of raising money for each of his three towers, one by one, particularly as (one hopes) the city’s economy improves.
It’s not a sufficient condition for success, but it’s certainly a necessary one.
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