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Silverstein Cleared To Borrow More Tax Exempt Dollars

World Trade Center leaseholder Larry Silverstein is on a roll. In December, the developer prevailed in his long-running legal battle against insurers who claimed that the 9/11 attacks were one insurable event. That ruling dramatically increased the amount of proceeds available to Silverstein in his ambitious rebuilding program.

Just yesterday, the New York City Industrial Development Agency (NYIDA) cleared Silverstein to borrow an extra $75 million through tax-exempt Liberty Bonds. This money will be used to finance Silverstein’s $1.35 billion project at 7 World Trade Center.

In 2003, Silverstein was approved to receive $400 million in Liberty Bonds. Yesterday’s announcement by the NYIDA means that Silverstein can tap added funds for the massive rebuilding project at Ground Zero. The lion’s share of the financing--$819 million--will come from insurance proceeds.

With Liberty Bonds, lenders accept lower interest rates since the proceeds are not taxed on the federal, state or city level.

7 World Trade Center bondholders should also welcome the news, according to Fitch Ratings.

"This is good news for the bondholders," says Karen Trebach, director of Fitch Ratings’ CMBS group. "While a number of things still need to fall into place, including the approval of the increase by the Governor and Mayor and the actual sale of the bonds, Fitch sees today's recommendation as an important step toward the repayment of the existing bonds."

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