The New York Times

July 17, 2003, Thursday, Late Edition - Final

SECTION: Section B; Page 3; Column 1; Metropolitan Desk
LENGTH: 744 words
HEADLINE: Developer Wants 9/11 Bonds for Times's Project in Midtown
BYLINE:  By CHARLES V. BAGLI

BODY:
The New York Times Company's development partner in building the newspaper's new headquarters on Eighth Avenue has asked city officials for $400 million in tax-exempt bonds that were designated for rebuilding New York after the attack on the World Trade Center.

The developer, Forest City Ratner, has told city and state officials that it needs the special federal financing, known as Liberty Bonds, because it is nearly impossible in the current economic environment to obtain a conventional construction loan for its portion of the planned 52-story tower on Eighth Avenue, between 40th and 41st Streets.

A spokesman for the Times Company noted that the newspaper would not benefit directly from the bonds. But some critics questioned whether a project in Midtown, which embraces some of the most valuable real estate in the world, should receive another round of subsidies.

The federal government provided up to $8 billion in Liberty Bonds in 2002 as part of an initiative to provide tax-exempt financing for major projects to revitalize Lower Manhattan in the wake of the September 2001 attack. The legislation for the bonds set aside up to $1.6 billion for residential projects downtown and up to $2 billion for commercial projects outside Lower Manhattan.

The Times and Forest City reached an agreement with city officials more than two years ago to build the Eighth Avenue skyscraper as part of a deal in which the newspaper got $26.1 million in sales tax breaks and other subsidies.

Under the terms of their partnership, The Times will own the 2nd through 27th floors of the tower, totaling about 875,000 square feet, while Forest City Ratner will own the upper floors, 725,000 square feet. With millions of square feet of vacant space in Midtown Manhattan today, Forest City has been unable to find a tenant for its space, making it difficult to secure financing.

Bruce Ratner, chief executive of Forest City Ratner, declined to comment on the application yesterday. The partners are scheduled to take possession of the land for the project at the end of August and to begin demolition immediately. The tower should be completed in the third quarter of 2006, about a year behind schedule.

Michael Golden, vice chairman and senior vice president of the Times Company, said the Liberty Bonds would be a valuable investment for the city. The Times, he added, would not be involved in the bond financing. He said the original deal for the project was drawn up several years ago amid a real estate boom. "The real estate world has changed," he said. "There's a lot more space out there. I think anything the city and state can do to make the development of this office building happen is a legitimate expenditure. It's a good thing for the city to have this building go up."

Bettina Damiani, project director of Good Jobs New York, an advocacy group that evaluates economic projects, disagreed, saying the city had already struck a deal for the Times project that required The Times and the developer to proceed.

"It's disappointing," she said. "They're certainly taking advantage of everything that's out there. But the whole point of the Liberty Bonds was to rebuild downtown and create back-office space in Brooklyn and Queens so companies don't flee to Jersey. It wasn't about Midtown."

Deputy Mayor Daniel L. Doctoroff confirmed yesterday that the city had received an application from Forest City Ratner. He declined to discuss the specifics of the proposal, but he did say that the city would employ two criteria in evaluating its merits: whether the project has boroughwide or citywide importance, and whether the project would not be built without Liberty Bond financing.

Like Forest City, the developer Douglas Durst hopes to get tax-exempt financing for a Midtown project. He wants $700 million in Liberty Bonds to build a two-million-square-foot tower with Bank of America at 42nd Street and the Avenue of the Americas.

City and state officials have approved a number of residential projects, but there have been few commercial applicants because of corporate layoffs and an anemic economy. The developer Larry A. Silverstein has received tentative approval for $400 million in Liberty Bonds to rebuild the skyscraper at 7 World Trade Center, and Forest City Ratner received approval for $113 million in bonds to build an office building for Bank of New York at Atlantic Center in Brooklyn.