By STEVE CUOZZO
NOT IN ACCORD: Real Estate developers Bill Rudin (above), John Zuccotti, Douglas Durst and Bruce Ratner have all weighed in on the pros and cons of Liberty Bond financing.
- Helayne Seidman
September 9, 2003 -- REAL estate circles are in a tizzy over a report that two influential developers urged the city to reject requests for Liberty Bond financing for two long-awaited new office towers planned for Midtown.
The incendiary issue arises at a time when developers Douglas Durst and Bruce Ratner say that without tax-exempt Liberty Bonds, their new towers - Durst's for Bank of America and Ratner's for the New York Times Co. - may not get out of the ground.
William Rudin, president of Rudin Management Co. and chairman of the Association for a Better New York, denies opposing Liberty Bonds for the projects, and says he endorses them if needed to kick-start the schemes.
But John Zuccotti, chairman of Brookfield Properties and the incoming president at the Real Estate Board of New York, stood by views attributed to him in the New York Times last week.
The paper reported that Rudin and Zuccotti, among other downtown property owners, had met with Economic Development Corp. President Andrew Alper last month and argued against authorizing tax-exempt bonds for Midtown.
Of $8 billion in Liberty Bonds authorized by Washington to help New York recover from 9/11, up to $2 billion may be used for projects outside Lower Manhattan.
It's up to the city and state to decide which ones to approve.
Only two Midtown projects so far have applied for the bonds - Durst's $1 billion-plus, 2.1 million- square-foot One Bryant Park on West 42nd Street, and Ratner's $800 million Times project on Eighth Avenue.
Rudin yesterday said he attended the meeting with Alper, but the view attributed to him in the Times was "inaccurate."
Rudin said most of the meeting had to do with revitalizing downtown. "Near the end, we said that if the city thinks it's an important project [in Midtown], then we're not raising objections to that particular project.
"We understand that the city must move forward, that the Times and Bank of America have decided to make a major investment. If these bonds make their projects work, that's great."
But through a spokesman, Zuccotti - speaking for himself, not for the Real Estate Board - said approving Liberty Bonds for Midtown "sends the wrong signal at this time.
"The bonds were designed to respond to a specific crisis that affected downtown and meet explicit needs to promote downtown development."
Asked how he would feel if the developers were unable to obtain financing without Liberty Bonds, Zuccotti said through the spokesman that the question was "preposterous."
"The city has ability to provide other incentives to spur development, which could and should be used if needed," he said. "Liberty Bonds seem inappropriate when other incentives are available."
Advocates for Durst's and Ratner's projects note that the bonds must be approved for use by the end of 2004, and if they're not, the city will lose them.
CB Richard Ellis chief Mary Ann Tighe, who represented the Times Co. in its deal with Ratner and now represents Ratner, said, "everyone in the debate is actually very well intentioned. Some people worry that using Liberty Bonds for anything other than downtown will somehow harm downtown.
"So the fundamental divide is whether people will consider aiding Midtown as good for downtown or bad for downtown," she continued. "But historically, anything that strengthens Midtown is guaranteed to benefit downtown."
The city has scheduled a public hearing on the Durst/B of A request for Sept. 29. No hearing has yet been scheduled for the Ratner/Times request.
Another major landlord, Tishman Speyer Senior Managing Director Rob Speyer, supports Liberty Bonds for Durst's project but not for Ratner's.
According to sources, Speyer told Deputy Mayor Dan Doctoroff at a recent meeting that at Durst's project, the benefits of a cheaper Liberty Bond loan would be passed on to the tenant - an assertion supported by a source familiar with Durst's preliminary agreement with B of A.
But Speyer - who could not be reached - argued that at Ratner's tower, the bonds would be subsidizing a developer's speculative building project.
That's because the Times Co. will own the bottom half of the tower, so it cannot participate in financing Ratner's portion - the as-yet-unrented top half, in effect a 700,000- square-foot empty building.
Ratner says he's so far failed to obtain conventional loans for his half.
A Forest City Ratner spokeswoman said, "in fact, this opposition [to Liberty Bonds] is endangering the financing of an $800 million project."
Durst had no comment. Andrew Alper's spokesperson, Janel Paterson, said, "We are not commenting at this time."