Ground zero owner, developer Larry Silverstein go to arbitration in spat over land turnover

By AMY WESTFELDT , Associated Press

Last update: May 20, 2009 - 3:10 PM

NEW YORK - The agency that owns ground zero and developer Larry Silverstein went to an arbitrator Wednesday to resolve a multimillion-dollar dispute over a land turnover that has stalled rebuilding.

The independent panel will decide whether the Port Authority of New York and New Jersey honored its lease with Silverstein when it turned over land that Silverstein needs to build office towers on the eastern part of the World Trade Center site.

The agency said it turned over the land it was responsible for, according to a 2-year-old agreement with Silverstein that divided responsibility for rebuilding ground zero. Silverstein is building three office towers on the site; the Port Authority is responsible for a multibillion-dollar transit hub, the Sept. 11 memorial and the largest skyscraper, the Freedom Tower.

But the agency agreed to turn over "construction-ready" land for Silverstein's towers by certain deadlines or pay $300,000 a day in penalties. The agency has paid over $40 million in late fees, but stopped paying on Oct. 5 and turned over land that makes up two of the sites Silverstein wants to build on.

The developer said that the agency is responsible for removing a 400-foot-long wall that is on the footprint where he plans to build. The agency said the wall doesn't sit within the footprint.

In a joint statement, the agency and Silverstein Properties said they had worked in good faith to resolve their differences.

"This effort did not yield an agreement and both parties feel it is most practical now to use the established dispute resolution process in order to achieve a clear and binding resolution of their differences," they said.

Construction progress wouldn't be affected on the site, the statement said. But work on the wall and other disputed parts of the site has been on hold since early October.