Recession Adds to WTC Troubles

NEW YORK -- The recession has cast uncertainty on plans for the office space at the World Trade Center, likely leading to more delays in rebuilding the site.

Executives for the Port Authority of New York and New Jersey, the agency that owns the 16-acre area in lower Manhattan, and private developer Larry Silverstein are in early talks on how to cope with construction problems and the slumping property market. Solutions are likely to include delays to the 2013 targets to complete the office and retail space meant to replace the Twin Towers, according to participants in the talks.

The rebuilding of the trade center, destroyed in the Sept. 11, 2001, attacks, has been hampered by delays, infighting and cost overruns. Work is under way on the project -- which includes five office towers, a memorial and museum, a shopping mall and a transit hub -- but most of the attention is now focused on the memorial and below-ground infrastructure, which are years behind schedule

A Port Authority review issued in October was meant to put the project back on track, but plans for the eight million to 10 million square feet of office space at the trade center are up in the air. "We definitely have challenges on the commercial side of the project about timing and raising capital. Those are the things we are talking to Silverstein about," said Port Authority Chairman Anthony Coscia.

The authority's executive director, Christopher Ward, said "discussions are under way to ensure infrastructure and the buildings meet the markets at the right time."

Mr. Silverstein declined to comment. In the past, he has expressed determination to build despite obstacles.

The economic environment is making it difficult to move forward on speculative office buildings. Debt financing for real estate has dried up, and the banks and financial firms that could fill the towers are reeling. Mr. Silverstein has floated the idea of having the Port Authority use its balance sheet to finance the office buildings, according to people familiar with the talks