Wednesday, May 23, 2007
Yara Zakharia, Esq.
For the downtown New York business community and the Port Authority of New York and New Jersey, the announcement that New York Governor Eliot Spitzer's office delivered this afternoon at ground zero was a much-needed dose of relief and contentment. The good news, of which Spitzer's administration was the harbinger, was that an insurance claims settlement had been reached, thus ending an acrimonious, five-year dispute with two dozen insurers centering on compensation related to the September 11 attacks. More specifically, the $4.55 billion in insurance funds to be allocated to the reconstruction of the World Trade Center constitutes half of the $9 billion total for rebuilding ground zero's retail area and office buildings.
Following a two-month campaign by New York insurance companies' superintendent, Eric R. Dinallo, which consisted of meetings in Paris, Delaware and Geneva, seven of the twenty-four companies (Travelers Companies, Swiss Re, Allianz Global Risk, Zurich American, Royal Indemnity, Industrial Risk Insurers, and Employers Insurance) that insured the World Trade Center agreed to a settlement. Governor Spitzer also participated in the negotiations in the last few weeks.
Officials indicated that the money facilitated the utilization of tax-free Liberty Bonds and private funding. They said that the settlement averted a prolonged dispute which would, in turn, have resulted in exorbitant legal fees. In an interview, Governor Spitzer commented as follows: “The unsettled insurance claims were the last major barrier to rebuilding and have been bitterly and intensely contested for almost six years". He explained that the settlement now makes it possible to "fund construction, access the financial markets and move on to what should be our primary focus: rebuilding.”
The settlement's main beneficiary- New York City's downtown business community- which, for the past few years, had been reeling from a climate of legal and political confrontation, reacted to the resolution with a sense of elation. Eric J. Deutsch, president of the Alliance for Downtown New York, confirmed this by stating that downtown businesses were pleased with Spitzer's and Dinallo's efforts "in removing the remaining uncertainty over the financing of the World Trade Center site". He added that "in conjunction with a strong office market, the settlement will ensure success.”
As it stands now, the twenty-four ground zero insurance companies have paid approximately $2.55 billion of a maximum $4.68 billion claim. Pursuant to the resolution, the seven insurers who opposed some of the claims will fork out an extra $2 billion. Confidentiality agreements respecting the amounts paid off by each insurer have been signed by all parties to the settlement.
Approximately $870 million of the settlement moneys will be distributed to the Port Authority of New York and New Jersey, which built the World Trade Center and is proprietor of the land at ground zero. This sum will be applied toward the construction of the $3 billion Freedom Tower, which is expected to be the highest and most emblematic skyscraper at ground zero, and the retail space there. The recipient of the remaining $1.13 billion will be Larry A. Silverstein, who will use the funds to build three prominent office buildings on Church Street, between Liberty and Vesey streets.