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~ P O R r A U I 1 I O R m
 
OF
NY
&
NJ
Mr. Larry SilversteinWorld Trade Center Properties, LLC7 World Trade Center250 Greenwich StreetNew York, NY 10007July
9,
2009Dear Larry:We are writing to outline a new proposal intended to break the impasse over the financing
of
privateoffice space at the World Trade Center site -one that advances a two-tower scenario withoutexposing the public to unsustainable amounts
of
risk. As this continues
to
involve a significantpublic financing commitment to the development, we began discussions on this proposal last weekwith the Mayor's, Speaker's and both Governors' offices, and they all agreed that we shouldadvance this proposal for your consideration.We have developed this proposal within the context
of
three goals that have informed ourparticipation in these discussions
to
date:
• Advancing the redevelopment
of
the WTC site
to
keep the public projects movingforward, including the 9/11 Memorial and transportation projects, the new retaildevelopment that Lower Manhattan needs today,
as
well as new office space commensuratewith market demand;
• Providing public sector support in a responsible fashion
to
assist Silverstein Properties(SPI) in accessing private sector financing for its private office development; and,
• Protecting public sector funds for investment
in critical public transportation projectsessential for our region's economic growth.The Port Authority continues to believe that its previous two proposals
of
April 2009 and May 2009achieve all three
of
these goals. However, you have rejected both offers
in
favor
of
more publicfinancing and less private risk, which brings
us
to
the current impasse.In order to advance the ongoing discussion, the Port Authority has prepared a new proposal,summarized in the enclosure, that increases our previous financing commitment by up to $1.2billion. Key elements
of
this proposal include:
• Port Authority Debt Backstop on Tower
2:
The Port Authority will provide a newbackstop
of
up to $1.2 billion
of
fixed-rate senior debt for Tower 2, on top
of
our existingoffer to backstop Tower
4.
The Tower 2 backstop will, in addition
to
the City's expressedwillingness to underwrite up to $100 million
of
future cash shortfalls, help you raise privatefinancing that otherwise would be unavailable in today's market, and will allow you
to
do so
at a much lower interest rate given the Port Authority'S lower cost
of
capital.
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