Larry Silverstein Drops Application for 2 WTC Federal Funding

Larry Silverstein withdrew his application for a $3.7 billion loan to develop 2 World Trade Center from a federal program designed to finance rail infrastructure improvements.

Scott Rechler and the Elghanyans applied to the same program for $4.8 billion to finance their supertall office/hotel tower at 175 Park Avenue. Given that Silverstein boasted about the funding strategy less than a year ago, the move could hint at complications in securing the low-cost funds.

Silverstein Properties in April 2023 submitted an application with the U.S. Department of Transportation for its Railroad Rehabilitation and Improvement Financing program, which offers 35-year loans at the rate of the government’s cost of borrowing.

In the book “The Rising,” which Silverstein published last year about his 20-year effort to rebuild the World Trade Center site, the developer wrote about teaming up with the Port Authority of New York and New Jersey to apply for the funds.

“It was a very reasonable strategy,” he explained. “Tower Two would be directly connected to the PATH World Trade Center line as well as the MTA subway lines, and in addition critical mechanical, electrical and plumbing elements that service the transportation infrastructure for the entire complex would be housed in the building’s base. I was optimistic that the Transportation Department would see the logic and the necessity in giving us this funding.”

Silverstein’s book was published in September, but his letter of interest was last listed on the DOT’s website in June.

A spokesperson for the agency confirmed that the project withdrew its LOI. A spokesperson for Silverstein Properties declined to comment. A source familiar with the project said the company has moved on to an alternative source of financing with less red tape.

The 93-year-old developer has faced decades of challenges building the 2.8 million-square-foot tower, including Rupert Murdoch walking away from negotiations for his 21st Century Fox and News Corp. to anchor the project in 2016.

Silverstein recently turned to American Express, talking with the bank about kickstarting the project. Financing, however, remains an issue.

It’s not clear why Silverstein withdrew his application. But it raises questions about the viability of the Department of Transportation financing a project like 175 Park Avenue — particularly under the Trump administration.

Observers have pointed to moves by Elon Musk’s Department of Government Efficiency to slash government agencies. The Transportation Department, which has about 75,000 employees, reportedly sent buyout offers to its workforce earlier this month.

Others have pointed to Trump’s connection to the 175 Park site as the former owner of the Hyatt hotel, suggesting he has a soft spot for the project.

Rechler’s RXR and Tom and Fred Elghanayan’s TF Cornerstone last April submitted their application for $4.8 billion in loans from the Railroad Rehabilitation and a similar stream of financing under the Transportation Infrastructure Finance and Innovation Act.

Speaking with The Real Deal at the Real Estate Board of New York’s gala in January, Rechler said 175 Park “checks all the boxes for what that program was put in place to do.”

“I used it when I was at the Port Authority for infrastructure,” he said. “It’s very challenging to navigate all the requirements that are associated with it. So you need a project that’s large, that warrants you to be able to go through this as a true public-private partnership. I have an extremely high degree of confidence and we’re excited to move forward.”