9/11 fund money
diverted to build luxury housing

From Nicholas Wapshott
in New York

PART of an billion (£4.47 billion) public fund to revitalise New
York’s financial district after September 11 has been diverted to subsidise luxury housing and the construction of office blocks far from Ground
Zero.

The “Liberty Bond” scheme was set up by Congress after 9/11 to ensure that Lower Manhattan retained its financial businesses and domestic residents who were tempted to flee the devastated area.

But 32 months after the disaster, records show that large sums have been paid to subsidise the construction of office buildings that will compete directly with the sagging office rental market in the financial district.

[Tower collapsing]One developer, Bruce C. Ratner, was given a $650
million interest-free, tax-exempt Liberty Bond loan to build an office tower for the Bank of America near Times Square.

Another developer was granted a $113 million interest-free loan to build a Bank of New York office tower in Brooklyn.

After intense criticism, an application by Mr
Ratner for a further $400 million to build an office tower for The New York Times in midtown
Manhattan has been abandoned.

Although Congress designated $1.6 billion to provide housing at modest rents near Ground Zero, with 20 per cent intended for lower and middle-income families, all but 5 per cent has been used to build luxury flats with rents of $6,500 a month upwards. According to research by the pressure group Common Cause, a third of the Liberty
Bond money for building homes was granted to
Leonard Litwin, a prominent contributor to the Republicans and Governor George Pataki.

In addition to Liberty Bonds, the Administration diverted $300 million set aside to spur economic development in poor areas to banks and financial companies who threatened to leave Lower
Manhattan.

Auditors Deloitte & Touche received $17
million, Bank of Nova Scotia $3 million and Bank of
New York $40 million. American Express was given
$25 million even though it expressed no intention of leaving its offices next to Ground Zero.

State Senator Liz Krueger said: “We’ve gotten free federal money and, instead of building affordable housing, it’s become a race between the most powerful groups in the city to claim it.”[Larry Silverstein]

Some money was used in the spirit intended by
Congress. Larry A. Silverstein,
right, who owned
[sic. leased]
the twin towers, got a $400 million interest-free loan to replace his 7 World Trade Centre tower which also collapsed on September 11.

The actor Robert De Niro and partners were awarded nearly $39 million to build a six-storey, 83-room boutique hotel in Tribeca, north of Ground Zero.

It is estimated that $5.7 billion of the $8
billion bond fund not yet allocated will be used to help to rebuild the Ground Zero site if the scheme is renewed by Congress.