World Trade Center Case Discussion Paper

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PROGRAM ON NEGOTIATION AT HARVARD LAW SCHOOL
AN rNTER-UNIVERSITY CONSORTIUM TO IMPROVE THE THEORY AND PRACTICE OF CONFLICT RESOLUTION
WORLD TRADE C~mR REDEVLOPMENT
NEG~1~FION
Confidential Instructions for the State’s Representative
The property in question has belonged to the State of New York since it was acquired by eminent
domain in the mid-1960s. It was intended to foster development of downtown New York City.
For many years, the site operated at a heavy loss. It was not until recently that it finally became
profitabre. Now, the risks and costs have been somewhat alleviated by the assignment of the
lease to the Developer. It is in the Developer’s financial interest to redevelop the site, but there
are other reasons to go forward as well. The tragic events of 9/11 had a profound impact on the
people of New York and the nation as a whole. Redevelopment will be helpful in the healing
process and to showcase New York’s resilience. As the site owner, you need to convey energy,
practicality, and vision that will sweep away all hesitation. If a permanent memorial can’t be
decided upon, at least get agreement on a temporary memorial. If full funding can’t be found,
start with partial funding. It is crucial that agreement be reached today. That said, you must
also look out for your other interests:
The Site Plan This issue is very important to you. Under the lease agreement signed before
the terrorist attacks, you collected rent from the Developer at the rate of $12 per square foot of
office space. Before the attacks, the Developer had 10 million square feet of office space on the
property. That amounts to $120 million in annual payments to the State. Given City building
codes, the Developer will need at least 10 acres of land to re-build 10 million square feet of
office space. With State budget shortfalls predicted, you are extremely reluctant to lose this
revenue. Do what it takes to see that the Developer can re-build. However, as the representative
of the people of the State of New York, you are also under great pressure build a memorial that
satisfies the Families.
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• Your first choice for the 17-acre site is to create a five-acre memorial within the footprint
of one of the Twin Towers, leaving 12 acres for commercial development. This will create
substantial opportunities for you to collect lease revenues, and still leave room for a sizable
memorial. If it doesn’t cause an uproar among the Families, you could also accept an
agreement that dedicates just two acres to a memorial, leaving 15 acres for commercial
development. However, you could only support this proposal if the Families were somehow
brought onboard. Perhaps the City will donate adjacent land for the memorial?
•
You cannot agree to any plan that does not allow you to generate $120 million a year in
payments for the State.
This case was developed by Professor Lawrence Susskind, Katharine Harvey, and David Kovick of the Consensus Building Institute, F. Peter
Phillips, Marc Wolinsky, Cathy Cronin Harris, and Simeon Baum. Full case materials, including the teaching note, are available online at
sI ore , Telephone: 800-258-4406, Fax: 617-495-7818. This case may not be reproduced, revised or translated itt whole or in part by any
means without the written pet-mission of the Director of Curriculum Development, Program on Negotiation, Harvard Law School, 518 Pound
Hall, Cambridge, MA 02138. Please help to preserve the usefulness of this case by keeping it confidential. Copyright © 2007 by the International
Institute for Conflict Prevention and Resolution, and the President and Fellows of Harvard College. All rights reserved. (rev. 5/07)
CONFIDENTIAI INSTRUCTIONS FOR THE STATE’S
Total Money Allocated For the Project. This issue is somewhat important to you. Your
constituents are diverse, and it is important that the site be redeveloped for both commercial use
and as a memorial. However, you have already invested significant resources in the site and do
not have additional money to contribute. With the estimated insurance payout for rebuilding
likely to be between $3.5 and $7 billion:
Your first choice would be to see $6 billion allocated for commercial development and $1
billion to the memorial. This would be enough money to help stimulate development in the
area, while also making the Families happy. However, if less money is available, you could
support allocating $4 billion for commercial development and approximately $500 million
for the memorial.
You’d be willing to support allocating more that $6 billion for commercial development,
as long as the money is generated from sources other than the State. And the Families must
be satisfied with any arrangements for the memorial.
Timing of Construction This issue is very important to you. This is, after all, the State of
New York, and it is important that you expedite the development of this site. Additionally, the
governor is planning a run for national office and in no way can the State, as owner, is seen as
obstructing or delaying the process.
Thus, our first choice is to break ground on the memorial within six months, and to begin
commercial development within a year. Breaking ground on the memorial and the
commercial development will attract a lot of positive media attention for the State (and the
governor). If need be, you could also accept an agreement that breaks ground for the
memorial in a year while the commercial development begins in two years. At the very least,
the memorial must be started before the next campaign cycle.
• You cannot accept an agreement that delays ground breaking for both the memorial and
the commercial development more than two years. This would be both detrimental to State
morale and to the political ambitions of the governor.
Credit. This issue is very important to you. Both the governor, who is planning a run for
national office in two years, and your state political party (which wants to hold onto the
governor’s seat~ would be very pleased to get welI-desen,ed credit for leading this effort.
• Your clear first choice would be for the State, as owner, to get primary credit for making
this process and project a success. You also want to be known as the person who “makes
things happen quickly and efficiently.” However, if you can negotiate concessions on other
issues, you could live with sharing credit among multiple parties.
• It would be unacceptable to you for the City to get primary credit for this project. The
current mayor of the City, with whom the governor has always had a challenging
relationship, has political ambitions of his Own. With elections on the horizon, you cannot
risk losing credit for all the State’s hard work!
All rights reserved. (rev. 5/07)
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REPRESIVE
CONFIDENTIAL INSTRUCTIONS FOR TI-1E STATE’S
The bottom line is that the State, as owner, cannot afford to lose the revenue generated from the
space or to lose the public’s good will. Sure, you might be able to find another Developer, but
then it would take years for the site to generate revenue again. With elections on the horizon, it
is extremely important to balance public support with the need to tend to the State’s financial
requirements.
You cannot support an agreement unless you get a deal that ensures the equivalent of your first
or second choice outcomes on the issues that are most important to you.
Copyrtght © 2007 by the International Institute for Conflict Prevention and Resolution and the President and Fellows of Harvard College.
All rights reserved. (rev. 5/07)
NEGOTIATION: CONFIDENTIAL INSTRUCTIONS FOR THE STATE’S
R~fB~SENTATJVE
Worksheet: The State’s Representative
Issue 1 The Site Plan
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0 tions
17-acre memorial on site/O acres commercial develo ment
9-acre memorial on site/8 acres commercial develo ment
5-acre memorial on site/i 2 acres commercial develo ment
2-acre memorial on site/iS acres commercial develo ment
Issue 2
Issue 3
Issue 4
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—
—
Pre erences
Unacce table
Unacce table
1st choice
2” choice
Total Money Available to Spend on the Project
Timing of Construction
Credit
All dghts reserved. (rev. 5/07)
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