Last August, the federal government set aside $4.5 billion for lower Manhattan's transit system. Now, a feud is brewing over how the money should be spent. Should the existing transit system be repaired and upgraded, or should new lines be built into what many are calling “Grand Central South,” a new downtown transit hub?

At odds are two differing transit schemes, each with powerful backers. New York State Sen. Charles Schumer, D-N.Y., and Daniel Doctoroff, New York City deputy mayor for economic development, are rallying for new rail service from both JFK International and Newark Liberty International airports into a hub in Lower Manhattan. They're not the sole proponents — many in the real estate industry support this plan, too.

But this bold expansion plan has drawn fire from some politicians and Metropolitan Transit Authority officials. To the critics, the expansion plan is irresponsible, given a host of other outstanding transit proposals, such as the long-delayed Second Avenue subway line and Long Island Rail Road (LIRR) connection into Grand Central Station. Rather than expanding the system, critics of a Grand Central South would like to see the existing system repaired.

The Second Avenue subway line has been on the city's wish list since 1929. The proposed line would run from 125th Street in Harlem to the financial district in lower Manhattan. Likewise, a commuter rail connection between the LIRR and Grand Central Station has been under discussion for years.

Convenience is Key

Real estate executives and Downtown business advocates see the transit hub as an opportunity to not only correct the damage wrought by the terrorist attacks at the World Trade Center, but also to remove a longstanding Downtown handicap — namely, direct access to the area for suburban commuters. Anyone traveling from the northern suburbs now must take two, or even three, trains to reach downtown.

“There is clearly a battle between those who want a $12-billion Second Avenue subway line built, and those who favor LIRR/airport access from downtown,” says Stephen Spinola, president of the Real Estate Board of New York, a trade organization. “The bottom line is that people should be able to get in and out of lower Manhattan easily.”

Adds Ric Clark, president of Brookfield Properties Corp., “It is sort of a catch-up maneuver, but very important and very critical, and will help address the long-term, nagging infrastructure issues.” The Toronto-based company owns and manages five buildings located on the perimeter of the WTC site.

In addition to the transit hub maneuverings, a host of planners and politicians are still struggling to conjure a master strategy for the redevelopment of Ground Zero. In July, six initial plans submitted to the lower Manhattan Development Corp. (LMDC) were shot down by New Yorkers and architecture critics. Now, six new teams of architects are preparing plans, and LMDC officials say they will release three of those for public comment at the end of the year.

For many years, downtown rents have averaged one-third less than those of midtown, according to Stephen Berliner, executive director of New York-based Insignia/ESG Inc. The gap is due in part to the lack of a downtown transportation hub comparable to Pennsylvania Station or Grand Central Station, says Berliner.

Some observers fear political wrangling over what to do with the money could ultimately doom the downtown hub project. And there's a symbolic risk to consider. Since the terrorist attacks, downtown landlords and other real estate executives have identified improvements to transit infrastructure as a key issue in securing a downtown recovery. If that issue gets pushed to the back of the line, real estate executives question the prospects for a downtown revival.