Volume 18 • Issue 44 | March 17 - 23, 2006

Downtown Express photo by Jefferson Siegel

Larry Silverstein in 7 W.T.C. Wednesday after telling reporters he wants to keep negotiating with the Port Authority.

Day of bravado and finger-pointing after W.T.C. talks breakdown

By Josh Rogers

They have stopped talking to each other, they are $1 billion apart according to one estimate and neither side knows how it will all end, but both the Port Authority and Larry Silverstein somehow agree that those details will not interfere with their immediate plans to rebuild the World Trade Center.

Silverstein, who holds the lease for the Trade Center, said Wednesday he is ready to begin building the Freedom Tower next month even if there are no further talks with the site’s owner, the Port Authority, before then. A few hours earlier, Charles Gargano, the Port’s vice chairperson, said the agency hopes to finish building the site’s eastern bathtub six months ahead of schedule, meaning Towers 3 and 4 could break ground at the beginning of 2008, even though it remains unknown who will actually build them. With the revised schedule, Silverstein could start building Tower 2 — the only undisputed site out of five — at the beginning of next year.

Despite the bravado, Downtowners were scratching their heads Wednesday fearing what the breakdown in talks will mean. Gov. George Pataki had given Silverstein and the Port 90 days to resolve their financial differences and determine who would develop each of the five commercial sites at the W.T.C. Mayor Bloomberg and the Port have been arguing that Silverstein doesn’t have the money to rebuild. The talks collapsed early in the morning on Wednesday, just after the governor’s deadline.

“It doesn’t serve the neighborhood well to have a 16-acre hole,” said Pat Moore who lives across the street from the site. “There’s all kind of retail that we need. Morally and legally it’s the man’s [Silverstein’s] right to develop the property and so now it’s reneging on a contract, but if he doesn’t have the money then he’s got to admit it and let an organization that can [build] get going.”

Pataki blasted Silverstein publicly for the first time Wednesday. In a prepared statement, he said Silverstein’s firm “has betrayed the public’s trust and that of all New Yorkers” and that the developer should “finally put the interests of our nation ahead of his own financial interests.”

“I am terribly saddened by the governor’s statement,” Silverstein told reporters. “We have worked very closely together on this project for a long time. I don’t know what information he is being given by the Port Authority.

Silverstein said he did not understand why the Port broke off negotiations and he wanted to go back to the table.

Gargano, a Pataki appointee and confidante, said Silverstein made a last-minute offer that was worse than his previous one and the two sides were about $1 billion apart. Janno Lieber, Silverstein’s senior vice president, said the sides were “close on the economics.”

The parties agreed to let Silverstein develop the three most viable office sites on Church St. — Towers 2, 3, and 4 — and have the Port take responsibility for the Freedom Tower and Tower 5, which will be built where the damaged Deutsche Bank building still stands. The disagreements were over the change in rent Silverstein would pay to the Port and the amount of insurance money and tax-free Liberty Bonds Silverstein would give up in exchange for developing less of the site.

Gargano said Silverstein’s “motivation is to get the most money out of the project as possible.”

“I am a builder and that is all I have wanted to do,” Silverstein said. “And when the Port Authority has not stood in the way, that is exactly what I have done.”

He pointed out that it has taken the Port Authority over four years to get only one site ready for construction, the corner of Vesey and West Sts., site of the Freedom Tower.

Silverstein held the press conference in 7 World Trade Center, which is about to open and is in the shadow of Fiterman Hall, the still-damaged Borough of Manhattan Community College building. He blamed the Fiterman delays on “government” and the delays in dismantling Deutsche on the Port Authority, even though the building is owned by the Lower Manhattan Development Corp. and the Port is not involved in the project. Silverstein said he still has over $4.6 billion in insurance money, even though he and his executives accepted a city assertion over a month ago that he has spent nearly $2 billion of the insurance money.

Pataki may have turned on the developer Wednesday, but not all of his political friends did. Assembly Speaker Sheldon Silver, whose district includes the site, criticized the governor, not Silverstein.

“Suddenly, the governor is setting deadlines when for four and a half years he has failed to provide the leadership necessary to bring about Lower Manhattan’s recovery,” Silver said in a statement to Downtown Express. “The promise we joined in making in the wake of the terrorist attacks to rebuild the commercial office space that is required of the financial capital of the world must be kept. My community must be made whole.”

Last year, Silver called for quickening the pace for developing Church St. Steve Coleman, a Port spokesperson, said several months ago that the agency thought it could get Church St. ready six months ahead of schedule, but as negotiations proceeded with Silverstein, agency officials did not respond to repeated questions from Downtown Express as to whether they thought they could speed up the timetable. That also changed on Wednesday.

“We are trying to shave six months off the original schedule,” Gargano said. Kenneth Ringler, the Port Authority’s executive director, said work on the Church St. bathtub is scheduled to begin between July and September but he was trying to start earlier. Both said the breakdown in talks with Silverstein would not setback the work.

Lieber, Silverstein’s executive, said differences between the New York and New Jersey factions of the Port Authority slowed negotiations. “A lot of the time on the clock was run out by the Port Authority and for some reason they are blaming Larry,” Lieber said.

Both sides appear to be contemplating lawsuits. Gargano said the Port would consider it if Silverstein does not begin building the Freedom Tower in April — although the developer said he is ready to build. Silverstein had his attorney at his side for his press conference, but said, “My prayer is that [a lawsuit] doesn’t happen. The last thing we want to do, the last thing we need to do is assert our legal rights. That doesn’t accomplish anything.”

He said the fight will make it harder to find tenants to move into 7 W.T.C. “The worst thing that a businessman can face is uncertainty and lack of predictability,” he said. “Does this help? Of course not.”

With reporting by Ronda Kaysen


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