Future of Ground Zero Will Fall Into Silverstein’s Hands This Week

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The New York Sun

The future of ground zero will fall into Larry Silverstein’s hands this week when the Port Authority hands him a proposal for a reconfiguration of development rights at the site, but more than 4 1/2 years after the terrorist attacks that destroyed the World Trade Center, it is difficult to predict what the Port Authority proposal will contain.


Officials familiar with the negotiations told The New York Sun yesterday that Mr. Silverstein is waiting to see whether the Port Authority will submit a proposal that is in line with the framework that nearly resulted in an agreement last week, or whether government officials will seek to start from scratch.


On Friday, the developer made a new offer to the Port Authority, but the bistate agency, made up of commissioners from New York and New Jersey, rejected it and said they would produce a proposal of their own this week.


If the Port Authority tries to buy out the developer’s rights to the site with unfavorable terms, a legal showdown becomes increasingly likely.


The city, state, and Port Authority, which owns ground zero, have sought to prod the developer to renegotiate his development rights on the site, claiming that Mr. Silverstein cannot properly finance the current plan to build four commercial office towers at ground zero and a fifth, Tower Five, abutting ground zero to the south. He’s already built Seven World Trade Center, an office building north of ground zero.


A city analysis, which Mr. Silverstein disputes, asserts that the developer will default on his lease after building only two towers in four or five years, stalling the redevelopment of Lower Manhattan.


Before negotiations between the developer and the Port Authority abruptly ended on Tuesday night, a deal was on the table that would have transferred the building rights for the Freedom Tower and Tower Five to the Port Authority, in exchange for a share of Mr. Silverstein’s billions of dollars of insurance proceeds and a reduction in the developer’s ground rent payments. Silverstein officials indicated that the two sides had been very close to a deal, but the vice chairman of the Port Authority, Charles Gargano, said they were about $1 billion apart.


Officials familiar with negotiations said yesterday that the division inside the Port Authority between the New Jersey and New York representatives was continuing to create problems for the Silverstein camp.


The New Jersey representatives, led by Port Authority chairman Anthony Coscia, were the first and strongest proponents of taking back part of the site from Mr. Silverstein, enabling the Port Authority to develop it itself.


A Port Authority commissioner quoted Saturday in the New York Times said that the majority of the New York commissioners believed a buyout of Mr. Silverstein’s development rights is the best move.


Mr. Silverstein’s lease requires him to rebuild about 10 million square feet of office space at the site, and under that agreement he has now paid the bi-state agency hundreds of millions of dollars in rent. Still, most of the 16-acre site is not yet ready to be built on, which Mr. Silverstein blames on delays by the Port Authority in preparing the site. Mr. Silverstein has said he is prepared to begin on the Freedom Tower next month.


Last week, personal attacks by several government officials portrayed the 74-year-old developer as greedy and obstructionist, and now some are questioning whether the developer’s leverage to negotiate could be reduced after the verbal abuse.


Mr. Gargano called Mr. Silverstein “greedy” and the developer’s previous supporter, Governor Pataki, along with Mayor Bloomberg and Senator Schumer said the private developer should give up additional profit for the sake of the public good.


An official who is familiar with Mr. Silverstein’s thinking told the Sun that the developer was unfazed by the personal attacks. The source said Mr. Silverstein thinks the personal attacks are a weapon that public officials can only use once – they have done so, and the developer is unmoved.


Yesterday, the Port Authority gave no indication of what its proposal would entail. A statement released by the Port Authority on Friday said: “Silverstein Properties has attempted to provide a revision to their proposal of last Tuesday night. However, many aspects remain unacceptable. Port Authority staff will develop a counter proposal that we believe will work for both parties to get this deal done.”


Silverstein Properties answered with the following statement: “We’re glad the Port Authority has finally decided to produce a counter-proposal, which is what we’ve been asking for since they abruptly broke off talks on Tuesday night. We hope it means that they are also prepared to return to the table without further needless delay.”


The New York Sun

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