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Poker at Ground Zero

Larry Silverstein, George Pataki, and a few other big bettors are playing a high-stakes game downtown. Who loses? Probably us.

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Illustration by Darrow  

I arrived the other morning at Kathryn Wylde’s office on Battery Park Plaza feeling a little like Diogenes—except that, instead of searching for an honest man, I was looking for someone, anyone, with something remotely nice to say about Larry Silverstein. Wylde, the savvy, estimable head of the Partnership for New York City, doesn’t dislike Silverstein. She counts him among the Partnership’s members and portrays him as a man whose project to rebuild ground zero—a project about which, she said, he’s “sincerely passionate”—has been enormously complicated by the politics of the process. But even so, Wylde went on, “he has a reputation in the industry of being a great partner after you’ve made a deal with him, but for being extremely difficult to make a deal with, of being extremely stubborn, of being terrified of leaving any money on the table.”

Wylde offered this assessment a few days before the fateful events of March 14. Before the midnight collapse of Silverstein’s negotiations with the Port Authority provided the latest dismal chapter in the ongoing fiasco-cum-farce that the restoration of ground zero has become. Before George Pataki, Michael Bloomberg, Chuck Schumer, and every other politician and bureaucrat with a taste for a lusty pile-on had denounced Silverstein as an abject greedhead who was manifestly more interested in padding his pocketbook than in serving the public interest.

Well, duh. For more than four years now, in every setting, Silverstein has behaved like a real-estate developer, nothing more and nothing less. His avarice (or, if you prefer, his vigilant protection of his fiduciary self-interest) has been apparent since he first registered in the public consciousness, with his infamous lawsuit against his insurers on the grounds that the attacks on the Twin Towers constituted two discrete events. (A suit that, though partially successful, was bogus on its face, at least if you credit the careful account in Steve Brill’s book After: How America Confronted the September 12 Era.)

So let us stipulate from the outset that Silverstein’s primary fealty is to the bottom line. But let’s also acknowledge that he’s far from the only villain in this story. (Any sensible list, of course, would start with Pataki and would extend to include the Port Authority and the Lower Manhattan Development Corporation.) Then let’s put aside the blame game and turn our attention from past to present. Let’s analyze the situation today for what it is: a game of power poker, in which both sides are playing the cards they’ve been dealt and the stakes are, quite literally, as high as the skyline.

Silverstein’s trump card has always been his 99-year World Trade Center lease, which he signed six weeks before 9/11. Though the Port Authority owns the land comprising ground zero, Silverstein’s lease gives him the right to rebuild all 10 million lost square feet of office space. If not for that piece of paper, Pataki, surely, would have got rid of Silverstein long ago. But the lease is solid, and Silverstein, who has used it relentlessly to get his way on countless matters, clings to it as if his attitude were “You’ll have to pry it from my cold dead fingers.”

The weaknesses of Silverstein’s hand are many, however. There’s his Tales From the Crypt appearance, his pushy manner, and his tendency to overreach (his proposal that he get a 5 percent development fee for building the Freedom Tower, which could add more than $100 million to its cost, for instance), none of which inspires public sympathy. More to the point, there’s the sense, even among those inclined to support him, that he’s bitten off more than he can chew. “There has not been enough money in the pot for him to rebuild, and everybody’s known it for three years,” Wylde said. “And he refused to make any deal that would’ve allowed some others to come in with more resources. That’s where he lost the crowd.”

Certainly, Silverstein’s greatest vulnerability is on the question of his financial wherewithal. It’s an issue that City Hall and the Port Authority have been hammering on for weeks, bolstered by a study undertaken by the city that predicts that Silverstein is likely to run out of money in 2009, leaving behind, as Bloomberg put it, “a half-finished set of buildings or vacant sites.” Silverstein’s people dispute all this in voluminous, and sometimes even convincing, detail. Yet given the lack of demand so far for space in Silverstein’s recently completed 7 World Trade Center tower (just one major tenant has agreed to a term sheet), it’s hard to imagine that the developer isn’t a wee bit nervous that he might, in fact, be in over his head.


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