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Underground Man

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One contentious project with serious Republican backing that will not be in the MTA’s new five-year capital plan when it is released in July is the extension of the 7 train to the Javits Center. This is a priority for Mayor Michael Bloomberg and Dan Doctoroff, his deputy for economic development. It is a critical piece in any West Side redevelopment plan, which Doctoroff announced last week is moving forward: a stadium for the Jets (and perhaps Olympic use) and an expansion of the convention center.

Kalikow has refused to budge on this issue despite steady pressure from the mayor. He says the MTA does not want to be the obstacle to a project everyone agrees would have great benefits for the city. But he is emphatic that the MTA will not fund any part of the project. “I’m getting beaten up pretty good internally because I haven’t taken my pants down over this No. 7 project,” Kalikow says. “That’s okay. I’m a big boy. I don’t want you to think everybody goes to Peter Luger with cigars and doles this stuff out. Some of these decisions are the result of knock-down, drag-out battles with powerful, competing politicians at the table.”

What the city wants from the MTA, in addition to the extension of the 7 train, is the construction of a platform over the rail yards between Eleventh and Twelfth avenues. Any stadium that gets built would actually sit on this deck. And while Doctoroff’s press conference made it sound as though a deal with the MTA has been struck, it hasn’t. “My fight with Doctoroff is over what happens to my development-rights money for that site and some other property the MTA owns in the area,” Kalikow says. “That’s what we’re arguing about. We think they’re worth $400 million to $600 million over fifteen years, and we want compensation.” Initially, the city did not want to give the MTA anything. Now the two sides have begun to negotiate and the process is moving forward.

“Kalikow is a tenacious defender of the MTA’s rights,” Doctoroff says. “But I’m certain we’ll reach an agreement that’s fair for everyone.”

The MTA’s preliminary five-year capital plan will be released this summer. And in addition to everything already mentioned, it will likely include system improvements such as satellite monitoring of buses, additional subway cars and buses, computerized signals on some subway lines, and plenty of station renovation. “Kalikow is a builder and a doer with a big vision,” says Russianoff, “and that’s both a negative and a positive. He knows how to sell projects. My concern is that the debt service is already a huge part of the budget, and there’s talk about a fare increase in 2005.”

Kalikow remains unfazed. He has maneuvered his way around opposition on virtually every project he’s ever built. It’s the only way things get done in New York. “When we complete East Side Access and when we build the Second Avenue subway, it’ll be like throwing a rock in a lake. The ripples will go on for decades.”

A block and a half from Grand Central is 101 Park Avenue, a soaring glass-and-steel tower that is Kalikow’s signature building. When he bought the property in 1978, everybody told him he was crazy. Conventional wisdom said you couldn’t build office space below 42nd Street. However, he rented all 1.3 million square feet in his new building in just three months.

Kalikow’s office is on the 25th floor. It is a stunning space with tall wraparound windows, buttery leather furniture, and soothing natural tones. Among the vanity snapshots capturing moments along his career arc is one of Kalikow with Donald Trump, Bob Dole, and Al D’Amato. Kalikow had them all sign the photo because of what it means to him: all four men suffered a difficult, embarrassing setback while at the top of their game.

Trump miscalculated badly, overextended himself, and nearly lost his real-estate empire. Dole was whipped by George Bush senior for the Republican presidential nomination. D’Amato was investigated for ethics violations. And Kalikow, who, like Trump, was overleveraged and underprepared for the bottom to fall out of the real-estate market in the early nineties, was forced to endure a humiliating, prolonged public bankruptcy.

“That picture is there to remind me,” Kalikow says one morning, dressed in his usual dark-blue suit and blue shirt with white collar and cuffs, “that no matter how successful you get, you’re always only one step from trouble.”

Kalikow’s fall was steeper than most. He was raised in Forest Hills, went to Hofstra University, and then straight into the family business. His grandfather, a Russian immigrant who came to America with nothing, eventually started a real-estate business, buying huge tracts of undeveloped farmland in Queens in the thirties. (“He was an organizational genius,” Kalikow says, “and incredibly full of himself.”)

Joined by Kalikow’s father after World War II, the men built thousands of apartments in six-story buildings on the land they owned. They made a fortune. Peter learned the family business by hanging around his father’s office and visiting construction sites, and by the time he was ready to take his place beside his father, low-rise apartments in Queens held little appeal for him.

He wanted to do something bigger, sexier, more interesting. He wanted to build in Manhattan. Though his father was in his middle fifties and thinking about retirement, Peter convinced him to take a risk. They started buying property in Manhattan in the late sixties and early seventies.

That led to the purchase of the property at 101 Park, which he could see from the window of his old office across the avenue. “By the time I bought this property, we’d built ten apartment buildings.” Including the Fifth Avenue co-op across from the Metropolitan, where he still lives with his wife of 30 years, Mary, in a triplex penthouse. Throughout the eighties, Kalikow couldn’t miss. In addition to the luxury apartments and office towers, he decided near the end of the decade to build a hotel (the 56-story Millenium, across from the World Trade Center, whose name he intentionally misspelled because he didn’t like the way it looked with two n’s).

“In 1986, everybody was itching to do everything,” Kalikow says almost wistfully. “So I got this brainstorm that Larry Tisch was going to take over CBS.”

Putting his money where his brainstorm was, Kalikow bought 800,000 shares of CBS stock at $128 a share. His bankers called him to explain himself. “Have you lost your mind?” they asked. They said they’d give him any amount of money to build a building. But speculating in the market? They told him to sell the stock.

“I got $160 a share, which was a nice little profit,” Kalikow says, “but the stock went to $325. My profit would’ve been $160 million if I’d held it.”

Then, in 1988, Kalikow decided he wanted to buy the New York Post from Rupert Murdoch. The price was $37.6 million. On its face, it was an even more ridiculous idea than his CBS stock purchase. He had no newspaper experience, no media background of any kind. It just seemed like it would be fun to own a newspaper. It was, in the context of the roaring eighties, simply the next interesting thing.

And this time his bankers made no attempt to talk him down off the ledge. They figured since he was so right about CBS, maybe he knew something they didn’t. “I was a victim of my own success,” Kalikow says. “If that CBS stock had gone to $20 a share, it would’ve been a blessing for me. I believed I could do anything, that nothing would ever go wrong. I got a severe lesson that life doesn’t work that way.”


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