Port Authority Could Get N.J. Guy Who Raided City

Over the long term, the person who may have the most direct influence over what’s rebuilt on the 16-acre World Trade Center site isn’t a politician. He’s a real-estate developer. But he’s not Larry Silverstein. He’s not even a New Yorker.

His name is Charles Kushner. Last year, Mr. Kushner, who has holdings worth billions, was the single biggest contributor to New Jersey Governor James E. McGreevey’s campaign. Now, by all accounts, he’s the man Mr. McGreevey wants to be chairman of the Port Authority, the bistate agency that owns the Trade Center site. Mr. McGreevey has nominated Mr. Kushner to fill a vacancy on the Port Authority’s board, with the intention, insiders say, of making sure that his patron is elected chairman sooner rather than later.

What has some observers of lower Manhattan’s redevelopment worried is the following fact: Mr. Kushner is a major New Jersey property owner. He’s ambitious and he’s expanding fast, gobbling up office space in a North Jersey office market swollen with refugees displaced by the destruction downtown.

So how will Mr. Kushner keep his dual roles-the public servant, and the developer who has said he hopes to be one of the country’s biggest property owners-separate? And can he help lower Manhattan regain its stature as a thriving commercial center if it stands to hurt his bottom line?

The potential conflicts aren’t just hypothetical. Shortly before his nomination to the Port Authority’s board, for example, Mr. Kushner signed a big lease with a division of a financial-services firm once based in the World Financial Center.

“I think it raises a question,” said Jonathan Bowles, research director of the Center for an Urban Future, an urban-policy think tank. “If he has a chance to benefit if companies don’t come back to New York, will he be as vigorous in making sure that New York City, and lower Manhattan, returns to its former prominence?”

Mr. Kushner declined to be interviewed by The Observer . “The properties that he owns in New Jersey will not have any impact on the decisions he will help make to rebuild lower Manhattan,” said his spokesman, Howard Rubenstein. “He accepted this as a total civic responsibility.”

Many New York real-estate executives said that, on balance, the Port Authority would probably benefit from having a developer in charge.

“Historically, there has been tension between the two states relative to the resources of the Port Authority,” said Richard LeFrak, a developer with major holdings in both New York and New Jersey. “Is the fact that he’s experienced in development going to make him a sharper trader for New Jersey? I don’t think so.”

It’s a hard fact, however, that what’s bad for New York has, in this case, benefited New Jersey. While the city hemorrhaged jobs after Sept. 11, New Jersey swelled, gaining 15,400 jobs in October alone. Stalwart Manhattan companies like Goldman Sachs have, in recent months, announced plans to shift large numbers of employees to the New Jersey waterfront, where five million square feet of office space are under construction.

New York officials are desperate to stem the flow-so much so that when American Express executives recently announced that they would return to their headquarters in the World Financial Center, Mayor Michael Bloomberg vowed not to use any other credit card and, in his State of the City speech, asked all New Yorkers to do the same.

Yet Mr. Kushner’s appointment highlights one of the central complexities of the redevelopment process. The World Trade Center may have been located in Manhattan, but the site is sovereign territory, owned by the Port Authority. New Jersey has half the votes on the authority’s board-which means the Garden State will have a big say about what’s going to be built at the site.

“The governor of New Jersey has essentially veto power over what the Port does-so Jersey has a very critical role,” said Robert Yaro, president of the Regional Plan Association.

This means that the byzantine intrigues surrounding Mr. Kushner’s appointment- Trenton politics, for heaven’s sake-have immense implications for lower Manhattan.

Mr. Kushner’s appointment as chairman is not yet assured. His appointment to the board still has to get by the New Jersey State Senate, where Democrats and Republicans are deadlocked, each with 20 members. Senate approval is a potential pitfall, as his intimate ties to the McGreevey administration have lately become controversial. Meanwhile, important Democratic power brokers in the state reportedly want to keep the current chairman, Jack Sinagra, in the job.

New Yorkers have had a good working relationship with Mr. Sinagra, one state official said, and wouldn’t mind seeing him stay. But ultimately, it’s not up to them.

Mr. Sinagra, who hopes to hang onto his job when the board votes a new chairman in April, says it’s out of his hands, too. “That’s a question you’ll have to ask Governor McGreevey,” he said.

A spokesman for Mr. McGreevey did not return several phone calls. But conventional wisdom holds that Mr. Kushner wants the job-and he’ll get it, probably soon.

“This is an extremely wealthy person with very definite ideas about redevelopment, and the governor of New Jersey has a considerable debt to him,” said one New York real-estate executive.

Mr. Kushner owns, in whole or in part, six million square feet of commercial space, most of it concentrated in North Jersey. That may be small potatoes compared to those of, say, Mr. LeFrak or public companies like Mack-Cali Realty, both leaders in the move to build “Wall Street West” in Jersey City. But, by all indications, Mr. Kushner-whose holdings have been valued at more than $1 billion-is looking to buy his way into the big leagues.

“I would like to be one of the largest owners in the country in the next ten years,” Mr. Kushner told The Wall Street Journal in 2000.

In recent years, he’s been on a spending spree, expanding from his apartment-building roots into commercial office space. In November, just days after he helped Mr. McGreevey get elected, he bought a package of 12 New Jersey office properties from Keystone Property, totaling about one million square feet, for approximately $80 million. He added those buildings to a portfolio that includes a pair of recently acquired office buildings in Newark, some property in Jersey City, and a new office complex in Florham Park that Mr. Kushner is building as a speculative development. (He also has some properties in New York, including the Puck Building on Houston Street.)

“He was known as a large apartment owner, primarily in New Jersey,” said Jeffrey Dunne, senior vice president of investments at the real-estate firm CB Richard Ellis, which negotiated the Keystone Property sale. “He has become a significant commercial owner in the past three or four years.”

Mr. Kushner was raised in real estate. His father, a Holocaust survivor, settled in New Jersey after the war and became a construction worker. He began building apartment buildings, gradually amassing a family empire that now includes 22,000 apartments, a bank, an insurance company and a construction firm.

The younger Mr. Kushner has made his mark, however, as a savvy businessman with an appetite for expansion-and a yen to be a political player.

“He’s very charismatic,” said Mr. Dunne, “and a smart, tough negotiator.”

Mr. Kushner first came to prominence in national political circles as a top fund-raiser for New Jersey Senator Robert Torricelli. He raised millions for Democrats during the 1990′s, including Vice President Al Gore. He calls former President Bill Clinton a friend. In October, NorCrown Bank, a small community lender based in Livingston, N.J., and owned by Mr. Kushner, sponsored a breakfast speech by the former President at the Park Avenue Club in Florham Park.

Return to Sender

Mr. Kushner’s political contributions have caused him, and his favored candidates, some headaches at times. In 1999, Rudolph Giuliani returned $57,000 that Mr. Kushner raised for his (eventually aborted) Senate race, after revelations that the developer had made multiple donations under numerous different corporate names, in apparent violation of election law. Mr. Kushner’s spokesman blamed the fiasco on an employee and said the developer was “embarrassed.” But last year, Mr. Kushner made almost exactly the same mistake again in donating money to Alan Hevesi and Mark Green, two Democrats contending for New York’s Mayoralty. The two men returned a total of $51,000 to Mr. Kushner after the questionable donations came to light.

None of the embarrassments dimmed Mr. Kushner’s enthusiasm for politics, however. He threw himself wholeheartedly into Mr. McGreevey’s race for governor, raising more than $350,000 for the campaign and giving nearly 35 percent of the money raised by his political-action committee, according to a recent investigation by The Record of Hackensack. He also hired two men who have since gone on to become top advisers to the governor, including his chief of staff. The links have made Mr. Kushner a lightning rod for Republican accusations of cronyism in the McGreevey administration.

What Mr. Kushner himself wants from the governor-and what, by most accounts, Mr. McGreevey wants to give him-is the chairmanship of the Port Authority.

“Charlie is a very good man, a very successful businessman and an independent thinker,” said Port Authority board member Alan Philibosian, a New Jersey Republican who also serves as a director of Mr. Kushner’s bank. “I think he’ll bring good leadership.”

And make no mistake: The Port Authority intends to lead. It lost 74 employees to the disaster on Sept. 11, and has kept a low profile on redevelopment issues. But insiders say it will eventually wield huge influence over what’s built in lower Manhattan. It has money and bureaucratic expertise. As a practical matter, Mr. Silverstein-the developer who claims the right to rebuild the Trade Center, which he leased before Sept. 11-will need to secure Port Authority approval for his plans.

The Port Authority is set up to keep either state from having too much power. Each governor appoints half of the agency’s board. The board chairman traditionally comes from New Jersey, while the agency’s executive director is a New Yorker. The current executive director, Joseph Seymour, is a longtime friend of Governor George Pataki; he was the city manager of Peekskill, N.Y., back when Mr. Pataki was the city’s mayor.

It’s an unusual arrangement, and one that makes for tension. Three years ago, a dispute between Mr. Pataki and then-Governor Christine Todd Whitman over the division of the Port Authority’s wealth (and, among other things, the proposal to lease the World Trade Center) led to a 17-month stalemate in which no board business was done. That’s all in the past, said New York state officials, who say their colleagues across the river have deferred to Mr. Pataki’s wishes on redevelopment issues.

Of course, the hard part is still to come. Mr. Kushner will have to make the difficult decisions, while maintaining the fragile peace between the two states.

He will also have to deal with the conflicts inherent in serving in public office at the same time he’s running a development firm. There are tenants to woo, and billions of dollars of construction contracts to be given out.

Some big New York developers, including Peter Kalikow, who is also chairman of the M.T.A., and John Zuccotti, co-chairman of the company that owns the World Financial Center, demurred at opportunities to serve on the Lower Manhattan Development Corporation board for fear of appearing as though they were trying to use political influence for financial benefit.

Raised Eyebrows

“The idea of putting a real-estate developer in charge of a project involving large transactions of valuable real estate clearly raises some eyebrows,” said Larry Makinson, senior fellow at the Center for Responsive Politics. “Especially when this real-estate developer has also demonstrated, via his political contributions, an interest in winning friends and influencing people. Usually when someone gives that much money, they make them ambassador to the Bahamas-they don’t give them something of real substance.”

“When he makes a decision affecting the Trade Center development-let’s say a tenant is looking at something at the [redeveloped] Trade Center and at one of his properties-there may be an inherent conflict right there,” said one New York real-estate attorney.

To take a real-world example: On Jan. 7, CIBC Oppenheimer announced plans to open a branch office in a new Florham Park office complex built by Mr. Kushner, staffed by 20 brokers who used to work in the World Financial Center. The financial-services firm is the first tenant to lease space in the speculative development.

For now, however, most of the New York politicos and real-estate players involved in the redevelopment process-many of whom know little about Mr. Kushner-are keeping an open mind.

“My theory is, as long as everyone understands who everybody is and what interests people have, that that will be dealt with at the table in the discussions of the board members,” said Steven Spinola, president of the Real Estate Board of New York. “I assume this person, if he’s prepared to take on the responsibility, will do so in an appropriate way.”

“He’ll have to bend over backwards to show he’s not a partisan of New Jersey,” said Kathryn Wylde, president of the New York City Partnership, a business group. “My guess is we come out of that pretty well.”