Libeskind’s Plan Hits First Wall With Mall Giant

Daniel Libeskind’s plan for the redevelopment of Ground Zero may have won critical acclaim, but at least one powerful voice has begun to grumble. Westfield America, the retail-mall monolith that operated retail space in the Twin Towers, has become increasingly disgruntled with the redevelopment process and has raised objections to key elements of the design. Those objections, however, are falling on deaf ears at the Port Authority, or so the company says.

“We don’t think [the Libeskind plan] works,” Peter Lowy, chairman of Westfield, told The Observer . “So why don’t we sit down and fix it? Why not have a meeting? It’s not that difficult. We think we can help and make it better.”

Westfield’s unhappiness is significant because the company and the Port Authority will have to renegotiate Westfield’s lease at the site. Those talks give the company, the American arm of the family-run and publicly traded Australian retail powerhouse Westfield Inc., substantial control over what were once the plaza and concourse levels of the World Trade Center. In fact, some sources familiar with the legal tangle at ground Zero fear that Westfield in effect has veto power over any proposal for the use of the land through the lease renegotiations.

Because the lease specifies that damage to the site must be ameliorated to replace exactly what was there when the leases were signed, any changes-including restoring parts of the Lower Manhattan street grid, the building of a memorial or any changes in the number of square feet of retail space-requires the lease to be rewritten.

“To build the Libeskind plan, you have to renegotiate the lease,” Mr. Lowy said. That process looks more and more tortuous in light of Westfield’s recent warning to the Port Authority. A March 14 letter from Westfield to Joseph Seymour, executive director of the Port Authority, complained that the company’s wishes were being ignored.

“While we have shown our willingness to make numerous compromises, we do not believe that the Port Authority or the [Lower Manhattan Development Corp.] has given proper consideration to our best professional judgment, much less to our rights or commercial interests or to any additional alternatives that would safeguard our interests,” the letter stated. “As you are well aware, under our agreements with Port Authority, we lease substantially all of the Plaza and Concourse levels of the World Trade Center site and our approval is required for any changes to the site or for any new redevelopment.” The letter’s contents were first revealed in the New York Post in early April. According to Mr. Lowy, the company still has not received any response.

Port Authority sources admitted they had not yet made a reply to Westfield, and dismissed speculation that their relationship with the company had deteriorated.

“The Port Authority has a cooperative working relationship with Westfield, and we fully expect that relationship to continue,” Port Authority spokesman Greg Trevor told The Observer . “Throughout this process, the Port Authority has encouraged and sought input from all stakeholders, including Westfield, regarding the rebirth of the World Trade Center site. That commitment continues.”

Charles Gargano, vice chairman of the Port Authority and the head of the Empire State Development Corporation, suggested that more cooperation was needed from the tenants.

“At this point, I think everyone realizes that we have a different site there because of the … memorial taking up a large part of the site, which we should do and are doing,” he said. “And then there will be transportation improvements. So the site is very different from what it was. We want to keep the partnership together, and hopefully move forward on the rebuilding of the site, but it’s going to take the cooperation and flexibility of all the parties.”

According to Mr. Lowy, however, it has been impossible to arrange a meeting with the Port Authority about Westfield’s proposed changes to the Libeskind plan-a situation that Mr. Lowy said was becoming exasperating. He said he has had such meetings canceled even after bringing a negotiating team from Australia to meet with P.A. officials.

He added that the current plan calls for a retail layout “that the lease may or may not allow us to do.”

Mr. Lowy characterized the March 14 letter as a last-ditch effort to make Westfield heard in the redevelopment process, and said even that measure hadn’t produced results.

“The Port hasn’t even written back to us, called us back,” he said.

Mr. Lowy said that an in-house team of architects was working on plans for a retail concourse that utilize the basic elements of the Libeskind design, but declined to specify how extensively the team had changed the design.

“What we’re asking the Port is for our internal guys to sit down with Libeskind and work this thing out together,” he said. “We bought an asset from the Port, from a retail point of view, that was one of the best retail assets in the country …. And now we’re presented with a plan that does something different. From our point of view, we need to make it more efficient for the retailer and more efficient for the consumer.”

Mr. Lowy did explain why some portions of the retail layout in the Libeskind design presented problems for his firm. Westfield has been characterized in previous reports as insisting on replacing all of its square footage in one contiguous arrangement, allowing customers access to the entire retail complex on a single level. Such an arrangement increases overall foot traffic in front of the retail establishments and therefore increases sales volume.

“The issue on contiguous space is this: Originally, what we bought, 80 percent was a contiguous underground mall with 150,000 people going through it every day, and did $900 a square foot a year of sales for the retailers,” Mr. Lowy said. “Clearly that is not reproducible, and we understand that. What we are trying to talk to the Port about is having the most efficient form of retail that is available with the restrictions that are there.”

He said the current plan breaks up the retail space too much and gives it too little profile for pedestrians and commuters.

“There’s [retail space] underground, at street level, and two and three stories above the street,” he added. “There’s not great visibility … and the flow of the retail is more difficult now. The key is how it integrates into the transportation system. We never said we had to have a specific amount of contiguous space underground. [But] the more contiguous, the better, and the more connected to transit, the better. If you have a street and cars and traffic, for the consumer to be able to make it across is harder-especially if there are cars-than if you have a pedestrian walkway.”

Mr. Lowy said that his company found the Port Authority’s posture puzzling, given the imminent requirement to renegotiate the lease with Westfield before any substantial rebuilding begins.

“No matter what, the leases have to be renegotiated sooner or later, even to put Greenwich Street through the site,” he said, pointing specifically to the restoration of streets through the site that have been the cornerstone of the redevelopment plans. “We have the lease over the land. So to put this [street] through, the leases have to be renegotiated. I don’t think they’ve even focused in on it.”

Civic Outrage

This isn’t the first time that Westfield has chafed at the redevelopment process.

Westfield was given a presentation by Mr. Libeskind and the New York–based “THINK” team headed by architect Rafael Viñoly. The two finalists in the design competition for the rebuilding at Ground Zero, Westfield sources said, had paid little attention to the company’s retail needs at the site. One Westfield source said that company representatives had felt “lectured at” by Mr. Libeskind in particular.

Meanwhile, Westfield’s behavior has sparked outrage from some civic groups.

“I trust that Westfield is the expert on how to design retail to maximize revenue; I don’t doubt that for a second,” said Jeremy Soffin, a spokesman for the Regional Plan Association, a vocal and powerful civic organization in the rebuilding effort. “But that is not the primary concern here. Decisions need to be made based on the best interests of the city and region, not the best interests of the leaseholders.” Mr. Soffin added that these interests include “revitalizing the entire district, creating an appropriate and moving memorial space, [and] creating civic amenities downtown.”

Westfield’s relationship with the Port Authority may become a moot point, if plans are realized for the Port Authority to swap the W.T.C. land with the city for the land beneath Kennedy and LaGuardia airports.

Recent reports have indicated that land-swap negotiations are coming closer to a resolution. Part of the swap would include a cash payout to the city that would reflect the back rents the city believes it’s owed by the Port Authority from profits generated at LaGuardia and Kennedy airports. The amount of that payout has been an item of contention, but the two sides were said to have come closer to a mutually agreeable figure in the $500 million to $600 million range. (The city had initially sought as much as $900 million to $1 billion.)

One Port Authority source familiar with the negotiations said the agency has come to believe that Deputy Mayor Daniel Doctoroff has become increasingly unsure about the feasibility of the swap.

“Every time we come really close, he backs off and makes another demand-which means that he’s unsure about it, and that’s the bottom line,” the source said.

The most recent of those demands is that the city maintain control over the way the airports are run, even when the land is owned outright by the Port Authority. The P.A., it has long been said, is unlikely to accept a deal in which its control of the airports is compromised. Even so, the city’s negotiators, led by Mr. Doctoroff, are insisting upon maintaining some kind of control over the airports, responding in part to criticism from elected officials in Queens and elsewhere of the plan.

But the Port Authority’s enthusiasm for the deal also remains unclear. Governor George Pataki, who controls the appointments of half the Port Authority’s board of commissioners, which would have to approve the deal, is said to support a swap. Mr. Seymour, a Pataki appointee, has spoken hopefully, if vaguely, about a deal that he said would either be rejected or in place by July.

But New Jersey Governor James E. McGreevey, who controls the other half of the Port Authority’s board, was still not publicly supporting the measure.

“We just haven’t seen the numbers at this point to indicate whether it is a good deal for the State of New Jersey,” said Micah Rasmussen, a spokesman for Mr. McGreevey.

He said that the basis for the valuation of the land (both the World Trade Center site and the two airports) that was used as the starting point for negotiations was still unclear to the Governor.

“One of the things that our leadership at the Port has asked for is a detailed explanation of what the appraisals of the land were based on, what information they used,” Mr. Rasmussen said. “Those are the kinds of details we need to have to make a determination as to whether we support it.”