His Woes Aside, Mr. Silverstein Won’t Be Shoved

“Where’s Larry?” Governor George Pataki asked on April 25, as he led a gaggle of reporters and officials on a tour of Ground Zero.

One of the reporters had just asked Mr. Pataki who would build the 1,776-foot-tall glassy spire that is the skyline signature of architect Daniel Libeskind’s plan for Ground Zero-a building Mr. Pataki had, in a presentation earlier that afternoon, dubbed the “Freedom Tower.” He also promised it would be ready for occupancy by 2008.

“I have tremendous confidence in Larry Silverstein and the Port Authority,” he continued, after he found the cinnamon-sugar-haired, 71-year-old developer with a broad, creased smile.

Mr. Silverstein is used to hearing these public vows of confidence. Hardly a mention of the World Trade Center site’s future reaches the public without including some mention of the continuing “partnership” with the developer-a practice Mr. Silverstein is known to enforce.

In private, however, Mr. Silverstein’s hold on the rights to redevelop the World Trade Center has been, in typical Silverstein fashion, only as strong as his own tenacious grip.

Mr. Pataki’s avowal, however, seemed different. It appeared to be the final blessing necessary to take control of what will be the tallest and most famous (if not the largest) building of the 21st century.

Mr. Libeskind’s tower will recoup only 2.6 million of the 10.5 million square feet of office space on which Mr. Silverstein still holds the lease. But as he becomes known as the developer who restores the skyline of lower Manhattan, Mr. Silverstein will have recouped the legacy-if not the capital-he so dearly wanted when he scraped together his initial plan to buy the 99-year lease on the original World Trade Center.

With the projected cost of Mr. Libeskind’s entire plan (which he called the “bargain basement” among all his competitors’ plans) only $330 million, the developer already has the money in the form of $1.3 billion in insurance proceeds that are not a part of the increasingly bitchy legal contest with his insurers.

“We have the money in hand to build the iconic tower and then some,” a spokesman for Mr. Silverstein told The Observer . “So that’s going forward and is in no way connected to the progress of the legal case.”

Of course, not everybody is betting on Mr. Silverstein. After all, the developer had scarcely paid for his investment in the World Trade Center when the towers fell, and now he’s stuck with massive rent payments on a profitless site, as well as some $600 million in mortgages to companies like GMAC-all of which could whittle away at Mr. Silverstein’s capital.

But the Silverstein spokesman said that other sources of income were being used to cover those costs.

“We have $1.3 billion in escrow right now,” he said. “None of that is being used for anything except to build the iconic tower. Income from other sources, such as business interruption, meets the [mortgage and lease-payment] costs, so the money in escrow, the $1.3 billion, is for the building of the iconic tower.”

The rest of the insurance money-which Mr. Silverstein will need to stake a claim to develop the remaining 75 percent of the office space lost on Sept. 11-still hangs in the balance.

Appeals on preliminary judgments that favored Mr. Silverstein’s insurers won’t even begin to be heard until the summer, meaning that judgment on the substance of the insurance dispute-the question of whether Mr. Silverstein is due $3.5 billion or $7 billion-still is far away.

“Oral arguments for the appeal that Silverstein requested have now been set for July 22 of this year,” said Jacques Du Obis, chairman of Swiss Re America Holding Corporation and Mr. Silverstein’s chief opponent in the court battle over insurance money. “So what it all means is that Silverstein’s decision to appeal the losses he suffered in district court will end up costing at least one year in terms of when the trial begins. So he’s cost himself a lot of time.”

Mr. Du Obis said that the appeals process could stretch far into the fall or beyond, into the early months of 2004; only then would the trial itself even begin.

“Then that trial takes eight weeks … and then who knows what happens after that. If we win, then as far as we’re concerned, it’s over,” said Mr. Du Obis. “But they’ve indicated from the very beginning that they would appeal should we win. So it’s hard to say. It could be quite a long time.”

The possibility remains, of course, that the Port Authority could float bonds to pay for the construction; the bonds could be backed by the insurance settlement expected from Swiss Re Insurance Company, the main litigant against Mr. Silverstein in the massive insurance case he’s slugging through.

Such a move would seem to solidify Mr. Silverstein’s place in the Freedom Tower, since it would be his insurance money backing the bonds, even though Mr. Silverstein’s press team insists that the hypothetical bailout will never be needed.

And some developers balked at the wisdom of that move, saying the market for office space was terrible enough when the Port Authority first built the Twin Towers and found themselves attempting to sidestep the real office market by strong-arming government offices to lease space there.

“The Port Authority had vacant space that was never rented from the day it was built until the early 90’s,” one prominent Manhattan developer said. “So if that’s what they want to do again, last time it was a disaster for the downtown market. This time, it will be a disaster not just for the downtown market, but for this building.”

But if Mr. Silverstein builds the Freedom Tower, it will have been in large measure because of the growing feeling in the Pataki administration that some progress must be evident on the site.

The elements of the rebuilding that are most important to the public-restoration of the skyline, development of a memorial and construction of a transit hub-are all now promised to be showing significant progress before Mr. Pataki stands for re-election in 2006.

The timing, for Mr. Silverstein, couldn’t be better; for Mr. Pataki, a “topping-out” ceremony-in which the structural steel rising to the full height of the eventual building is christened in a ribbon-cutting ceremony-could be a show-stopper in an election year that’s already looking tough for the Governor.

Rebuilding officials say Mr. Pataki’s growing personal affection for the Libeskind plan goes beyond politics. They point to the fact that the Governor overrode his own planning agency to set the Libeskind plan into motion.

But the urgency to restore the skyline by the time Mr. Pataki’s current term ends in December of 2006 is such that by the end of this year, a large tarp will hang over the Deutsche Banc building at the southern edge of the W.T.C. site. The building is currently covered in a black shroud, unsafe to enter due to an insurgence of deadly mold in the building after Sept. 11. The new tarp will display a massive picture of Mr. Libeskind’s Freedom Tower, giving New Yorkers plenty of time to imprint the image in their minds-and to measure what’s ultimately built against the huge image.

Office Work

But it may yet only be a plan “laid up in the mind”: Asked for specifications about the tower-its projected cost; whatever “green” building innovations might be part of the tower; the size of its floor plates; the plans for the upper stories (which will not, according to current plans, contain offices); the view of the building from the public streetscape at Fulton Street; estimates of how long different portions of the building would take to build-both Studio Daniel Libeskind and the Lower Manhattan Development Corporation said that the design was too “preliminary” and “conceptual” to discuss that level of detail. “We’re going to work very hard to drive the process forward and achieve the goals we’ve set for topping off the building by 2006 and occupancy by 2008,” LMDC spokesman Matthew Higgins told The Observer .

Current plans call for a 70-story office building stretching about 950 feet into the sky, with indoor gardens, a café or restaurant, a viewing deck taking up the higher floors, and an antenna to replace the television antenna lost on Sept. 11, bringing the building up to 1,776 feet. Office floors will provide between 30,000 and 40,000 square feet each of contiguous office space; elevators will not be stacked, nor will passengers have to navigate sky lobbies to switch elevators, making exits safer.

The first few weeks of work on the joint contract between Studio Daniel Libeskind and the Port Authority and the LMDC will determine much about the tower: how underground transportation connections are planned and built, for example. The PATH train and other service elements are located under the proposed site for the building, according to a rebuilding source, so a structural system for the building will have to be reconciled with those elements. Where, for instance, can structural columns go? Ensuring the structural integrity of the building is, understandably, a priority.

Meanwhile, Skidmore, Owings & Merrill, Mr. Silverstein’s architects, continue to work on plans for him for the development of office buildings on the site, using the Libeskind site plan as a template.

How much of Mr. Pataki’s enthusiasm for the aesthetics of the Freedom Tower Mr. Silverstein shares may not be clear. In fact, as the selection process that resulted in Mr. Libeskind’s selection wound down, Mr. Silverstein wrote an angry letter to the LMDC, copied to the offices of the Port Authority and the Governor, claiming that he was being unduly shut out of the planning process.

“Our group,” the letter, sent in late January, said, has the right “to select the architect responsible for preparing rebuilding plans.”

After meetings with Mr. Libeskind and the other finalist in the design competition, the THINK team headed by Rafael Viñoly, LMDC officials said the problem had been smoothed over.

“I think Mr. Silverstein has problems with the plans of the two architects. But instead of just asserting he has problems and getting a little angry, he is now working closely with the architects,” said LMDC chairman John Whitehead to a reporter the following month.

By Feb. 26, the day Mr. Libeskind was formally announced as the architect of the World Trade Center site, the architect received a warm welcome and embrace from Mr. Silverstein near the podium.

Sources close to the rebuilding process said that Mr. Silverstein initially found Mr. Libeskind’s “pit” concept for the memorial space too morbid and likely to turn off potential renters in the commercial complex surrounding it on the northern and eastern edges.

Mr. Silverstein quickly reversed his position, even as Mr. Pataki and Mayor Michael Bloomberg began to make no secret of their affection for the Libeskind plan.

Whether Mr. Silverstein will need help from Mr. Pataki, or a convenient alignment of interests, when it comes time to put up money for the four other commercial buildings slated for the site remains to be seen. That, after all, is a battle for another day-and, perhaps, another Governor. His Woes Aside, Mr. Silverstein Won’t Be Shoved