Mike And George Now Zero Buddies, How About Larry?

Mayor Michael Bloomberg’s pre-election grumblings about Larry Silverstein didn’t get him very far. So, on Nov. 16, he took a

Mayor Michael Bloomberg’s pre-election grumblings about Larry Silverstein didn’t get him very far. So, on Nov. 16, he took a cue from Governor George Pataki, who had taught him a thing or two about making major announcements single-handedly.

This time around, it was the Mayor who issued a unilateral press release at 4:30 on a Wednesday afternoon, announcing his lineup for the board overseeing Ground Zero rebuilding: two deputy mayors, the Planning Commission chairwoman and his finance commissioner, along with a couple of high-profile business leaders.

To have close and powerful confidants like these show up at the somnolent meetings of the Lower Manhattan Development Corporation is sort of like sending the 1927 Yankees out to play a farm team. And while Mr. Pataki had been expecting a move like that for some time, he was caught unaware enough that his own press release, listing two of his own appointees, barely came in time for that evening’s news.

(A Pataki ally told The Observer that the Mayor and Governor had been planning to announce the names together but never managed to coordinate the details.)

Decisions at Ground Zero are supposed to be guided by the LMDC board, half of whose 16 members are appointed by the Governor, the other half by the Mayor. But on Sept. 28, Mr. Pataki, acting alone, unceremoniously nixed the International Freedom Center, which had by then been thoroughly vilified by a number of vocal Sept. 11 family members.

At the time of Mr. Pataki’s declaration, Mr. Bloomberg had allowed six of the chairs he gets to fill at the boardroom table to remain empty for months. He wasn’t going to let that happen again.

If the Mayor needed another reason to exercise the Ground Zero muscle that he had let atrophy during his first term, the Freedom Center announcement was it, for it sent tuxedoed benefactors running up and down East Side dining rooms, yelping about how culture was dead at Ground Zero. At the same time, civic do-gooders wrung their hands about how Mr. Pataki had eviscerated the LMDC, which was on its way to making a decision about the Freedom Center a few days later.

Now it seems like the LMDC is more powerful than ever, at least the way the Mayor and Governor have been treating it, and is destined to play a more prominent role.

“It seems to me that there had been all these different rooms where backroom decisions had been made,” said David Kallick, who has been following the board as a senior fellow at the Fiscal Policy Institute. “Now it is clear where the playing field is: It’s at the LMDC. And so, presumably, this will open up the process more and make clear what are the Mayor’s and Governor’s positions.”

Kathryn Wylde, the president and C.E.O. of the Partnership for New York City, a business leadership group, predicts that the LMDC appointments will give corporate executives the confidence they need to make that plunge and rent in 7 World Trade Center, a 52-story building ready to open early next year just north of the World Trade Center site itself.

“The Mayor is obviously ratcheting up the city’s involvement, and that is definitely a positive step for encouraging additional commercial interest,” Ms. Wylde told The Observer. “As we see construction begin on the PATH terminal and on the Freedom Tower, those steps are very positive, and may end up putting [Mr.] Silverstein in a much more positive position.”

ALREADY, MR. BLOOMBERG SEEMS TO BE GETTING RESULTS. Charles Gargano, the Governor’s top economic aide and one of Mr. Pataki’s new downtown appointees, has begun talking about the need for “flexibility” and said he supported converting some of the 10 million square feet of office space at the World Trade Center site into apartments, as Mr. Bloomberg had suggested during his campaign.

And so, instead of a brawl, Mr. Bloomberg and Mr. Pataki appear to be chipping away at each other’s differences, inching closer to each other’s views, and pretending that they weren’t very far apart in the first place.

“What I have urged is that we take a look and see if the marketplace is in fact changing, and to see whether or not we should make adjustments,” Mr. Bloomberg said at a Nov. 21 press event. “The fundamental, overall plan we have been in agreement on since Day 1.”

But while these two gentlemen may be making up, they’re just the start of any process of changing the specs of the site—how much will be built, where and by whom—which reached a certain finality a year ago with the so-called Thanksgiving Agreement, a nine-page document signed last November by the Deputy Mayor Dan Doctoroff and Kenneth Ringler, executive director of the Port Authority of New York and New Jersey, which owns most of the site. Changing that document will not be easy: The World Trade Center site is such a web of conflicted interests and anachronistic orthodoxies that placing an apartment building at Ground Zero would require the assent of—get this—the Governor of New Jersey! (Who—thankfully, for Mr. Bloomberg—is now a billionaire too.)

The next major decision, and the next opportunity for the Mayor to take a stand, will come in the run-up to a Dec. 8 hearing by a city development agency on the approximately $3.5 billion worth of Liberty Bonds that Mr. Silverstein wants to help finance the five commercial towers he is building on the site. Senators Hillary Clinton and Charles Schumer as well as Mr. Pataki have keenly supported the bond issue, backed by the federal government and with a low rate of interest. The Mayor, while in principle supporting the idea of using the bonds for Ground Zero, is in negotiations with Mr. Silverstein about how much to release and when.

MR. BLOOMBERG’S COOLNESS TOWARD MR. SILVERSTEIN may be just a roundabout way of tweaking the Governor, who generally supports the developer, or it may come in response to the rest of the real-estate world’s insistence that someone else—notably themselves—could do better at Ground Zero. Mr. Bloomberg, in an October interview with the Daily News editorial board, famously said that the city would be better off buying out Mr. Silverstein’s lease at the World Trade Center site, and yet the developer has never been blamed publicly for any specific delays. The Freedom Tower went back to the drawing board ostensibly because the city police and the Port Authority couldn’t agree about security. Goldman Sachs hesitated on constructing it’s building because Mr. Pataki hadn’t decided whether or not to shelve a highway tunnel. In the end he did, and the investment bank is breaking ground next week.

The Mayor’s interest in converting some of that 10 million square feet into apartments—out of a belief that the city simply doesn’t need that much office space (and that it might be better built on the West Side)—is another story, however. This is because Mr. Silverstein’s insurance policy stipulates that he will receive the full $4.6 billion he has been awarded only if he re-creates the office space that he lost in the attack as office space.

Rebuilding 10 million square feet is not, however, a point that Mr. Silverstein has so far insisted upon, although he is strongly in favor.

A source familiar with the redevelopment process told The Observer that Mr. Bloomberg hasn’t discussed changing the November 2004 plan with the developer.

Meanwhile, the Mayor is learning that a larger obstacle to getting things done at Ground Zero may not be politics: It could be the Hudson River, which engineers are fighting to hold back from lower Manhattan’s landfill.

Even the unveiling on Nov. 18 of the Port Authority’s plans to build three-story shopping malls along Church Street—the better to speed up retail development—was more show than substance. Here were sketches about what can be built no sooner than mid-2008, when the Port Authority finishes that section of the slurry wall, and what would open no sooner than 2010, by which time the Mayor will have retired to a life of quiet philanthropy, if his stated ambitions are to be believed.

The developer insists that he is not the one slowing the process down. “As Larry Silverstein has demonstrated at 7 World Trade Center, he can build very quickly once he’s allowed to,” Silverstein spokesman Bud Perrone said in a statement. “He shares the Mayor’s desire to get construction moving along Church Street; however, the construction of buildings in that area of the site cannot proceed until the government finishes excavating and otherwise preparing those sites for development.”

Even those sketches are a contingency plan, in case Mr. Silverstein isn’t able to build the office towers that are supposed to go there.

The spot most often discussed for an apartment tower—the block south of Liberty Street—is currently occupied by the highly contaminated Deutsche Bank building, which survived the 2001 attack but is now being painstakingly taken apart in a process scheduled to last until mid-2007.

And dividing up the World Trade Center site into parcels to be simultaneously developed by different real-estate companies, Mr. Silverstein’s allies say, would cause unprecedented traffic, noise and pollution problems.

In other words, if Mr. Bloomberg wants to speed up development at Ground Zero, he is going to have to wait a while.

—Additional reporting by Jason Horowitz Mike And George Now Zero Buddies, How About Larry?