Mayor Says Developer Has Little to Lose at World Trade Center Site

Speaking to reporters this afternoon, Michael Bloomberg weighed in on the World Trade Center negotiations between the Port Authority and Larry Silverstein, painting the 77-year-old developer as a man with little to lose, someone who “doesn’t really have a lot of skin in the game.”

Silverstein has no equity in the World Trade Center site right now, according to people familiar with discussions.

The comments came after Silverstein approached the Port Authority, which owns the World Trade Center site, with a plan to finance some of his three office towers at the site. Building all three towers with private financing is considered an impossibility given the drought in lending—two of the towers have no tenants and citywide vacancy is on the rise. If the Port Authority were to back the financing with its balance sheet, it would transfer billions in risk to the public agency (which would be able to capture the towers if Silverstein ultimately defaulted) and limit its ability to carry out other projects.

Right now, conversations seem to be limited to Port Authority director Chris Ward and Silverstein Properties. But Bloomberg will ultimately need to sign off on any major changes to a 2006 development agreement, officials have said.

Speaking publicly last week, Silverstein acknowledged that a change in dates was likely to be dramatic. Per Real Estate Weekly, he said: “The earliest Tower Three could get done is 2015 or 2016.” The current schedule calls for Tower 3 to be completed by 2013.

More from the mayor:

"What Larry did is he took out all his equity at the beginning, so he doesn’t really have a lot of skin in the game. He has an enormous amount of upside potential, which doesn’t leave the Port Authority with a lot of negotiating ability, because they’re the ones that got to put up some money. They’re the ones that, everything else stops, and get criticized."

"Larry’s on the other side, and for him, it’s a neutral to win situation, so I don’t envy the Port Authority."

Mayor Says Developer Has Little to Lose at World Trade Center Site