http://www.observer.com/2009/real-es...-jon-and-david
Mike vs. Larry vs. Jon and David
By Eliot Brown
June 16, 2009
Just after 6 p.m. on Monday, Mayor Bloomberg’s press office emailed a statement on negotiations surrounding the World Trade Center, where a private developer and the public sector have hit a major obstacle over financing. In May, the various officials involved pledged to try to have a resolution by Thursday, June 11. With no solution then, the mayor asked for a few more days, with the hope of having some sort of plan by Monday.
The result was less than a breakthrough: “We continue to work through the details to try to arrive at a consensus.”
Ever since Larry Silverstein first approached the Port Authority late last year with a request that it back financing on his towers at the World Trade Center, officials at the state and city level have been at a loss for a workable solution. At least as of press time, that continues. Without an agreement, officials on all sides fear that Mr. Silverstein could delay integral components of the site, such as the main access roadway and the PATH hub.
At its core, the unending impasse involves Mayor Bloomberg, who has tried to seize the role of dealmaker here, squaring off against a pair of governors and the bistate Port Authority they control. The mayor and his top aides have sided with Mr. Silverstein on his main demand, that the public sector put up money to help build two of his towers, and they have thus far pointed at the Port Authority to put up the bulk of the $3 billion or so needed.
But the two governors, David Paterson and Jon Corzine—who would likely have to agree in tandem to such an act—have been unwilling to do so to this point, given that it would mean scaling back transportation projects.
In recent days, the multiparty summits have come to an end and city officials, led by Deputy Mayor Bob Lieber, have been shuttling back and forth between the various governmental parties in an attempt to craft a solution and whittle away at the substantial gap, according to multiple officials involved and familiar with discussions.
And for the Bloomberg administration, it seems the governors are the best hope for the bulk of any new money.
Even if Mr. Silverstein wanted to put substantial new equity into the project beyond his insurance proceeds—and he doesn’t—the tenacious landlord has far less capacity to raise money than the government, which is why he’s been looking for this bailout in the first place. In the latest multiparty talks last week, he offered $75 million in new money, according to people involved, though he would take more than that in development fees from the project.
The city has been resistant to plunge into the deal itself (though it offered $100 million last week), as it has taken the position that it is more of an observer, and the other parties have more of a direct stake.
The Port Authority has been unabashedly intransigent on the point of money, as its executive director, Chris Ward, and chairman, Tony Coscia, have insisted they already put up plenty in an earlier offer, which involved financing Mr. Silverstein’s Tower 4. The jump to finance a tenantless second tower the size of the Empire State Building, the agency has said, would necessitate unacceptable transportation-related cuts.
THUS, IF THERE IS any chance the agency will change its position, it would come from the two people who ultimately control the semi-independent authority, and have additional capacity to give on their own: Messrs. Paterson and Corzine.
But both are protective of the Port Authority’s capital plan, as it puts billions of public-works spending into the two states, and in talks thus far, both governors have resisted directing the agency to put up the money for the second tower.
Mr. Paterson’s office has been more receptive to the city’s pleas than the Port Authority staff, according to multiple people involved, but not to the point where new money is on the table. Mr. Corzine has far less political ownership of the project and has previously been critical of any attempt to move more capital money toward the World Trade Center. Mr. Corzine’s spokesman did not respond to multiple requests for comment, and a spokeswoman for Mr. Paterson declined to comment.
The political alignment that has emerged is a different one from the last renegotiation, in 2006, when the city and New Jersey officials at the Port Authority challenged Mr. Silverstein and the governor at the time, George Pataki.
“It was the city and Jersey versus Pataki,” one former official said, an approach that resulted in Mr. Silverstein ultimately agreeing to cede responsibility.
This time around, it’s difficult to see a way out of the deadlock. After weeks, the parties are still nowhere close to having the money needed, according to multiple officials, leading to frustrations all around. This frustration seemed evident in the Bloomberg administration’s statement Monday, attributed to Mr. Lieber, which seemed directed far more at the other parties than at the public or the press.
“The redevelopment of Ground Zero is no ordinary real estate project,” Mr. Lieber said in the statement. “Rebuilding the site is a civic obligation of the highest order, and the people of our City rightly expect all those responsible for the site to work cooperatively to honor that obligation.”
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