By David Stanke
World Trade Center redevelopment has again stalled. The issue is the renegotiation of Silverstein Properties’ legal rights to redevelop office space. The details of the negotiations are complex, but the agendas of various parties are thinly veiled. Only one thing is absolutely clear: No one has a monopoly on greed at the W.T.C.
What is this greater good that our government officials are working to achieve? From the public’s perspective the greater good is providing the maximum economic boost to the neighborhood and to the city at the lowest expense to taxpayers. Without a clear public benefit, renegotiation of development rights is simply a land grab. Further, it wastes time and money.
Amidst the name-calling targeted at Larry Silverstein, a review of the players at the site is enlightening. All of them are being greedy. Despite demands for Silverstein to compromise for the public good, our politicians’ greed may be more harmful to the public interest.
Governor Pataki’s greed is to have a legacy he has not earned. He wants signature W.T.C. landmarks on his resume. Landmarks are expensive. The Freedom Tower will be the most-expensive, least-marketable building in the city. With funding tight, he now wants the Port Authority to build it at public expense.
Pataki has not done the work necessary to accelerate development. He was backing Silverstein until last week when he turned on the developer. The governor has not guided us past the outrageous demands and frequent redesigns. He has not forced fiscal responsibility. His only right to a legacy is a pit and the public debt that will hang around for decades.
The Port Authority’s greed is to get new headquarters. It owns the site and wants to control it. The agency’s plans for W.T.C. transportation and retail beyond the eight-acre memorial have earned the public’s respect. More than anyone, Port leaders realize that it will be a spectacular site down the road. This is their chance to get an additional piece of the site.
The Port is using federal funds for the new Path terminal and infrastructure across the site. They will presumably raise debt for whatever is not covered. They have not held the line on costly redesigns and much of the site is still not ready for redevelopment. They want insurance proceeds, development rights, and ongoing lease payments. Name-calling is counterproductive and may not indicate the real problem.
Mayor Bloomberg’s greed is to build his own legacy projects, specifically the West Side. The influx of W.T.C. office space will postpone West Side development and he has only four years left in office. In City Council testimony, Dep. Mayor Dan Doctoroff recommended that the Port develop two towers as apartments, a hotel and government offices. This would be viable, he claimed, because the Port Authority is not subject to market returns. For the mayor’s legacy, Bloomberg would have the Port recklessly waste public funds.
He also wants $1.7 billion in Liberty Bonds for projects away from the W.T.C. He broadly speculates on possible uses, when no other private enterprise project in the city needs public financing. Liberty Bonds are a boon to developers, all of whom might be called greedy. Ties between government and developers are complicated and dangerous, a storied part of New York’s history.
Renegotiation is needed because Pataki and Bloomberg scattered Liberty Bonds around town like slop to pigs, leaving about $3.4 billion. There was originally $6 billion in commercial bonds, enough money, with insurance proceeds, to completely rebuild the W.T.C. The negotiations are only needed because Pataki and Bloomberg were irresponsible. Now they call Silverstein greedy for not compromising to help them look good.
The fastest way to develop the W.T.C. is to keep responsibility with a private developer. The problems with government development have been widely exposed at the W.T.C. Government projects are subject to revisions in government decisions. They can be sidetracked by intra- or inter-agency disputes.
The least costly way to develop the site is to grant Larry Silverstein Liberty Bonds and if necessary, tax-free loans so that rental payments pay back the debt instead of taxes. The city and state could fund additional loans to Silverstein, like they are doing for Yankee and Shea Stadiums. The $1.4 billion for the stadiums is coincidentally about what Silverstein needs at the W.T.C. But evidently, billionaire baseball team owners with $100-million player salaries are not as greedy as Larry Silverstein. Bloomberg and Pataki could resolve the problems with no renegotiations and no new public debt.
The smell of greed permeates from the W.T.C. With Silverstein, at least we know his agenda and that it is based on clear legal rights. He wants to make money by developing a 21st century office complex. If he succeeds, he will, in addition, perform a great public service, generating jobs and tax revenue and revitalizing Downtown. He has a history of succeeding against the odds, which is precisely how he got the lease at the W.T.C.
David Stanke lives and writes Downtown. His e-mail is davestanke@ebond.com.
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