For a Ground Zero Developer Seeking Subsidies, More Is Never Enough

By Michael Powell New York Times

The developer and philanthropist Larry A. Silverstein has cut a striking figure in New York City. He owns the H.M.S. Bounty-size yacht favored by his peers and has dominated the rebuilding of ground zero for a decade.

Along the way, he has internalized a developer’s rule of thumb in New York: Only a rube puts much of his own money at risk.

Billions of dollars in Liberty bonds, insurance money, developer fees: Year after year, Mr. Silverstein has shaken the public tree and benefits have fallen to the ground.

Construction of 4 World Trade Center is completed and it stands about half empty, with commitments from just two tenants: New York City and State. Now Mr. Silverstein wants to complete his 70-something-story 3 World Trade Center. He has found just one prospective tenant for it.

City and state officials, ever helpful, agreed to give that company, GroupM, a $15 million cash subsidy and tax breaks worth about $75 million.

Now Mr. Silverstein wants to shake the tree again. In March, as Charles V. Bagli reported in The New York Times, he asked the Port Authority of New York and New Jersey to guarantee up to $1.2 billion of his construction loans. The authority’s board could vote on the proposal this month.

As chutzpah, this was impressive. As public policy, it was less salutary.

Kenneth Lipper is a board member of the Port Authority, a former deputy mayor under Edward I. Koch, an investment banker and a novelist with a keen eye for currents of power, municipal and financial.

In an interview on Monday, he described how the board had signed off this winter on a capital plan, carefully assigning priority to rebuilt bridges, a new terminal at La Guardia Airport and — Mr. Lipper’s personal favorite — the rebuilding of that corroding pile of metal and concrete that is the Port Authority bus station in Midtown.

No choice was easy. The Port Authority’s bond rating is sterling, which keeps its interest rates low. In the end, its rating is backed by hundreds of millions of toll-paying commuters.

Then Mr. Lipper saw the request from Mr. Silverstein.

“Am I in ‘Alice in Wonderland’?” he recalled thinking. “I wanted to get a modern bus terminal built and we’re talking about putting $1.2 billion into a private developer, in which he gets the gain and we take the hit?

“Is it the role of an agency representing taxpayers and toll payers to speculate in real estate?”

This city harbors many expert practitioners of state capitalism. In Brooklyn, Bruce Ratner has built project after project, with a savant’s touch for finding the most gilded subsidy.

At least twice since 2001, Mr. Silverstein and city and state officials have cut the deal of all deals, the no-mas, this-is-the-final-subsidy moment.

Then that moment passes and Mr. Silverstein asks for more.

Bettina Damiani, the project director of Good Jobs New York, which monitors development subsidies and spending, has totaled and retotaled the subsidies for the rebuilding at the ground zero site, which comprises 16 acres. Even she has waved a white flag.

“We had such a good handle on it,” she said. “And at some point they pull another move and you’re left holding the string and there goes the balloon, floating off into the air.”

The administration of Mayor Michael R. Bloomberg, to its credit, tried to resist Mr. Silverstein.

“Mr. Silverstein’s financial interests should not be the operating principal [sic] in the rebuilding,” a deputy mayor, Daniel L. Doctoroff, noted years back. “The guiding force has to be the excellence of design and creating the right demand.”

Yes, well. Mr. Silverstein is no political naïf.

Around that time, he began referring to then-Gov. George E. Pataki by his first name. And the subsidies kept coming.

Late last year, Mr. Silverstein discovered that he had somehow not pulled down $340 million in federal recovery zone bonds for 3 World Trade Center. And, alas, the deadline to apply had ended in 2010.

Not to worry. Senator Charles E. Schumer went to Jacob J. Lew, the Treasury secretary, and the Internal Revenue Service. Shazzam! Mr. Silverstein had his money.

Mr. Schumer’s logic was beautifully circular. It went like this: The terrorist attack threatened doom for downtown. Then the federal, state and city governments spent billions of dollars and “now downtown is thriving.”

That’s why the federal government should give out hundreds of millions of dollars in new bonds to finish the game.

Question too much of this, and you hear a lot of talk of patriotism. Mr. Silverstein has often said he simply wants to do his public duty.

I asked Mr. Lipper about this one.

“I’m as patriotic as the next guy,” he said. “But when patriotism and symbolism are contrary to common sense, it moves from patriotism to vanity.”

And cha-ching to that.

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