Wednesday, April 26, 2006

The Battle For Ground Zero, Part 127

So, now Silverstein and the Port Authority have apparently come to terms on an agreement to build at Ground Zero, although the terms are still to be worked out. Expect shifting goalposts as the Port Authority continues to try and push Silverstein to the sidelines despite the fact that he's the only one who has actually rebuilt a permanent structure affected by 9/11. And Silverstein would want to protect his interests at the site, obligations set forth in his lease:

Silverstein is no doubt wary that if some arcane but necessary element goes awry after he's stood up with the politicians and proclaimed a done deal, he's the one who will shoulder the blame. (Pataki's statement yesterday, ignoring the issues that need to be resolved, could only add to Silverstein's fears.)

Second, the current deal would hold Silverstein to a rigorous construction schedule. If he missed a deadline for any reason, he'd default, losing all three towers, not just the tower with the construction delay. The agreement lacks any clause to allow for construction delays caused by mundane events like stoppages for related work at the nearby memorial or at the new PATH station - or by spectacular events like a terrorist attack or an oil embargo.

Silverstein's insistence on such a provision may seem like nitpicking, the kind of thing the News derides as "treating every wrinkle at Ground Zero as a hard-fought negotiating point." But Silverstein's financial advisers doubtless know that, without a clause indemnifying the developer for some events outside his control, no lender - including Liberty Bond lenders, whose debt is only tax-exempt, not government-guaranteed - would put money at risk.

These details are vital. But that's what negotiations are for, and Silverstein, having agreed to renegotiate his long-term lease in the first place, and having endured personal insults and slander from Pataki and Bloomberg, stands to have his concerns addressed calmly and reasonably.
The Post: Still critical of the Port Authority, and thinks Silverstein has called the PA's position. Either the PA lives up to its obligations, or Silverstein will sue to enforce the lease obligations.

The Daily News puts the blame for the holdup on Silverstein, despite all the facts pointing to the Port Authority, and more specifically Pataki, Corzine, and Bloomberg (in that order).

Steve Cuozzo examines why the Daily News is going after Larry Silverstein. Is it any surprise that there's real estate interests at heart - ones that would be affected if Silverstein actually rebuilt at Ground Zero?
To understand the Larry-bashing that has embarrassed hard-working News reporters conscripted into the war, it's necessary to look both backward and forward in time.

Zuckerman is also chairman and a major shareholder in Boston Properties, a publicly traded real-estate company that owns, builds and manages first-class office buildings in the United States and Canada, including six splendid Manhattan properties.

Boston once craved the World Trade Center as well. But, in the Port Authority's auction for the 99-year leasehold early in 2001, the patrician, Canadian-born Zuckerman lost out to New York street fighter Silverstein.

Yet the News' editorial page last Friday claimed it was an "accident of history" that Silverstein ended up with the WTC just weeks before 9/11 - when it's a matter of historical fact that Silverstein soundly and publicly whipped Boston and its partner, Brookfield Properties, in the competition.

At the time, insiders involved in the Boston-Brookfield bid made no secret of their bitter disappointment over losing out, first to a third bidder, Vornado Realty Trust, and then to Silverstein when Vornado backed out.

How badly did Boston and Brookfield want the WTC? Enough to bid more than $3 billion with the help of some last-minute dough from their financial backers (Blackstone Real Estate Advisors, CIBC Capital Partners and Deutsche Bank) - only to fall short of Silverstein and his partners.

But whatever Zuckerman's grudge over that defeat, the future holds more tangible reasons for him to fear reconstruction of 10 million square feet of office space.
Zuckerman is also facing big problems as a significant portion of his real estate empire is going to have renewals in the timeframe when the Silverstein buildings become viable alternatives. The New York Times similarly has real estate interests that aren't always clear when the Times opines on Ground Zero matters. Hence, their opposition to Silverstein and apparent siding with the Port Authority. Delays only help their own real estate interests at the expense of New Yorkers and all Americans who want something done at Ground Zero.

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