After four years of public debates, political infighting, posturing and stalled momentum in the rebuilding of Lower Manhattan, the next five weeks promise to be among the most critical since the towers fell.

Gov. George E. Pataki set the stage for a March 14 showdown at ground zero shortly before Christmas when he gave the developer Larry A. Silverstein 90 days to work out his longstanding differences with the Port Authority over the rebuilding process.

Mayor Michael R. Bloomberg upped the ante recently in language certain to incite the developer, when he called on him to set aside his financial interests and "do the right thing": cede two proposed buildings and a major portion of the site to the Port Authority of New York and New Jersey so that rebuilding can go more quickly.

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"It's long overdue, but very welcome," Mr. Yaro said. "Ending up with a see-through Freedom Tower and the rest of the site vacant, while the developer gets a half billion in his pocket and the public is stuck with billions in obligations, doesn't sound like a particularly attractive outcome."

The mayor's blunt remarks were backed by a city financial analysis indicating that Mr. Silverstein could exhaust his money for the project and default on his lease at the World Trade Center site in 2009, yet still walk away with half a billion dollars. Talks between the authority, which owns the land, and Mr. Silverstein, who leased the property six weeks before the 9/11 attack, are at an awkward standstill, according to authority officials.

The authority contends that to speed up the process, Mr. Silverstein should build the Freedom Tower, the largest and most symbolic building at ground zero, and relinquish control of a major portion of the site so that work can proceed simultaneously on two buildings and a mall along Church Street.

"This is not about Silverstein Properties; this is not about the Port Authority," said Anthony R. Coscia, chairman of the Port Authority. "It's about choosing the most viable way to fulfill the economic restoration of Lower Manhattan and build a memorial that fully signifies the site."

Mr. Silverstein, however, has said he has the legal right, the will and, most important, the insurance money to do the entire project on a schedule that extends until 2017. The Real Estate Board of New York, the industry's powerful lobbying arm, has rallied to the developer's defense.

The two sides could still come to a resolution in time for the planned April groundbreaking ceremony for the 1,776-foot Freedom Tower. On the other hand, the dispute could also result in a court battle keeping much of ground zero a hole in the ground for a long time. Some downtown executives say the resulting delay would leave a cloud of uncertainty over Lower Manhattan, feeding fears among potential corporate tenants about the future.

A standoff could also tarnish Governor Pataki's record as he considers a run for the presidency. State officials, who favor a new arrangement at ground zero, declined to discuss the negotiations.

Although the governor, not the mayor, sits at the negotiating table, Mr. Bloomberg joined the fray in his State of the City speech on Jan. 26 when he essentially aligned himself with the Port Authority, an institution the city is often at war with.

His decision came after the city financial analysis indicated that Mr. Silverstein could run out of money after building the Freedom Tower, and possibly the second of five skyscrapers planned for the site, unless a new financial arrangement is negotiated at ground zero.

Noting that the demand for office space is sluggish, the report predicted that once billions of dollars in insurance money is exhausted, the Port Authority would be unable to complete construction without putting up enormous cash subsidies it does not have now.

But Mr. Silverstein could "walk away from the project" with $565 million in profits, fees and equity, according to the analysis, compiled by a dozen officials at the city's Economic Development Corporation, the Law Department and City Hall. The report notes that Mr. Silverstein has already regained most if not all of the $137 million he and his investors put up when they bought the lease.

The Port Authority commissioned its own report by Jones Lang LaSalle, a real estate firm, that came to a similar conclusion, according to an official at the authority.

Mr. Silverstein and his supporters say the city report is dead wrong. They argue that he is eager to build and that any delays are the result of government inaction. They note that Mr. Silverstein has nearly finished rebuilding 7 World Trade Center, a skyscraper at Vesey and Greenwich Streets, while the planning continues at ground zero.

"It's time to stop planning and start building," said John N. Lieber, senior vice president at Silverstein Properties. "We have the money to accomplish this quickly, providing government gives us access to the physical sites."

The Silverstein camp brandishes its own report, compiled by the developer's advisers at Morgan Stanley, saying the developer could build the first four towers at ground zero using a combination of nearly $3 billion in insurance money and more than $3 billion in Liberty Bonds.

"I'm not convinced that the Port Authority is better equipped to build an office tower than my members are," said Steven Spinola, president of the Real Estate Board. "And I'm not sure there is a deal to be made if the Port wants Larry to drop what may be the best two office sites."

City officials say that Mr. Silverstein is operating on some overly optimistic assumptions, and that the conditions downtown have changed drastically since he signed a 99-year lease for the trade center in a deal worth an estimated $3.2 billion. At that time, the twin towers were nearly full for the first time since the trade center opened in the mid-1970's.

Today, 14 percent of the office space downtown is vacant, and major tenants like Lehman Brothers have moved to Midtown. Only three tenants have signed up for about 15 percent of the space at 7 World Trade Center, and no one is in line for the Freedom Tower, which will take years to build and lease. The city's report estimates that Mr. Silverstein will run out of money to pay the rent and default on his lease unless rents for prime space rise to $70 a square foot by 2011, from an average of $33.33 today.

The developer also assumes that he will use all of the remaining $2.9 billion in insurance proceeds to build four towers. But Mr. Silverstein is obligated under his lease to rebuild all five towers, at an estimated cost of $7 billion. The authority contends that about $350 million from the insurance money should go toward rebuilding the shopping mall, far more than the $116 million Mr. Silverstein has offered. The two sides are also far apart on Mr. Silverstein's share of the cost of common infrastructure at ground zero.

The authority has offered to "dramatically" reduce his annual rent, which rises to $140 million this year, if he cedes the land for what are known as Towers 3 and 4, on Church Street. Mr. Silverstein would still build the Freedom Tower and a second building at Vesey and Church Streets.

Both sides acknowledge that the Freedom Tower would be difficult to lease to corporations who fear it could be a terrorist target. To entice Mr. Silverstein to make a deal, the state and city have informally offered to rent about 40 percent of the tower.

The authority, in turn, would be the anchor tenant for Tower 3. The fourth site would be sold to a developer for a hotel, office space and, according to the mayor's vision, apartments. Much of the shopping mall would be built on the first and second floors of those buildings.

"The build-out of the site, based on the current plan, is extremely questionable in terms of Silverstein's ability to go beyond the Freedom Tower," said Mr. Coscia, chairman of the authority. "We are unconvinced it is a viable plan."

Mr. Coscia said that the new deal would be worth $2.2 billion to the authority, a billion dollars less than four years ago. Any extra money, he said, would go into the memorial.

The Silverstein camp and some real estate developers say it does not make sense to move the authority to one of the best corporate office sites, next door to the site where a multibillion-dollar transit hub is under construction. Better to put them in the Freedom Tower.

They also question whether the mayor's desire to build apartments at ground zero reflects a pessimistic view of the future of Lower Manhattan as a business district.

City officials contend that their most important objective is to rebuild ground zero quickly.

Robert D. Yaro, president of the Regional Plan Association, favors opening up the trade center site to multiple developers and different concepts.

"It's long overdue, but very welcome," Mr. Yaro said. "Ending up with a see-through Freedom Tower and the rest of the site vacant, while the developer gets a half billion in his pocket and the public is stuck with billions in obligations, doesn't sound like a particularly attractive outcome."

I wonder if Take back the Memorial would sign a lease in the Freedom Tower.
- tom moody 2-06-2006 6:17 pm [add a comment]

if i remember correctly they are based across the street and have a view of the pit. fwiw.
- bill 2-06-2006 6:30 pm [add a comment]

I think they would be too scared to take a lease in the Freedom Tower. Which means they hate freedom.
- tom moody 2-06-2006 6:37 pm [add a comment]

Bill, your page still requires side to side scrolling--I'm betting it would be fixed if you delete the dotted line in this post.
- tom moody 2-07-2006 10:40 am [add a comment]

• can't find the detailed thread on the dotted line so I'm comenting here. Instead of a dotted line or the resulting side to side scrolling I always see a set of brackets containing three dots:
  
  [...]
  
  always wondered what they were about.
  
  Running safari on both my Macs.
  - steve 2-10-2006 3:54 am [add a comment]




• more ways to say quote marks.
  - bill 2-10-2006 4:11 am [add a comment]

The report found that rebuilding five towers, as Mr. Silverstein plans to, would cost at least $7.3 billion, and that Mr. Silverstein underinsured it with only $4.6 billion, $1.7 billion of which has already been spent.

The report concluded that Mr. Silverstein will be able to build only one or two towers before being forced to default and that even if he defaults on the entire site he will net $106 million. If he holds on to the Freedom Tower and one other building he could stand to make $565 million, the report said.

The Bloomberg administration's war against developer Larry Silverstein got even uglier yesterday, as each side hurled insults at the other.
But City Hall had some extra ammo: a line-by-line analysis purportedly showing hundreds of millions of dollars that Silverstein will accrue in profit from the World Trade Center site.

"It's time to inject a dose of economic reality into the discussion about the future of the World Trade Center site," said Dan Doctoroff, deputy mayor for economic development and rebuilding, in an interview with the Daily News.

"What we're looking at, as we look ahead a few years, is a default, a half-finished site and a developer who walks away with potentially over half a billion dollars in profits and fees," Doctoroff said. "We simply can't allow that to happen."

The city's analysis, reviewed by The News, asserts that Silverstein used insurance money to repay himself and his lenders for the entirety of their original investment. The city claims Silverstein no longer has any of his money at risk in the project and will soon run out of insurance funds.

A top Silverstein aide called the statements scurrilous.