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 How a Verdict Could Alter the Shape of Lower Manhattan

Though it is neither their purpose nor their charge, the jurors in the insurance case involving Larry A. Silverstein, the commercial leaseholder at the World Trade Center site, may be reshaping the future of downtown. By significantly limiting the insurance proceeds to Mr. Silverstein, and therefore his construction financing, they have made it more likely that only one skyscraper, the Freedom Tower, will rise at ground zero in the foreseeable future.

Where the plan calls for three more office towers along Church Street, between Vesey and Liberty Streets, there may instead be only low-rise retail buildings, flanking a permanent PATH terminal and bordering the landscaped memorial.

In any case, the development is to occur in phases over the next decade, and the construction of small, place-holding retail structures is part of the plan. But they may be there longer than anyone anticipated. And as the development timeline stretches out, the likelihood increases that the plan will eventually change, with or without Mr. Silverstein. Charles A. Gargano, the vice chairman of the Port Authority of New York and New Jersey, which owns the trade center site and leases it to Mr. Silverstein, said yesterday that the authority's commissioners "have had discussions about things - what if, what if," as a prudent measure "to get ourselves prepared for any eventuality." But he also said the authority was bound to honor the terms of the lease. "That agreement is in place," Mr. Gargano said in an interview. "Larry Silverstein has been making payments and he has been cooperative with the Port Authority in a very complex and challenging situation in Lower Manhattan. And I think that for us to discount the fact that we have this agreement in place is wrong."

Some critics of the redevelopment process, while not celebrating Mr. Silverstein's legal setback, hope that his difficulties might encourage state officials to rethink the whole plan, which is based on providing Mr. Silverstein with 10 million square feet of office space, as much as he had before the trade center was destroyed. With the partial verdict on Thursday in the insurers' favor, it is certain that he will not receive enough insurance money to complete the project. The shortfall may range from $1 billion to $4 billion. "We're going to have to take a fresh look at the program of 10 million square feet," said Jeremy Soffin, director of public affairs at the private Regional Plan Association. "A broader mix of uses on the site would certainly be appropriate," he said, "including residential and more cultural uses and a very high concentration of commercial, as well. It's a question of slimming it down a bit and following the market. And we don't believe there is a market for that much office space on the site."

David Dyssegaard Kallick, the coordinator of the Labor Community Advocacy Network to Rebuild New York, said: "The undecided nature of the lawsuit skewed the whole process. You couldn't say, 'What would happen if we built less,' because everyone was deferring to Larry Silverstein."

For now, there is no change to the general project plan, which is moving toward adoption next month by the Lower Manhattan Development Corporation. It calls for four buildings on the trade center site itself and a fifth office tower to replace the badly damaged Deutsche Bank building across Liberty Street. And Mr. Silverstein, 72, has never shown any sign of wavering. In a speech last December, he said, "We have the wherewithal to start and build the first phase" - the $1.5 billion Freedom Tower, which is to be finished in 2009. Following that, he said, he planned to complete a tower a year from 2010 to 2013, until his 82nd birthday. To proceed at that pace and scale, however, he needed to persuade the courts that he was entitled to twice the face value of the $3.55 billion of insurance he carried on the trade center, which he took over in July 2001 on a 99-year lease. The claim would be based on defining the 2001 attack, as two occurrences.

On Thursday, a federal jury determined that the liability of eight insurers was limited to the original amount, taking $1 billion off the table. Now, even if Mr. Silverstein prevails on the rest of his claims, he could expect no more than $5.5 billion to meet development costs that will be at least $1 billion greater.

That does not mean he is without resources. He could, for instance, borrow against existing buildings. Or he could seek conventional financing. But in that case, prospective lenders would almost certainly insist on tenant commitments. From today's perspective, it is hard to see where those tenants would come from. Across Vesey Street, Mr. Silverstein is building the 1.7 million-square-foot, 52-story 7 World Trade Center without a prime tenant. And he has no prime tenant yet for the 2.6 million-square-foot, 70-story Freedom Tower, on which ground is to be broken this summer

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