Esquire vs. The Audit on Ground Zero Coverage

Raab, Longobardi trade shots on Silverstein, Rubenstein, the Port Authority and lack of progress

Editor’s Note: In a recent two-part edition, The Audit roundly castigated the press for what we believe has been a dismal job covering the reconstruction of the World Trade Center. We took issue with repetitive and undeservedly positive profiles of the trade center’s leaseholder, Larry Silverstein, and said the Financial Times, Esquire and the New York Post in particular were played “like a circus organ” by Silverstein’s publicist Howard Rubenstein.

Scott Raab, author of a lengthy series on ground zero for Esquire, asked for some space to respond.
In the interest of improved ground zero coverage, and of providing a home for reasoned debate about business-press issues, we set up a debate between Raab and Elinore Longobardi, the author of The Audit pieces. The last word is Raab’s.

Raab:

I‘ve worked since April 2005 on a series of stories for Esquire about
rebuilding the World Trade Center, so I’d like to challenge the
assertion that Howard Rubenstein has “played (me) like a circus organ.”

To repeat and emphasize one point, at no time have I or my editor
dealt
with Howard Rubenstein or anyone from his agency during the two and
a
half years we have been reporting about rebuilding the World Trade
Center. From the beginning, in April 2005, we have dealt directly
with
Larry Silverstein and Dara McQuillan at Silverstein Properties. No
one
else. And neither Silverstein nor McQuillan ever asked for or
received
any control whatsoever over the range of reporting or the work
itself.

Esquire set out to write about the more practical aspects of
building a
superskyscraper, i.e., the Freedom Tower, on contested ground.
Shortly
after we began, the Freedom Tower project was thrown into chaos for
several reasons both familiar already to anybody who cares and not
directly relevant to the point — which is that, in addition to
writing
about the actual work of designing, engineering, and building the
building, we were also writing about politics, real estate, and
governance.

“Deeply misguided” as my reporting and conclusions may appear to Ms.
Longobardi, I’ll stand by it and them. Over the course of my
experience
on this story, I’ve talked with folks, on or off the record, at
every
major public agency and private contractor involved in the
rebuilding
and many of the minor ones, and I’ve followed the relevant work of
my
colleagues at The New York Times, The Wall Street Journal, and elsewhere. It’s a
big,
big story, and there’s plenty to get wrong and plenty to debate.

Still, for anyone to assert, after watching the events of the past
few
years unfold at ground zero, that the Port Authority and Silverstein
Properties were not involved in a long, vicious war; or that George
Pataki did not first search in vain for a way to strip Silverstein
of
his leasehold, and then seek to control almost every aspect of the
Freedom Tower project; or that Mike Bloomberg finally opened his
mouth
about ground zero in order to serve the best interests of New York
City—for anyone to assert any of those things, much less all of
them
— is laughably ignorant.

As for my supposed pro-Silverstein hysteria, there’s no point in
trying
to explain the differences between magazine and newspaper journalism
to
someone who already should understand them, at least in theory. But
here’s a big one: Unlike a newspaper reporter, I don’t have to hide
behind various sources to mask my own earned authority, and I don’t
need to balance sock-puppets to maintain the illusion of
objectivity.


Elinore Longobardi replies:

The purpose of this call-and-response is not to score points, but to clarify issues and improve ground zero coverage going forward.

We are happy to concede that we erred in saying that Raab was played like a circus organ by Silverstein and his external PR consultant Rubenstein.

But this to us is a form of hair-splitting. The press has been played at ground zero, let’s put it that way.

We say it is a serious mistake to accept and repeat what is by now an obviously false myth that Silverstein is, or ever was, qualified to rebuild ground zero and that he is in any
sense a victim of the state, rather than an extraordinary beneficiary.

Silverstein was, and is, inexperienced, underinsured and undercapitalized. To say he is scrappy or whatever is probably true but also irrelevant. The proof is that hole at the corner of Church and Liberty Streets.

We believe journalism’s problems at ground zero stem from its general failure to see the story for what it is: a fight over money. This is a business story. If the money isn’t the only story, it’s certainly part of it, a big part. In fact, all the major aesthetic, political and social debates about the site have been driven by Silverstein’s tangled and inadequate finances.

A couple of quick points:

Raab’s assertion that the Port has conducted a “five-year, scorched-earth war” against Silverstein is just false and ignores the record. The Port supported Silverstein in his misguided fight against insurers. It used vital insurance proceeds to buy out Silverstein’s retail partner, Westfield America, and his lender, GMAC, and returned Silverstein and his shadowy backer Lloyd Goldman their equity in late 2003. The Port allied with Silverstein—against the Lower Manhattan Development Corp., civic groups, local residents and others—in demanding that the development include ten million square feet of office space. The Port and Silverstein were—and are, today—legal and financial partners, even though the Port could have found Silverstein in default on September 12, when his lack of financial capacity to rebuild ground zero was obvious. His lack of development skills would become apparent later.

In 30,000 words, Raab provides no evidence for an assertion that fatally mis-frames the problems at ground zero. And the reason he provides no evidence is that, while it fits a pro-Silverstein storyline, it’s not true.

We fear this is an access issue. During the course of Raab’s four stories, the Port, which has all the PR legerdemain of the big, dumb, bureaucratic and unaccountable government agency that it is, gave him only one official interview—noted at the end of his June 2007 piece, in which he includes one quote from the Port chairman. Compare this to quote after quote from Silverstein. This is not just a problem in Raab’s pieces. Throughout the press, the more Silverstein talks, the better his coverage seems to be. But just because Silverstein is talking doesn’t make what he says either new or true.

The extent of Raab’s and others’ financial analysis is to repeat endlessly the fact that Silverstein makes his lease payments. This is Silverstein’s line. But those payments are from insurance proceeds, a finite and already-too-small pool of money that dwindles with each hour the developer dithers.

The New York Observer writes that Silverstein got $4.55 billion in insurance proceeds. But he’s wasted way more than any additional sum he may have won in litigation.

We wish there were more emphasis on Silverstein’s lease, signed in July 2001, which has been kept in place as if it were holy writ despite the fact that it was written for buildings that no longer exist. It is the lease that drove Silverstein’s longstanding, now-abandoned “requirement” for ten million square feet of office space, and which physically distorted all planning on the site.

Deborah Sontag’s long recounting of progress—or lack of it—at ground zero, published in The New York Times on the fifth anniversary of 9/11, has some insightful comments on Silverstein’s claim to the site. Here is an example:

‘They could have gotten Larry out,’ [former director of the Lower Manhattan Development Corporation Roland W.] Betts said. It would have meant writing a check, [co-chairman of Brookfield Properties Corp. John E.] Zuccotti said, but it could have been done. Robert D. Yaro, president of the Regional Plan Association, said the mayor and the governor ‘could have gotten in a room with Larry Silverstein and said, “You’re out of here.”’

So why didn’t they? Sontag continues:

But Mr. Yaro said the Port Authority had multiple motivations for retaining the Silverstein lease. ‘They saw it as their key to hanging on to the site,’ he said. ‘They were afraid of losing control to the city or the state.’

Another important point from Sontag’s story:

Although the public would not realize it for some time, there was little room for any wholesale reimagining of the World Trade Center site once the Port Authority made the decision to respect Mr. Silverstein’s lease.

We pause for a moment to take note of the word “decision.” To continue:

‘You had this very quiet, very rapid elimination of the idea that it could be something other than 10 million square feet of office space plus a decorative necklace of ancillary institutions,’ said Michael Sorkin, director of the graduate urban design program at City College of New York.

And one more from Sontag:

[In early 2002], it came to light that the government was treating Mr. Silverstein’s lease as sacrosanct, that it wanted to replace the 10 million square feet of office space that was lost.

‘This was a disastrous decision, and no one could believe it,’ said Mr. Yaro of the Regional Plan Association.

The upshot? Because Silverstein’s lease went unchallenged—until the renegotiation in 2006—the Port and Silverstein were honest-to-goodness partners for a long time. Uneasy partners, yes. But partners nonetheless.

All along, Silverstein has had a financial incentive to create the appearance of forward motion. And “appearance” is the key word here, because not then and not ever did Silverstein demonstrate that he had the money to rebuild. Alas, the press has bought this bill of goods. “The Port Authority and Pataki,” wrote Raab in 2005, “both have stonewalled Larry Silverstein since 9/11.”

As for Pataki, he was Silverstein’s closest ally and biggest supporter—until late 2005,
when it became clear to even that inept and timid governor that he would not have the Freedom Tower as his administration’s legacy.

In April 2006, during negotiations to split the site—and finally rewrite the lease—the Daily News took note of Pataki’s growing impatience with Silverstein:

Gov. Pataki, who has been Silverstein’s closest political ally, has also tired of Silverstein’s delays.

The 2005 and 2006 negotiations did expose public anger on the part of state and city officials against Silverstein. But the point is that this acrimony—finally extreme enough to lead to action—represented a shift in alliances that had stood (even if shakily) since the towers fell. Raab’s first piece appeared in September 2005, and he may not have looked closely enough at what had come before.

By the way, we agree with Raab that the Port is sclerotic, opaque, secretive, incompetent, and mean. But that doesn’t mean Silverstein isn’t incompetent, underinsured, greedy, inexperienced, undercapitalized, and the weirdest kind of 9/11 entrepreneur.

And, on the positive side, we do give Raab credit for talking with the workers who are down in the construction pit and who will ultimately rebuild the World Trade Center. In fairness to Raab, his articles were not just about Silverstein, but also about the tough work of building at the ground zero site. He introduces us to some compelling characters and offers valuable glimpses into the lives of people who are playing important roles at ground zero, but who aren’t politicians or developers. We commend him for venturing out of the cubicle. Especially because we don’t hear enough in the press about how the buildings are going up.

But still, we must take issue with his reporting on Silverstein and the finances of the project—on the forces above the workers in the pit, the forces that are really driving the story.

We’re delighted Esquire has made the commitment to continue coverage, and we, seriously, have every confidence Scott Raab and others can help bring the historical record into focus.
To help push ground zero coverage foward, here are a few questions we’d ask Silverstein and the Port:

1. How much in insurance proceeds has been spent to date?
2. How much is left?
3. How much has Silverstein received in development fees and expenses?
4. How much has he paid out in legal fees to Wachtell Lipton and others?
5. How much equity does Silverstein currently have in the project?
6. Who will control ground zero upon Silverstein’s death or retirement?

Raab’s final word:

The “legal and financial” bond between the Port Authority and
Silverstein Properties is not evidence of a friendly partnership; it
is the very basis of the landlord-tenant battles I describe. That both
parties sought to rebuild the 10 million square feet of office space
destroyed on 9/11 is, likewise, the foundation of their war for control
of the rebuilding process, not a sign of bliss.

Whether the Port “could have found Silverstein in default on Septermber
12” is open to question. I myself have zero doubt — and I imagine that
the PA would agree — that Larry Silverstein would have questioned such
a finding, in court and with all the means at his disposal.

Blaming Silverstein for “that hole at the corner of Church and Liberty
Streets” grants Silverstein far more power than anything I’ve written
on the subject. He neither picked the idiotic “master plan” that
seduced George Pataki, nor decreed that the Freedom Tower must come
first, nor ignored the NYPD when they first tried to raise the alarm
about the security flaws in that building’s prior design. To suggest
that Pataki and his appointees — at the PA, the LMDC, and the Empire
State Development Corporation — have somehow been Silverstein’s
hapless victims, while Larry himself has been their “extraordinary
beneficiary,” is stunning in its denial of reality. As the leaseholder,
Silverstein had a seat at the table — a 99-year, $3.2 billion seat —
and he either outplayed or outbluffed the PA, Pataki, and the Bloomberg
administration. Whether this makes Larry more or less heroic or
villainous than Goldman Sachs — now there’s an “extraordinary
beneficiary” of bureaucratic ineptitude — is a matter of opinion.

I have written about all of this — and plenty more — in my 30,000
words. And I don’t think it’s sour grapes to say that for any
journalist to read the Esquire series and conclude that I’ve offered
“no evidence for an assertion that fatally mis-frames the problems at
ground zero” says far less about my own work than it says about
journalistic prejudice. Taking issue with my failure to parse the finer
details of Silverstein’s years-long legal struggle with his WTC
insurers, and his use of the insurance proceeds, is valid — although I
think it’s only fair to acknowledge that I write for a far-flung
general-interest readership — but to insist that this failure is
sufficient to dismiss my work is nonsense. Rather than proof of the
Port’s largesse, its “support” of Silverstein’s litigation against his
insurers consisted of collecting $120 million per year in rent on the
empty pit out of those “vital proceeds.” And it is — in my opinion, at
least — worth noting that a few yards north of “that hole” stands 7
World Trade Center, a very nice office tower that Silverstein managed
to design, build, and lease, without any help at all from George Pataki
or the Port Authority.

**********

Access is always an issue on any story. My access to Larry Silverstein
himself has been limited, but Silverstein Properties understands that
rebuilding ground zero is a matter of genuine historical importance,
and they have let me do my job without asking for favor or refusing my
requests for help — even when they have taken issue with my work.

The way the Port Authority deals with the press — or simply chooses
not to deal — is no anomaly. They prefer not to answer to anybody; the
PA, in fact, was created and designed to answer to no one. But over the
two and a half years that I’ve worked on the WTC rebuilding, I have
talked repeatedly and at length with off-the-record sources whose
knowldege of the Port and its role at ground zero derives from
first-hand, intra-agency experience. This can’t balance the quote
count, but it is nonetheless germane.

**********

One final word: Phrases like “the press has been played” and “violating
basic journalism standards” at some point sound less like accusations
of laziness or naivete and more like attacks on the targets’ honesty
and integrity. Two of journalism’s most vital tools — two of life’s,
actually — are a clear mirror and the guts to look into it.

Dean Starkman Dean Starkman runs The Audit, CJR's business section, and is the author of The Watchdog That Didn't Bark: The Financial Crisis and the Disappearance of Investigative Journalism (Columbia University Press, January 2014). Follow Dean on Twitter: @deanstarkman.