The Larry Silverstein Story, Continued….

Esquire joins the Financial Times in fantasyland

Second of two articles

Coverage of Larry Silverstein is the object of much consternation here at The Audit. Why do marquee papers still publish the same old fluff about him, violating basic journalism standards? As if it didn’t cause any harm? This is pack journalism at its worst.

Perhaps certain publications and their employees have lived in the alternate universe of ground zero non-development for so long that what would seem odd under other circumstances seems perfectly normal down on Liberty Street. Because reading the recent Financial Times profile (subscription) of Silverstein is like sitting down to tea with the Mad Hatter. Readers are, like Alice, “dreadfully puzzled.” “The Hatter’s remark seemed to have no sort of meaning in it, and yet it was certainly English.”

Silverstein coverage falls into two periods: the days and months after the attacks of 9/11 and then the past few years. In that first period, after the towers fell, coverage was frequently excellent even before the hellacious circumstances are considered. But more recently, we too often get the same old story.

It’s not so much that the Silverstein story has gotten worse, but that it hasn’t gotten better. His myth persists despite the fact that there has been some solid reporting on the ground zero debacle. As time passes, and more information surfaces, reporting standards go up. So a fine story in 2001 is a travesty in 2007.

Peter Grant, driven from his office like the rest of the Wall Street Journal staff, wrote a story headlined “Control of World Trade Center Towers Moved to Private Hands Just Months Ago,” which describes Silverstein’s lease, offers a brief history of leasing the Twin Towers and explains Silverstein’s investment partners in some detail.

This story, which ran September 12, 2001, holds up better than the FT piece.

Eric Herman, then of the Daily News, various reporters at The New York Times, and especially Grant all do a great job of explaining brewing disputes between Silverstein and his insurers, and his then-tenuous relations with the Port Authority of New York and New Jersey.

True, the Silverstein-as-gritty-battler profiles also emerge, but at the time, the story was a natural. Besides, he is a gritty battler. The prose seems purple in hindsight, but it reflects the emotional nature of ground zero.

The Times’s Alessandra Stanley:

Observing him as he lays the groundwork for what he described as a patriotic mission is a little like staring at an Escher print; in one blink, his persona is suffused in optimism, in another, shrewdness dominates.

The FT announces in July 2002, “Insurers have cast Larry Silverstein as a villain but the owner of the World Trade Center site tells Holly Yaeger and Adrian Michaels he wants what is best for New York.” Here the British paper errs in its headline, calling Silverstein the center’s “owner,” instead of leaseholder.

A year later, a profile by the New York Times’s Charles V. Bagli and Edward Wyatt ploughs the same ground: “At Helm of Trade Center Site,” announced the July 21, 2003, headline, “As He Always Planned to Be.”

His language and demeanor are no longer that of a mere businessman, but rather of a master builder, statesman and visionary.

Ayn Rand meets Barbara Cartland. But again, it’s still only 2003. (There is less excuse for the March 2006 Times piece, “Master of the Slow and Deliberate at Ground Zero,” which makes a virtue of the problem.)

But good work has been done; it’s been fragmentary, but it is there to be pulled together. In one of his best reporting jobs, Bagli broke the story about the late 2003 deal that gave Silverstein back most of his down payment on the World Trade Center lease, while leaving him in control of the site. The November 22, 2003, article contains a prime quote: “Only in New York,” says former city administrator Harvey Robins, “can a developer strike a deal with government to get his money back and still walk away with a prime piece of real estate.”

This important news, however, gets lost.

In February 2004, your faithful Audit editor, then at the Journal, and Alex Frangos make a modest contribution, noting that $1.3 billion had been spent at ground zero with nothing to show for it. The money had gone to Silverstein’s equity reimbursement, legal bills and development fees, and the cashing out of Silverstein’s lender, GMAC, and only credible partner, Westfield Group, the owner of the WTC’s underground mall. Both had had seen enough and wanted out.

The well-sourced Frangos continued to give voice to exasperated, unnamed Port officials who believed that Silverstein’s double-payout scenario was always a chimera and that he was incapable of rebuilding and therefore in default.

Enter Esquire, which files a deeply-misguided series of staggering length, more than 20,000 words thus far. And settle in, because in a media story about the coming piece, the Times reported that Esquire plans to publish at least two “major articles” each year until the Freedom Tower is finished.(6)

This is another example of how the benefits of access can be seriously outweighed by the risks. The Times article also reported that the magazine had spent about six weeks negotiating with “Mr. Silverstein’s public relations staff” so that, according to Esquire’s editor in chief, they would “understand what we wanted to do and trust us.”

The piece is almost hysterically pro-Silverstein; why, we cannot say. But Esquire just blows the fundamentals:

[Last year], the Port Authority of New York and New Jersey officially declared the end of its five-year, scorched-earth war against Larry Silverstein, the real estate developer who leased the World Trade Center from the PA seven weeks before 9/11 and who had battled the Port and Pataki ever since to rebuild ground zero.

It was never a fair fight. On one side, you had a three-term governor tag-teaming with a quasi-governmental monolith—the PA owns and profits from every major bridge, tunnel, and airport in the New York City metro area, issues its own bonds, and skulks behind a wall of Stalinist bureaucracy—massed to obliterate a Brooklyn-born septuagenarian who had made his bones and his first fortune by buying, burnishing, and flipping distressed office buildings.

The idea that Silverstein and the Port Authority were enemies is exactly wrong. They were in fact allies, tied by their common commercial interests in generating income to pay the lease. Their foes were the civic groups and other art lovers who wanted something other than office space on the site.

The Port-Silverstein alliance, in fact, led to the now-forgotten first plan of July 2002 that would have jammed the site with 10 million square feet of office space. The ludicrous plan was withdrawn amid public outcry, replaced by the international design competition won by Daniel Libeskind. The Port, to accommodate Silverstein, made itself a laughingstock. For Esquire to make that mistake is just strange.

Nor was Pataki a Silverstein foe, as Esquire has it. Pataki tolerated Silverstein as a convenient buffer. Ousting him would have put responsibility for the project right on the governor, where it belonged. Pataki was not interested.

In its pro-Silverstein zeal, Esquire goes as far as to accuse the state of committing “blood libel” against him:

Larry was betraying the memory of the 9/11 dead—and in so doing, helped affirm 9/11’s most costly lesson: From the Hudson to the Tigris—whatever treasure, truth, and blood it costs—wielding national tragedy as a blunt political weapon is hunky-dory.

No direct quotes are offered. But no one was quicker to wave the bloody shirt of 9/11, and the memory of four Silverstein employees killed in the Trade Center that day, than Silverstein and his PR hack, Howard Rubenstein. Silverstein mentions their deaths as motivation at every opportunity.

By late 2005, Mayor Mike Bloomberg can’t stand it any more, and to the Daily News editorial board says for the first time publicly “what many Ground Zero players have whispered privately for months,” according to the News’ Dave Saltonstall: essentially, that New York would be better off if Silverstein’s default were declared and a developer with the means and experience in complex mixed-use development hired.

One could do worse than the real estate giants that the gritty-but-incapable Silverstein beat in 2001: Steve Roth’s Vornado, Mort Zuckerman’s Boston Properties, and the publicly traded giant Brookfield Properties, all many times more experienced in large-scale, mixed-use development and better capitalized than Silverstein’s relatively tiny, closely held company.

Frustration with the lack of progress and other issues triggered a new round of What-about-Larry questions in late 2005 and early 2006, resulting in still more talks with the now lame-duck Pataki administration and a second sweetheart deal: The Port takes off Silverstein’s hands the unrentable Freedom Tower project—while still paying him to build it—and gives him the three best parcels.

Frangos at the Journal put it succinctly:

Despite agreeing to what Mr. Silverstein called ‘real concessions,’ the proposed pact is a big win for the developer and his investors.

The article goes on to note Silverstein’s 2003 equity-reimbursement deal, then summarizes Silverstein’s most recent coup:

Now, he will be relieved of the most difficult to build and worst-located Freedom Tower and gets to keep the three best-located towers.

Combine this with government promises to rent substantial portions of his buildings, and Silverstein would certainly appear to have quite a deal. Other voices offer second-thoughts on entrusting a project of such dimensions to Silverstein. In 2006, New York Magazine’s John Heilemann finally says that Silverstein wanted to make money more than he wanted to act in the public good. “Well, duh,” writes Heilemann. “For more than four years now, in every setting, Silverstein has behaved like a real-estate developer.”

More reporters should have read Peter Slatin’s November 2005 story on his online publication, The Slatin Report, in which he speculated on Silverstein’s negotiating tactics. He quoted a “seasoned downtown observer” as saying that “the more involved Silverstein stays in it, the more it can be perceived that he has a right to major compensation if he has to walk.”

Slatin follows this quote with his own opinion that “Silverstein appears to be maneuvering for a high-cost exit while also making a fully credible show as the archetypal New York developer by squeezing out the last dollar from anyone wandering into his orbit.” This may have been speculation, but if we believe Frangos’s take on the situation, then Slatin was prescient. Silverstein didn’t walk completely, of course, but he received considerable compensation for relinquishing part of the site.

Scott Raab of Esquire must explain Pataki and the Port’s generosity after their “five-year, scorched-earth war.”

Here goes: “In the end, there was no contest: Larry Silverstein kicked Pataki’s ass and the Port Authority’s,” Raab wrote last June.

We don’t know what Esquire was trying to achieve and we don’t care.

But the FT, even if it wants to write the same Silverstein profile, cannot at this late date ignore Silverstein’s role in the sad story of ground zero.

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Elinore Longobardi is a Fellow and staff writer of The Audit, the business-press section of Columbia Journalism Review.