Larry Silverstein

Larry A. Silverstein (born 1932 in Bedford-Stuyvesant in Brooklyn, New York) is a real estate investor and operator and the head of Silverstein Properties Inc., a real estate development group. Silverstein is also a member of New York University's Board of Trustees. Silverstein is known for being the developer and leasee of World Trade Center towers which were destroyed in the September 11, 2001 attacks.

Background

College: New York University 1952
Husband of: Klara (married 1956)
Children: Lisa, Roger and Sharon

Other Prominent Buildings

Silverstein is most famous for his involvement at the World Trade Center. His other prominent projects:

11 West 42nd Street
One River Place(42nd Street west of 11th Avenue)
Two River Place
120 Broadway
120 Wall Street
529 Fifth Avenue
570 Seventh Avenue
Ronald Reagan Building, Washington, DC - Developer

World Trade Center lease

In 1980 Larry Silverstein won a bid to buy the last undeveloped parcel from the Port Authority of New York and New Jersey to build 47-story 7 World Trade Center.

During the 1990s, New York was suffering from the effects of Black Monday (1987) leading to high vacancy rates at the World Trade Center. George Pataki became governor of New York in 1995 on a campaign of cutting costs including privatizing the World Trade Center. A sale of the property was considered too complex, so it was decided by the Port Authority to open a 99-year lease to competitive bidding.

In January 2001, Silverstein via Silverstein Properties along with Westfield America made a $3.2 billion bid for the lease to the World Trade Center. Silverstein was outbid by $50 million by Vornado Realty. However, Vornado withdrew and Silverstein's bid closed on July 24 2001, just seven weeks before it was destroyed in the September 11, 2001 attacks.

The deal was described in a press release on July 24 2001, as:

"Silverstein Properties, Inc., and Westfield America, Inc. will lease the Twin Towers and other portions of the complex in a deal worth approximately $3.2 billion – the city's richest real estate deal ever and one of the largest privatization initiatives in history. 'Governor Pataki, Acting Governor Difrancesco Laud Historic Port Authority Agreement To Privatize World Trade Center' Port Authority Press Release, July 24 2001"

The lease agreement applied to World Trade Center Buildings One, Two, Four and Five World Trade Center, and about 425,000 square feet of retail space. Silverstein put up only $14 million of his own money 'Double Indemnity: Was the WTC disaster one incident or two?' Alison Frankel, The American Lawyer, September 3 2002. Silverstein was also given the right to rebuild the structures, should they be destroyed.

September 11, 2001 attacks

When the attacks occurred, Silverstein was at home debating with his wife about plans to move his headquarters to the 88th floor of the North Tower. His son Roger was at 7 World Trade Center but was not hurt. 7 World Trade Center is said to have caught fire when debris fell from the North Tower. The building collapsed shortly after 5 p.m. -- 8 hours after the attack.

Dispute with Insurers

As a private developer with a 99-year lease on the World Trade Center, Silverstein insured the property. Following the September 11, 2001 attacks, he sought payment for the destruction of the towers as two incidents. The two dozen insurers held that it was one incident. If it were considered to be a single incident, the payout would be $3.55 billion and if it were two incidents, it would be $7.1 billion. Silverstein sued the insurers. On December 6, 2004, a federal jury ruled in favor of Silverstein giving him an additional $1.1 billion from nine insurers, declaring it to be two "occurrences". However, in a previous trial, a different federal jury delivered a mixed verdict which highly favored insurers on April 29, 2004

At dispute in the trial were interpretation of standard forms used in the application for property insurance and when particular insurers saw which documents.

In total, Silverstein was awarded nearly $5 billion in insurance money following the destruction of the Twin Towers . 'Charges Of Greed Surface Following Breakdown Of WTC Talks', NY1 News, March 15, 2006.

Negotiations to rebuild at the World Trade Center site

Silverstein had the legal right to rebuild office buildings including the Freedom Tower at the World Trade Center site and while the site is unoccupied, he continues to pay $10 million per month in rent to the Port Authority of New York and New Jersey. After several months of negotiation in April 2006, he yielded some of those rights back to the Port Authority.

Ground was broken on the construction of the Freedom Tower on April 27, 2006. Construction Begins at Ground Zero, Washington Post, April 28, 2006 What had prevented the construction from starting earlier was the lack of financing. The proceeds of the insurance payments from the destruction of the previous buildings alone were insufficient to cover the cost of rebuilding all the planned buildings.

After the September 11, 2001 terrorist attacks, the United States Congress approved $8 billion in tax-exempt Liberty Bonds to fund development in the private sector at lower-than-market interest rates. $3.4 billion remained unallocated in March 2006 designated for Lower Manhattan, with about half of the funds under the control of Mayor Michael Bloomberg and the other half under the control of Governor George Pataki.

Negotiations were held to obtain concessions from Silverstein in exchange for allocating the Liberty Bonds to the World Trade Center rebuilding. The concessions were to give back to the Port Authority: rights to build and operate the Freedom Tower and another office tower, a share of the insurance payments, and not to contest the allocation to the Port Authority of Liberty Bonds. The Port Authority, a public agency, already has the ability to issue its own tax-exempt debt. The Port Authority will have its proposal in final form in September 2006. In return, the Liberty Bond funds were allocated to Silverstein and government agencies will be anchor tenants in his three office towers. This allows construction to commence.

In summary, Silverstein retains rights for Towers Two, Three, and Four. The Freedom Tower (designated as Tower One) will be owned by the Port Authority as well as Tower Five which may be leased out to another private developer and redesigned as a residential building.

References

External links

Larry Silverstein | Larry Silverstein

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