Date: Tue, 4 May 2004 21:48:03 -0400 (EDT) From: Louis Epstein Subject: WTC Rebuilding #298:Silverstein Loses Swiss Re,Trump Gets Radio Show A budget analysis of Bloomberg's West Side plan is not too cheerful: http://nypost.com/news/regionalnews/19915.htm of course making it work is a reason he's against making WTC rebuilding full scale. His likely election opponent next year,Fernando Ferrer, is critical of the West Side plan: http://nypost.com/news/regionalnews/19921.htm Haven't heard (or tried to influence) his WTC views. The Post's Steve Cuozzo sees Silverstein's defeat on insurance as a reason to rally BEHIND the Libescheme: http://nypost.com/news/regionalnews/19999.htm ...he only considers those who hate the official plans for reasons opposite to ours! And yesterday as expected Silverstein lost the case on the last and largest of the insurers covered in the current trial: http://nypost.com/news/regionalnews/23725.htm This is covered in greater depth in the following two articles I received from Cecil Shepherd,one from the NY Times and the other from Bloomberg News. Silverstein continues to wrap himself in the mantles of Libeskind and Pataki,though Pataki may well be out of office before anything opens on the site. Sobering to hear that his LEGAL BILLS have amounted to $1,000,000,000 already,if the radio this morning was correct! \----------------------------------------------------------/ U.S. Jury Limits Payout of Trade Center's Biggest Insurer May 4, 2004 By CHARLES V. BAGLI A federal jury in Manhattan said yesterday that the single largest insurer at the World Trade Center was limited to a single payout of $877 million, not the double payment sought by the developer Larry A. Silverstein in his long-running legal battle over the downtown complex. It was another blow to Mr. Silverstein's 29-month campaign to collect $7.1 billion for rebuilding the trade center site and one that could ultimately force him to settle with 10 remaining insurance companies. Last week, the jury ruled that eight of the two dozen insurers at the trade center were not liable for double payments. Mr. Silverstein, who has spent well over $100 million on legal fees, argued that the insurers had switched to a policy known as the Travelers form, which he said would view two planes slamming into two different towers at two different times as two separate attacks, entitling him to two payments. But the largest insurer, Swiss Re, contended that Mr. Silverstein, who acquired a 99-year lease of the trade center only six weeks before it was destroyed, had created a "self-motivated hoax" to enrich himself. The jury said yesterday that Swiss Re, like 13 other insurers, had committed to providing insurance based on a proposed policy devised by Mr. Silverstein's own brokers, which was known as the Wilprop form. The jury's latest decision reduces the maximum possible payout to $4.5 billion, if Mr. Silverstein wins every remaining legal battle, including a second trial that could start in August. "We got a great outcome today," said Jacques E. Dubois, chairman of Swiss Re, who has traded barbed comments with Mr. Silverstein over the past two years. "It confirmed the view we held from the beginning. We bound on Wilprop, and the jury agreed." An ebullient Mr. Dubois, who had frequently attended the 10-week trial, rushed to the courtroom yesterday, getting there shortly after the jury returned its verdict. Mr. Silverstein, who has suffered a string of defeats in the case, declined requests for an interview. In a statement he issued later in the evening, he said: "I am disappointed that the jury did not see things our way with respect to most of the insurers in the W.T.C. coverage. Whatever happens in court, we are determined to rebuild the World Trade Center, under Governor Pataki's leadership and in keeping with the master plan." Both Mr. Silverstein and the Port Authority of New York and New Jersey vowed to move forward with the rebuilding process regardless of the outcome of the trial. Mr. Silverstein has already begun work on the first of five towers proposed for the site. There is also $2 billion in federal funds and insurance proceeds available for the reconstruction of the transit center at the site. Rebuilding officials expect to raise the money for the memorial and two cultural buildings from private donations and federal funds. "Of course we are disappointed in the outcome," said Joseph J. Seymour, executive director of the Port Authority. "However, Silverstein Properties is moving forward with construction of the Freedom Tower. In addition, federal funding to build the World Trade Center transportation hub designed by Santiago Calatrava has already been set aside." A spokeswoman for Gov. George E. Pataki released this statement: "We will move forward with the rebuilding. Nothing will stop us from keeping our commitment to the heroes we lost on that day." But with the estimated cost of rebuilding the trade center at $9 billion, there are doubts about how soon, or even if, the four other office buildings at the site will be built. In addition, Mr. Silverstein's ongoing role at the trade center has been a hot topic for two weeks at City Hall, at the Lower Manhattan Development Corporation and among commissioners at the Port Authority. City and state officials say that there is now increasing pressure on both Mr. Silverstein and the 10 remaining insurers to settle the dispute before the trial this summer, rather than wasting more money on legal fees. But Mr. Silverstein expressed no misgiving yesterday. "We are ready to move on to the second phase of the trial against 10 insurers with more than a billion dollars worth of per-occurrence coverage," he said in his statement. "We feel the evidence is strongly in our favor and look forward to our next day in court." Mr. Silverstein won control of the trade center in July 2001 through a combination of luck and determination. The 99-year lease was valued at $3.2 billion, although the developer put up very little of his own money, about $14 million. Under the terms of his lease, he has continued to pay about $120 million a year in rent with in insurance proceeds, and retained control of the site, in part, because no official wanted to upset the chances of his success in the lawsuit. But with Mr. Silverstein now seemingly unable to fulfill his obligation to fully rebuild the 10-million-square-foot trade center, many officials say it may be time to remove him. "You'd have to be blind not to realize that Larry losing the lawsuit changes his power in the overall equation," said one official active in the rebuilding process. "This has never been about Larry. It's about redeveloping the site." A city official who requested anonymity suggested that it was wiser to allow Mr. Silverstein to build the first tower, at an estimated cost of $1.5 billion. The other office sites could be sold to other developers when there are tenants. "You've got to let him save face," the official said. "They've got to cut a deal where he remains the developer of the first building, with a profit interest, and then cut him loose." No one has come to a conclusion, but a top Port Authority official said it was clear that it was time to redefine the terms of its agreement. "There's almost unanimous support on the board that we need to change his relationship," he said. Mr. Silverstein has told the Port Authority that no matter what happens in court there will be enough insurance money for him to build the first two commercial towers at the site. He has said he would use conventional financing for the remaining buildings. "Larry's not going anywhere," said one executive who has spoken recently with Mr. Silverstein. "He has an unconditional right in this lease to build five office towers at five locations identified in the master plan." But rebuilding officials and downtown real estate owners are also now debating how much of the 10 million square feet of office space at the trade center must be replaced. City officials, and some landlords, for instance, contend that at least one of the office sites could be used for residential development instead, given the high vacancy rate downtown. But the Alliance for Downtown New York argues that residential conversion would signal a lack of faith in downtown as a commercial district. "We can, we must, and we will rebuild," said Kevin M. Rampe, president of the Lower Manhattan Development Corporation. "This is not a responsibility contingent upon the outcome of any lawsuit but a moral obligation borne of the worst terrorist attacks in our nation's history." http://www.nytimes.com/2004/05/04/nyregion/04insure.html?ex=1084668344&ei=1&en=70ff9fa0b429be6c Copyright 2004 The New York Times Company -=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= Silverstein Partner Says Verdicts Won't Stop Trade Center Plan 2004-05-04 03:01 (New York) Silverstein Partner Says Verdicts Won't Stop Trade Center Plan By David M. Levitt May 4 (Bloomberg) -- Larry Silverstein has no plans to cede his role as the main developer of the World Trade Center site in New York, and will rely on alternative financing after jury verdicts reduced his potential insurance payout for construction by about $2 billion, a Silverstein partner said. Lloyd Goldman, Silverstein's lead investor, and officials including New York Governor George Pataki reaffirmed their commitment to the master building plan, including the 1,776-foot Freedom Tower, after Silverstein's courtroom defeat yesterday by Swiss Reinsurance Co. The Zurich-based insurer held $877.5 million, the largest share, of the leaseholder's $3.55 billion in coverage. ``The port authority wants us to live up to our lease, and we're looking to live up to our lease,'' Goldman said in an interview. The Port Authority of New York and New Jersey owns the site and issued the lease to Silverstein six weeks before the Sept. 11, 2001, attacks. Silverstein, 72, has tried to boost his payout to as high as $6.8 billion by arguing most of his insurers' policies would allow him to assert the two-plane assault on the trade center was two separate events, entitling him to double compensation. The U.S. District Court verdicts would limit the maximum he could collect after further legal proceedings to $4.7 billion. The jury found in favor of Swiss Re yesterday on the eighth day of deliberations after a 12-week trial, part of a legal battle that began 2 1/2 years ago. Previous verdicts last Thursday favored insurers holding $1.1 billion in policies and went against insurers that issued $176 million in coverage. Silverstein's Role ``We have always been convinced that the maximum payout under a loss-limit policy could never exceed the sum insured,'' said Jacques Dubois, chairman of Swiss Re America Holding Corp., the U.S. unit of the Zurich-based insurer, in a statement. Pataki has called the rebuilding plan vital to lower Manhattan's future. Since the first set of verdicts in favor of insurers including Lloyd's of London, port authority officials have fended off questions over whether Silverstein's role, or the rebuilding plan itself, may have to be reduced. ``I don't know where that idea comes from -- that's totally ridiculous,'' Goldman said. ``It'll just mean we're going to end up having to finance the later buildings rather than paying for them out of insurance proceeds. It adds another level of complexity but I don't know that it makes it harder.'' Some people think it will be harder, including Robert Yaro, regional director of the Regional Plan Association, a nonprofit group that analyzes the New York region's economic and infrastructure needs. Freedom Tower ``Silverstein doesn't have the financial resources to rebuild the site,'' Yaro said. ``We have got to rethink his role.'' Financing for the Freedom Tower, to be built by Silverstein, and a transportation hub and a memorial, which have other funding sources, won't be affected by the developers' legal setbacks, according to written statements last night from Pataki, port authority executive director Joseph Seymour and Kevin Rampe, executive director of Lower Manhattan Development Corp., the state agency overseeing the rebuilding. Those statements didn't address how the rest of the plan would be completed, nor did a statement from Silverstein, who pledged to rebuild the trade center ``in keeping with the master plan.'' Silverstein wasn't available for further comment. The Freedom Tower funding isn't at risk because it ``will cost less than what the insurance proceeds will be in any event,'' Goldman said. Port authority vice chairman Charles Gargano has estimated the cost of the tower, to be completed in 2008 or 2009, as $1.5 billion. Four More Towers Silverstein has said that after the Freedom Tower was completed, four more office towers would be finished each year thereafter, with the shortest containing 57 floors of offices. The total office space would be 10 million square feet, the same as that destroyed when the 110-floor twin towers and other trade center buildings collapsed. Goldman said the timetable ``doesn't slip. But it was never fixed in stone either.'' The financing for the four other towers, he said, would result from cash flow generated from ``the first buildings.'' William Wheaton, professor of finance at Massachusetts Institute of Technology, said private financing may not be possible. ``Nobody is going to lend him money if the rents are to pay $50 or $60 per square foot when the market is at about $30 to $40 per square foot downtown,'' Wheaton said. ``The Swiss Re verdict is all the more reason that the project in its entirety will need to be scaled down,'' he said. Watching Market Goldman said that when ``the market is appropriate, we will go to market for financing.'' Pataki said after the verdicts, ``We will move forward with the rebuilding. Nothing will stop us from keeping our commitment to the heroes we lost on that day,'' referring to the 2,749 people killed in the assault on the trade center. Pataki is scheduled to deliver a speech reviewing the state of the rebuilding plans tomorrow to the Association for a Better New York, a real estate and business-led group. The case is SR International Business Insurance Co. Ltd. v. World Trade Center Properties LLC et al, 01-CIV-9291. --With reporting by Patrick Cole, Henry Goldman, Matthew Cox and Josh Hamilton: Editors: DeMarco, Williams, Goldschlag, Sillitoe. To contact the reporters on this story: David M. Levitt in New York at (1) (212) 893-4765 or dlevitt@bloomberg.net. To contact the editor of this story: Edward DeMarco in Washington at (1) (202) 624-1935 or at edemarco1@bloomberg.net. -0- (BN ) May/04/2004 7:01 GMT \----------------------------------------------------------/ MAY 24TH is the DEADLINE for Final-GEIS comments, we may soon be distributing a "default template" comment in a tactic similar to that used by Gateway Plaza residents on the Draft-GEIS. AS MANY PEOPLE AS POSSIBLE MUST SEND IN COMMENTS! Starting next month,Donald Trump will have a radio show on Clear Channel. I don't think he's likely to set himself up in opposition to the plans favored by Silverstein,whom he admires...but I wonder if our goals might be something he'd be interested in? See you on the 111th floor on 9-11-11! -=-=- The World Trade Center towers MUST rise again, at least as tall as before...or terror has triumphed.