Larry Silverstein: Would-be saviour of a wounded city

New York City has a soft spot for its larger-than-life property tycoons. Never mind that some are rogues – Leona Helmsley ended up in jail – or, like Donald Trump, often have more braggadoccio than good taste. They are the builders of the city. They embody its entrepreneurial spirit.

One who came late in life to this champion's gallery was Larry Silverstein. For five decades, with many ups and downs, he assembled a modest portfolio of office buildings. But, raised in the Bronx, he always yearned for more. In July last year, he finally got there, when the New York Governor, George Pataki, gave him a symbolic set of keys to the Word Trade Centre.

Miraculously, Mr Silverstein, 71, had beaten several rivals to take control of the twin towers, an icon of America. Its owner, the New York Port Authority, wanting out of the property business, had sold him a 99-year lease for $3.2bn (£2bn). It was the proudest day of his life.

What transpired just six weeks later was more terrible than anyone could imagine. The towers were demolished by terrorists piloting two commercial airliners and his new trophy was turned to a smouldering cemetery. Of the roughly 2,800 who perished, several were friends and employees. Devastated but unbowed, he hired a firm of architects and vowed at once to rebuild.

And that, it seemed, was his right. The lease, after all, was his, and the city long ago accepted that its skyline was in the hands of its property giants. He had lost 11 million sq ft of office space and the rental revenues that were meant to come with them. It was natural that, with the insurance money in his pocket, he would want to replace them as fast as he could.

But that was then. As the first anniversary of the tragedy approaches, Mr Silverstein finds himself in an altogether more difficult position. In theory, this slight man with reddish brown hair and a courteous demeanour, is still in the driving seat in determining what replaces the towers. But he may not be for much longer. Mr Silverstein is about to get the boot.

Far from becoming the saviour of the wounded city, he has emerged as the man most in the way of its redevelopment. Indeed, almost everyone wishes he would go away. The insurers of the twin towers most fervently wish it, the government is beginning to wish it, and before long, even a public traditionally tolerant of their property emperors, will wish it.

Two things are happening to seal Mr Silverstein's fate. Perhaps most importantly, the public has turned fickle on him. When the Lower Manhattan Development Commission, created by Mr Pataki to oversee the redevelopment of ground zero, unveiled a first set of six proposals for the site earlier this summer, the reaction was shocking. Each of them was excoriated.

The problem was that the architects had been hemmed in by the requirements of Mr Silverstein and his lease. While honouring a public desire to leave at least a portion of the footprints of the towers untouched, they all crammed in structures of varying blandness designed principally to deliver all the office and retail space Mr Silverstein wanted to recoup.

Not since the mid-1800s when visionaries in the city commissioned projects such as the astonishingly large Central Park, has there been such a fervent desire to put commercial needs in second place. New Yorkers want something more at ground zero. They want a fitting memorial to the dead and structures that fill the soul and human spirit, not a single developer's wallet.

On a more prosaic level, meanwhile, Mr Silverstein has got into a fight with the consortium of insurance concerns who must pay up on his policy. It is these companies, headed by Swiss Re but also comprising a large section of the insurance community in London, that are working the hardest to push Mr Silverstein out of the picture. They have, in fact, come to loathe the property developer.

Insurance claims are almost always hard to settle. But the extent of the mess in the Silverstein case strains credulity. When the terrorists struck, six weeks after he had taken control of the towers, he had not finalised his insurance arrangements.

The essence of the feud is this. Mr Silverstein contends the complex was destroyed by two separate events – that is to say, the two impacts of the pair of airliners.

He deduces this from a policy written up by Travellers Property Casualty Corp in New York. That interpretation would entitle him to about $7bn for rebuilding costs. But Swiss Re, which holds 22 per cent of the insurance , disagrees. It wants to treat what happened on 11 September as a single event. If so, Mr Silverstein can expect to receive $3.5bn, if he is lucky.

Unable to come close to any compromise, the camps have turned their backs on one another and, two weeks ago, a New York judge set dates for two separate trials. The first, starting in November, will decide the single or dual-event issue. The second, which won't begin until next year, will set the sums that should be paid out.

It is not that the insurers hate Mr Silverstein personally. One director of a London insurance company involved said: "For a property developer, Larry Silverstein is a very nice man but this is a question of legal liability." But there is exasperation.

Most outspoken has been the head of Swiss Re, Jacques Dubois. What Mr Silverstein is demanding, he says, constitutues a grotesque insult to insurers everwhere. "It's an offence to the insurance industry," he said. "If you were in a car accident and got hit from the front and behind, would you then be entitled to two cars? Or if there was a 17-car pile-up, would you then get 17 cars? People have to wake up".

The Silverstein camp, in turn, has accused insurers of wanting to duck their responsibilities. "They're stonewalling the process to accomplish as long a delay as possible to avoid their obligations and prevent the rebuilding of downtown Manhattan," said one of his aides.

A long court struggle will indeed delay the most important building project of the city's history. Which is why pushing Mr Silverstein out of the picture is beginning to look like a sensible solution.

The process was started three weeks ago, when the Mayor, Michael Bloomberg, suggested giving the ground beneath New York's La Guardia and John F Kennedy airports to the Port Authority, which, in return, would relinquish ownership of the Trade Centre site to the city. The next obvious step would be to buy out the lease from Mr Silverstein. Mr Dubois, of Swiss Re, said: "We think it is a good idea for the Authority of New York to be solely responsible because the beneficiaries of the insurance would be the people of New York."

New York is not used to treating its moguls this way. But it would not just be insurers who would applaud. The city would then be free to build exactly what it likes at ground zero. It would be up to the architects to deliver the inspiration.

PLANS FOR GROUND ZERO

By Paul Peachey

Memorial Plaza The plaza features an eight-acre open space and includes a memorial and a museum. The plan also includes a tall tower and five office blocks.

Memorial Square A 10-acre square to include "a range of cultural and memorial spaces" will be created as well as a new cultural district or park and four office blocks.

Memorial Triangle The five-acre triangular open space surrounded by memorial buildings would include a public pavilion on the footprint of the north tower.

Memorial Garden Four acres of open space would house memorial and cultural spots. Five office towers would also be built.

Memorial Park A new six-acre park partly placed on a deck. As well as office space, a 1,500ft-high beacon would be built.

Memorial Promenade An 18-acre promenade would connect a museum to be built on the site to a park lined with trees to remember the victims.