Port Authority as real estate speculators

From the NY Times:

The developer and philanthropist Larry A. Silverstein has cut a striking figure in New York City. He owns the H.M.S. Bounty-size yacht favored by his peers and has dominated the rebuilding of ground zero for a decade.

Along the way, he has internalized a developer’s rule of thumb in New York: Only a rube puts much of his own money at risk.

Billions of dollars in Liberty bonds, insurance money, developer fees: Year after year, Mr. Silverstein has shaken the public tree and benefits have fallen to the ground.

Construction of 4 World Trade Center is completed and it stands about half empty, with commitments from just two tenants: New York City and State. Now Mr. Silverstein wants to complete his 70-something-story 3 World Trade Center. He has found just one prospective tenant for it.

City and state officials, ever helpful, agreed to give that company, GroupM, a $15 million cash subsidy and tax breaks worth about $75 million.

Now Mr. Silverstein wants to shake the tree again. In March, as Charles V. Bagli reported in The New York Times, he asked the Port Authority of New York and New Jersey to guarantee up to $1.2 billion of his construction loans. The authority’s board could vote on the proposal this month.

As chutzpah, this was impressive. As public policy, it was less salutary.

Kenneth Lipper is a board member of the Port Authority, a former deputy mayor under Edward I. Koch, an investment banker and a novelist with a keen eye for currents of power, municipal and financial.

In an interview on Monday, he described how the board had signed off this winter on a capital plan, carefully assigning priority to rebuilt bridges, a new terminal at La Guardia Airport and — Mr. Lipper’s personal favorite — the rebuilding of that corroding pile of metal and concrete that is the Port Authority bus station in Midtown.

Then Mr. Lipper saw the request from Mr. Silverstein.

“Am I in ‘Alice in Wonderland’?” he recalled thinking. “I wanted to get a modern bus terminal built and we’re talking about putting $1.2 billion into a private developer, in which he gets the gain and we take the hit?

“Is it the role of an agency representing taxpayers and toll payers to speculate in real estate?”