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February 16, 2003
Trade Center Developer Objects to City's Insurance Talks
By CHARLES V. BAGLI
Larry A. Silverstein, the developer who controls the World Trade
Center lease, claims that his effort to get the largest possible
insurance settlement to rebuild Lower Manhattan is being undermined by
With public officials on the verge of adopting a development proposal
for the site, Mr. Silverstein has complained in recent weeks that despite
his legal obligation to rebuild the trade center he has been shut out of
the planning process. At the same time, he said he has been undermined in
his negotiations with the 23 insurance companies that provided coverage
for the trade center.
Mr. Silverstein is battling the insurers in court, claiming that there
were two separate attacks on two buildings at the trade center, entitling
him to a double payment of nearly $7 billion that he would use for
In what one participant described as a confrontational meeting at City
Hall on Thursday, Mr. Silverstein told Mayor Michael R. Bloomberg that
the city's plan to take control of the 16-acre site and billions of
dollars in insurance proceeds was unrealistic, according to people on
both sides who were there.
According to an executive who had been briefed on the City Hall
meeting, Mr. Silverstein also objected to contact between the insurance
companies and City Hall that he said undermined his efforts. That was a
reference to what Mr. Silverstein believes were secret negotiations
between Daniel L. Doctoroff, the deputy mayor for economic development, and
Jacques E. Dubois, chairman of Swiss Re America, the largest of the
insurers, over a possible insurance settlement, said the executive who
had been briefed.
Mr. Doctoroff, who attended the City Hall meeting, acknowledged that
he had met with Mr. Dubois, but said the discussions were for
informational purposes and did not constitute secret settlement
"I have met with Jacques," Mr. Doctoroff said on Friday,
"just as I've met with every party in this thing, to understand the
Mr. Silverstein was on his yacht over the weekend and unavailable for
comment. Michael McNamara, a spokesman for Swiss Re, said: "We have
meetings with many officials, both public and private. We don't comment
on those meetings. We intend to be a good corporate citizen."
Mr. Doctoroff has met Mr. Dubois before, over the city's Olympic bid.
In December 2001, Swiss Re pledged to contribute at least $100,000 to
NYC2012, a group founded by Mr. Doctoroff to promote the city's bid to be
the host of the 2012 Olympic Games. Mr. Doctoroff resigned from the group
after he became deputy mayor.
Mr. Bloomberg has outlined a vision for Lower Manhattan that is at
odds with Mr. Silverstein's. The mayor has proposed that the city take
over the trade center site in a land swap with the Port Authority of New
York and New Jersey, which currently owns the land. Under this plan, the
city would buy out Mr. Silverstein and get the insurance proceeds, which
could be spent on housing, transportation and other things both off and
on the site. The mayor's plan envisioned negotiating a $5 billion
insurance settlement. Mr. Doctoroff said that the number was merely an
estimate and not the result of discussions with Swiss Re.
But Mr. Silverstein told the mayor that the city's plan was not
Six weeks before the terrorist attack on the trade center, Mr.
Silverstein completed a deal with the Port Authority of New York and New
Jersey valued at $3.2 billion to lease the twin towers for 99 years. His
partner, Westfield America, leased the 450,000-square-foot underground
Mr. Silverstein said that under his lease, he is obligated to rebuild
the 10 million square feet of office space that once stood at the trade
center. But the two rebuilding proposals currently under consideration
depict far less commercial space on the site. Mr. Silverstein contends
that anything less than 10 million plays into the hands of the insurance
companies, because they pay correspondingly less money.
"They're going to have to be tweaked to get up to 10 million
square feet," Mr. Silverstein said of the proposals.
His legal battles with the insurance companies have involved months of
litigation and a host of claims and counterclaims, mostly expressed in
dry legal terms. But Swiss Re has been unusually personal and vitriolic,
describing Mr. Silverstein as a rapacious developer whose insurance
claims are "extortionate" and a "self-motivated
Last August, Mr. Dubois of Swiss Re expressed enthusiasm for Mr.
Doctoroff's land swap proposal. "I think it's an opportunity for the
city to take charge of the site," he said, adding, "We'd be
much more amenable in our negotiations if we thought the beneficiaries
were the people of New York, rather than someone claiming a huge
The remarks prompted one lawyer to wonder how an insurance company
could offer two different settlements depending not on the insurance
contract, but on the identity of the recipient.
The Silverstein camp expressed outrage, suggesting that Mr. Doctoroff
was doing the work of the insurance companies, an industry with which he
was familiar during his career as an investment banker.
2003 The New York Times Company