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Port Authority Confronts Silverstein

The New York Post reports that the Port Authority has asked WTC developer Larry Silverstein to explain how he expects to pay his share of rebuilding costs. Now that Silverstein has lost a lawsuit against most of his insurers, the most he could receive is $4.6 billion, and it could be as little as $3.5 billion depending on how the remaining court battles play out (and he has lost all of them so far). That's a far cry from the $7.0 billion Silverstein would have received, had he persuaded a jury that the 9/11 attacks counted as two separate occurrences.

Now, $4.6 billion isn't exactly chump change, but Silverstein has already blown $1.48 billion of it on legal fees, mortgage payments, and his $120 million-a-year lease with the Port Authority. It's estimated he'd owe another $630 million on lease payments before the 1,776-foot Freedom Tower, on which he's breaking ground this summer, could start generating income.

Silverstein estimates it will cost $1.6 billion to build the Freedom Tower, but the Port Authority believes he also owes a contribution to the sub-grade infrastructure, which could run to another billion. Add it all up, and it's more money than Silverstein is known to have. Banks are unlikely to lend Silverstein any more money when the Freedom Tower as yet has no principal tenant.

The bet here is that the Port Authority will have to find a way to buy Silverstein out of his lease.

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