Mike Sees City Taking Control At Ground Zero

The Bloomberg administration is pursuing a strategy to take over the World Trade Center site that will likely increase pressure on developer Larry Silverstein to abandon his interests in the rebuilding effort, according to a Port Authority source familiar with the city's position.

Mr. Silverstein, who headed a consortium that signed a 99-year lease on the site six weeks before the terrorist attacks of Sept. 11, has asserted his right to rebuild without reducing the 10.5 million square feet of office space or 600,000 square feet of retail space that existed in the complex. That condition has vexed rebuilding authorities, who must also set aside property for a substantial memorial, a massive transit hub and a restored street grid on the 16-acre site.

But now, sources say, there has been progress in talks between the Port Authority and Deputy Mayor Daniel Doctoroff about a proposed swap that would trade the 16 acres at Ground Zero, owned by the Port Authority, for the land beneath Kennedy and La Guardia airports, owned by the city and leased to the Port Authority. Those talks are part of an ambitious scheme to wipe the slate clean at Ground Zero, allowing the city to remove many of the conditions written into Mr. Silverstein's lease with the Port Authority.

It's a strategy that could drastically alter plans for the site, provided the city can persuade Mr. Silverstein and Westfield America, the American arm of the Sydney-based global megamall developer Westfield, to give up their leases. Port Authority executive director Joseph Seymour has said that talks on the land swap would continue through the spring and reach a resolution by the summer.

Mr. Silverstein has said he doesn't particularly care if the city replaces the Port Authority as his landlord, but the pressure on him to abandon his claim on Ground Zero is likely to intensify if Mr. Doctoroff has his way at the site.

While there is little more than hushed discussion of the topic, the city would appear to have the option of condemning Mr. Silverstein's lease if it took over the deed. While there is some disagreement on the matter in legal circles, the Port Authority has asserted that since the bistate agency was created by an act of Congress, neither the city nor the state government can condemn land it controls. If the city held the deed, that would no longer be the case. The leaseholders would have to be given fair market value for the property-which several sources have currently estimated at $1 to $2 billion-but could be compelled to leave if a public benefit would be secured by kicking them out.

That severe approach is unlikely. The scenario laid out by Port Authority sources is more complex: The city would obtain the deed to the World Trade Center, along with a one-time payment still under discussion, in exchange for the land under the airports. The one-time payment that Mr. Doctoroff is proposing-which would reflect back payments on the Port Authority's lease on the airports-is somewhere around $900 million to $1 billion. Most likely, the city would attempt t