Gov.: Ground Zero developer ‘betrayed public’s trust’

? Plans to rebuild Ground Zero, the gaping hole in lower Manhattan’s resurgence, stalled again amid fury Wednesday – leading New York Gov. George Pataki to accuse developer Larry Silverstein of betraying New York.

Hours after talks aimed at jump-starting the rebuilding broke off in acrimony, officials were still seething – charging any spirit of cooperation was clouded by Silverstein’s greedy play for an extra $1 billion.

Silverstein Properties “has betrayed the public’s trust and that of all New Yorkers,” said Pataki, in by far his harshest comments about the developer.

“We cannot and will not allow profit margins and financial interests to be put ahead of public interest in expediting the rebuilding of the site of the greatest tragedy on American soil,” Pataki said in a statement.

There were no plans to resume talks, which suddenly ended early Wednesday after Silverstein offered a proposal that floored Port Authority and state negotiators.

Both sides had basically agreed to allow the PA to build the Freedom Tower and another building, instead of Silverstein, and for the builder to retain three choice office-tower sites on Church Street. Pataki had planned to give Silverstein $1.67 billion in tax-free Liberty Bonds if he worked out a new deal with the PA by 12:01 a.m. Wednesday.

But the negotiations – aimed at getting construction finally going 4 1/2 years after 9-11 – collapsed over big-ticket details.

They included the size of Silverstein’s rent reductions, in return for his building site givebacks; the divvying up of his $3 billion in insurance proceeds, and how to proceed if his insurers win a challenge in federal appeals court.

Charles Gargano, the PA’s vice chairman and New York’s chief economic development official, said Silverstein demanded, in essence, an extra $1 billion.

He charged that Silverstein wants “to get as much money out of the project as possible.”

Gargano added pointedly: “This is not a traditional real estate project. This is a project where thousands of people lost their lives.”

The bitter dispute threatened to slow fundraising for the WTC memorial – and dashed hopes that Ground Zero would be filled with office workers and new stores in the next few years.

Silverstein remained publicly silent until late afternoon, when he stood in the lobby of 7 World Trade Center, his soon-to-open office tower, and blamed the PA for the collapsed talks. He said he had been willing to stay at the bargaining table indefinitely.

“When the Port Authority’s representatives abruptly walked away from the negotiations … we were all shocked.

“A basic framework of a deal was at hand,” he said.

Silverstein disputed assertions he had blindsided the PA at the eleventh hour with new, higher demands. “Nothing we had proposed was a departure from what had (been) discussed previously,” he said.

Now he’s facing the possible loss of the $1.67 billion in state-controlled bonds, Gargano said. The city has threatened to withhold an equal amount of the bonds from Silverstein.

Despite the rupture, there remained some hope of a deal.

Though Gargano said there will be no more negotiations until Silverstein puts “something on the table that is in the public interest,” the developer said he was ready to talk anytime.

“I’m a businessman,” said the 74-year-old developer. “I’ve been doing this for 50 years.”

While a soaring Freedom Tower is considered a tough sell to prospective tenants after the fall of the twin towers, Gargano made clear that it’s still important to the lame-duck governor.

Silverstein contends he will start building the 1,776-foot-tall skyscraper next month, as he previously announced.