The Grand Hyatt going up on the site of the old Commodore, at 42nd and Lexington, with its 1400 $70-a-night rooms, is the city’s and state’s first venture into the luxury-hotel business. The bureaucrats’ assumption seems to have been that the modern bankrupt American city ought to be opening hotels for its visiting rich while closing hospitals and schools for its unwanted poor. While entire neighborhoods could qualify for city vacate orders, tax exemptions to the tune of $160 million were granted to subsidize the redevelopment of midtown’s wealthiest core. Under the aegis of the state’s Urban Development Corporation, set up in 1968 to rebuild slums, the city is exchanging hospital beds for hotel beds. The Commodore deal is a perfect example of what government calls a “business-incentive program,” which uses public power and takes public risk for private profit — profits that will ultimately accrue to Hugh Carey’s principal campaign contributors.
But the list of Carey supporters who stand to gain is only one phase of this transaction. The deal is laced with apparent conflicts involving practically every public official who ever touched it — from the unknown city and state aides who packaged it to Comptroller Harrison Goldin, Carey appointee Richard Ravitch, and former deputy mayor Stanley Friedman.
In previous stories, I detailed the conflicts and serpentine relationships that made up Trump’s convention-center deal (Voice, January 22), but in acquiring the contract for the Commodore renovation, Trump outdid himself. He persuaded city and state officials to designate him developer on a site he didn’t own — or even have an option to own. Later, he got a binding lease and acquisition agreement from the city and state, though he had no financing commitment to back him up. The Commodore caper is part shill game, part intrigue. Its apologists make it part soap opera. But the size of the deal’s subsidies — it is perhaps the most costly incentive project in city history — make it news.
On the Bluff
Trump started his negotiations for the Commodore with Michael Bailkin, at the time counsel to the mayor’s office and a protege of then-deputy mayor John Zuccotti. According to Bailkin, Zuccotti and economic-development administrator Alfred Eisenpreis had been interested in renovating the hotel even before its owners — the Penn Central — had ever notified the city that the company was considering closing it. Early on, they instructed Bailkin to design a tax-abatement program for Trump’s proposal. Explaining the city’s interest in the deal, Bailkin said, “It was a combination of political access and a solid scheme. I was aware that he had political clout. Frankly, I thought that was a plus.”
Trump’s clout with the city administration was detailed in my two-part series last month. His family and Brooklyn-based real-estate firm were tied to the same county Democratic organization that had created Beame. His father had known Beame for 30 years and had contributed to every Beame campaign. Beame’s closest brokers — attorneys Bunny and Sandy Lindenbaum and lobbyist Howard Rubenstein — represented Trump on a host of deals. By fall 1975 Sandy Lindenbaum had been put on a Trump retainer to push the Commodore through the Board of Estimate.
But Bailkin says the reason the city chose the Trump deal was the developer’s option on the property. “Trump’s strength was his exclusive arrangement with the organization representing Penn Central, Victor Palmieri Co. The city had no option except to deal with Trump. He had site control.”
The problem with this reasoning is that Trump had no option on the Commodore until February 1977, a year and a half after he’d first brought his proposal to Zuccotti and Bailkin. Trump, in fact, had no claim on the property when the Board of Estimate and the state’s Urban Development Corporation gave him project approval in May and September of 1976. John Koskinen, president of the Palmieri firm, told me Trump “had absolutely no agreement or assurances of any kind — formal or informal” with Penn Central until 1977.
Walter Prawzinsky, the city’s deputy comptroller, who participated in the Commodore negotiations extensively, was stunned when I told him that Trump had had no option at the time of the Board of Estimate vote. “He certainly told city negotiators he had an option,” Prawzinsky said. “Other city officials involved told me he had an option. If we didn’t think he had an option, we wouldn’t have talked to him. What’s the use of talking to him and designing a program specifically for him if all he’s going to do is go peddle the program?” Prawzinsky then called the city’s corporation counsel and asked if that office had a copy of Trump’s option on the Commodore. Prawzinsky told me the city had only one copy. “Trump had sent a copy that is only signed by him. That’s all we have.”
Trump was even quoted in the Times shortly before the Board of Estimate vote, claiming that he “has an option — with no particular time limit — to buy the Commodore for $10 million from the railroad trustees.” An earlier Daily News story describes a “purchase contract” between Trump and Penn Central, which it reports was agreed to in May 1975. Dan Dorfman, in a New York magazine article at the time the city approved the plan, repeated Trump’s claim. Though there were stories suggesting that Trump was merely negotiating to buy the hotel, the impression created by the press was that Trump had a claim to the property. Indications are that this impression was created by Trump himself. Indeed, Trump seems to have convinced himself. When I interviewed him recently he offered the following chronology: “I went to Penn Central and said let me buy this building subject to tax abatement and a lot of things. We signed a contract subject to those various elements.” Trump was claiming to have signed a contract with Penn Central in May 1975, almost two years before he actually did. Penn Central officials wanted to leave no room for doubt when I raised the question with them. They wrote me a letter, stating “Whether or not Trump actually stated he had an option, he had no option and no one ever indicated on behalf of Penn Central that he had one.”
Since Trump in fact did not have the option, the city was free to advertise its interest in establishing a tax-incentive program for any private developer willing to renovate the hotel. It could then have negotiated a program with the developer whose proposal offered the best renovation at the least expense to the city. Apparently this approach was not considered because of the misconception that Trump, as Bailkin put it, had “site control.” Further, the resolutions creating the tax benefits on the property had been written so as to apply exclusively to Trump.
Packaging the Profits
In structuring the abatement program, Bailkin at first [ed note: due to a printing error, a line of text is obscured in the original issue from which this article was transcribed] hotel, sell it to the city for a nominal sum, and then lease it back on a 99-year lease at a minimal rental (with no taxes) for 50 years. Drafts of this proposal were submitted informally to the Board of Estimate in December 1975. As an afterthought, Beame issued a vague policy statement, attempting to place the Commodore deal in the context of an investment-incentive program.
This kind of loose arrangement — where deals are bound by no set of publicly adopted city standards and are implemented on a project-by-project basis — is precisely the open-market condition where connections can best dictate both terms and eventual profits. It is an invitation to the brokers who live at the public trough, shuttling between the roles of campaign donor and publicly aided developer. Indeed, it was the vague terms of the program that permitted Trump to be its first beneficiary, though he was completely unconnected to the property when he received the abatement. Since 1976, the city, under the banner of this program, has given away over a quarter of a billion tax dollars.
Bailkin’s proposal ran into some trouble with comptroller Harrison Goldin. The result was that Trump, Bailkin, and Zuccotti abandoned the notion of a city leaseback and instead proposed that the leaseback arrangement be made with UDC, which could grant the project total tax exemption.
In March 1976, the UDC board of directors, chaired by chief Carey development adviser Richard Ravitch, voted initial approval of the Commodore as part of a two-step UDC process. But in a letter to Zuccotti, the state agency warned of the possibility that the city’s rental scheme might result “in a windfall profit” for Trump and recommended changes in the arrangement to prevent that possibility.
Ravitch’s opposition to the deal threatened to delay UDC approval and perhaps even end agency participation in the project. Ravitch, who told me he still thought the deal was a “mistake,” said he was pressured by Beame, Zuccotti, State Senator Manfred Ohrenstein, Assembly Speaker Stanley Steingut, and Trump to approve the deal. “They all called and wanted me to move the thing faster,” said Ravitch. Ravitch kept telling the callers that the city could get better terms and told Trump not to call again. “I didn’t like this political stuff,” Ravitch said. “I didn’t want another call from another politician.”
Ravitch also recalled that “at the same time the Commodore was put before UDC,” Trump announced that he’d hired Louise Sunshine, the governor’s chief fund raiser, to be a staff coordinator. The announcement of the Sunshine position in the Real Estate Forum occurred the same day Zuccotti wrote Ravitch to invite UDC’s participation in the Commodore.
“I called Carey,” said Ravitch. “Trump had a proposal before UDC and I thought the whole thing [with Sunshine] was tasteless. Carey told me to do whatever I thought was right.” His hostility forced Sunshine to stay away from Commodore business until he left UDC in 1977. But after his departure, Sunshine became an active expediter on Commodore problems and a political force at UDC.
Despite Ravitch’s opposition, the Board of Estimate voted to approve the project in May 1976. The final version of the plan contained the following controversial and extraordinary terms, granted specifically to Trump though he still had no option on the property:
- Trump was given a 42-year tax exemption and instead charged rent in lieu of the $1.4 million annual taxes then assessed on the hotel. That 42-year term is more than double the 20-year limit in similar state tax-incentive legislation. After completing the project he would pay $250,000 in lieu of taxes for five years and $350,000 for the next five, and so on up to full taxes. The city calculated the value of the abatement at $72 million over the life of the project; a New York Times article estimated it at $168 million.
- The Hotel Association criticized the city’s method of valuing the abatement by pointing out that it was pegged to the existing tax rate, which had almost doubled over the past 10 years. The association calculates that if the same rate of tax increase occurs over the life of the abatement, Hyatt should be paying almost $15 million in annual taxes instead of the $2.7 million it would be paying as rent during the final year of the renovation plan. The association’s figures assume that the assessed value of the hotel will remain unchanged, but with the likely prospects of increasing assessment and an increasing tax rate, the value of the abatement turns out to be several hundred million dollars in lost revenue.
- Ravitch’s view, which he pressed unsuccessfully on the city, was that all Trump had to get to make the project feasible was the right to subordinate his taxes to his mortgage payments. By this formula, he would pay full taxes from the start if the project were successful. He would also be charged full taxes if he finished paying the mortgage long before the 42-year term of the abatement ran out. Further, Ravitch wanted to make it impossible for Trump to refinance the hotel once it was built, thus enabling him to “mortgage out” of the project, immediately recoup his equity investment, and simply take a yearly profit without any investment for the life of the project. The city refused to make Ravitch’s changes in the deal though Bailkin later conceded to me that Trump might wind up with none of his own money in the project. After the Board of Estimate approval, UDC wrote Zuccotti, complaining that the “anti-windfall’’ objective had been only “partially achieved” and that the effort to prevent Trump from mortgaging out “wasn’t achieved” at all. The city’s attitude was best expressed by Bailkin, who was quoted in the Post as saying that it was “possible for Trump to make high profits” and “I think that’s excellent.”
- In addition to his rental payments, Trump was required to pay a percentage of his annual profits to the city (15 per cent of the profits if they reach $2.5 million). Trump demanded — and got — a “cap” on the profit-sharing clause. This means that the city’s share of the profits stops at whatever point the Commodore is paying full taxes. City Councilman Henry Stern and a group of five Manhattan legislators opposed to the terms of the project charged: “The city makes the transaction possible by granting the substantial long-term tax abatement, but if the hotel turns out to be gold mine, it can only recover ordinary real-estate taxes.”
- Henry Stern sought full disclosure of all title companies, law firms, etc., receiving fees from the project. Bailkin’s response was that disclosure was “irrelevant to the city’s concern.” The final Board of Estimate resolution set no disclosure requirements.
- Even while Ravitch raised these objections, Bailkin prevailed on UDC staff to add a sweetener to the Trump lease package. UDC projects are exempt from city and state sales taxes on construction materials, a device built into the legislation to lower costs on UDC housing projects. UDC and the city decided that Trump’s estimated $2 million of sales-tax savings could be used for “public improvements” in the Commodore area. This proposal had several advantages for Trump: He would plan and make the improvements, even receiving an estimated $70,000 fee for supervising the spending of his own tax savings. The UDC lease permitted him to use the savings in ways that directly benefit his own hotel — like the construction of a sidewalk on 42nd Street and a new IRT subway entrance at the front of the hotel. Even improvements like cleaning the facade of the Grand Central Terminal would increase the value of the Commodore. Finally, Trump has struck the pose of a public benefactor while using public funds to enhance the profitability of his own hotel: “We’re doing this restoration because I think it’s important to New York,” he says.
In the end, despite all the objections, Ravitch and his board authorized a draft agreement and lease with Trump in September 1976. Even while UDC considered and approved the agreement, Trump had no option on the land — an issue, as Ravitch recalls, no one ever raised.
The parallels between Ravitch’s handling of the Commodore and his handling of the 34th Street convention-center site are striking. As a private developer, he had bid against Trump in an effort to acquire the convention-center site. His analysis of the Trump bid, filed in federal bankruptcy court in Philadelphia, charged Trump with attempting a windfall profit on the land. But he refused to litigate his claim, and, in effect, backed down in the end. He wound up chairing a Beame-appointed panel that selected Trump’s site for the convention center and his company, HRH Construction Co., was retained by Trump to do a cost analysis of the project.
Similarly, he went halfway on the Commodore, raising thorny questions but, at the same time, writing Zuccotti and concluding that he “hoped” and “trusted” that his board’s decision on the deal “will be favorable.” He wound up voting for the project himself and presiding over an agency that tailored its own special benefits for Trump’s deal, even beyond those contained in the city plan. And ultimately, after his construction company was sold to Starrett, it was selected by Trump to build the new hotel. One negotiator on the city side of this deal says that Ravitch’s objections to the Commodore were simply efforts to create a record for himself. “Political posturing” was how he described Ravitch’s tactics.
But, after three telephone interviews with him, I found him a man caught in the contradictions of his own complex relations and ethical standards. His business partner had died, he wanted out of HRH, and his best potential buyer was both Trump and UDC-connected Starrett Housing Co. His role at UDC was inseparable from his close relationship with the governor, whose most crass political brokers were at his door in search of approval of the Trump deal. Ravitch was also a budding mayoral candidate who eventually left UDC to fund raise for a campaign he subsequently abandoned. His public record on issues of city policy like the Commodore and his relationships with Carey, Trump, and Sunshine interacted with his political ambitions. And, finally, he was a developer himself, inclined toward this kind of development regardless of Trump’s terms and methods, which he found distasteful. In committing UDC to the Commodore, he reshaped the agency and fundamentally altered its social function. It is now no more than a tax-shelter and condemnation resource for private developers. In the world Ravitch lives in, that was a positive transformation.
The Bailkin Connection
The same week that the Board of Estimate approved the Commodore project in May 1976, Michael Bailkin, the city’s architect of the plan, left the government. A few months later, Bailkin’s staff counterpart at UDC, David Stadtmauer, who’d negotiated the initial lease terms between Trump and UDC, left his position as director of commercial affairs for the state agency. Like Bailkin, Stadtmauer had been an advocate of the Commodore project. When he’d chaired UDC’s public hearing on the project, he’d abandoned his obligatory neutral posture and made a ringing 10-minute speech on behalf of the Commodore deal.
While still with the state and city, Stadtmauer and Bailkin had decided to form a law firm. That firm has since built its practice around economic-development projects, including projects under the Investment-Incentives Program, which they had designed.
Their first client — who promised Bailkin a $10,000 initial retainer before he left government (the offer that provided the income base to create the firm) — was the 42nd Street Redevelopment Corporation, sponsors of an investment-incentives project. Bailkin told me that he and his client had discussed the applicability of the incentive program to his client’s project before he’d left the city. Less than two months after his departure from the city, Bailkin had completed the mortgage closing, acquired the properties, and submitted a site to the city for an investments project.
The project was Theatre Row, the conversion of West Side porn houses into Off-Off Broadway theatres. In 1975 Bailkin, then with the city, was asked by city officials to help design the incorporation of the group.
“Their concept was of 42nd Street as a river-to-river boulevard, connecting institutional and business uses on the East Side and theatre-related uses on the West Side,” said Bailkin. The Commodore project was an important spur to that development and Bailkin admits that his future employers at the 42nd Street Corp. told him, while he was putting together the Commodore package, how much they favored it. Theatre Row was the West Side complement of the Commodore.
After Bailkin and Stadtmauer had left the government, they were hired as consultants to the city and state. Zuccotti retained his protege Bailkin and assigned him to report on the progress of the Commodore. His $10,000 contract ran through the remainder of 1976 and 1977. His memos as a consultant continued the strident advocacy of the project he’d begun while with the city. Stadtmauer stayed on as a UDC consultant, advising his replacement on the Commodore and other projects, earning some $6300 until April 1977. Both were acting as consultants throughout the period that the city and UDC considered their firm’s Theatre Row project, but Bailkin claims he never discussed Theatre Row with public agencies, except in his private capacity as attorney for the developer. But an analyst at the comptroller’s office who renegotiated incentive projects told me: “I never knew who Bailkin represented or whether he was wearing a public or a private hat.”
The importance of this interrelationship is that in their continuing relationship with the Commodore project — which was widely cited as a prototype for the incentive program — Bailkin and Stadtmauer were using their public positions after they left full-time public employment to define the terms that would then shape the smaller projects represented by their firm. Bailkin himself said, in a Post article, that the Commodore was “a precedent-setting deal.… When other developers come in with other deals, they’re going to say, we want what Trump got.”
Bailkin was so successful in packaging the first $1.3 million Theatre Row project that it actually closed months before the Commodore and became the first completed incentive project. He has since shepherded a second theatre project, worth almost $8 million, through the Board of Estimate and is now working on additional potential incentive projects for 42nd Street and other developers.
In addition, Bailkin parlayed his government contacts into several consultant contracts, including a $43,000 UDC contract and two other city contracts. His former agency, the Office of Development, recently awarded his client, 42nd Street Corp., a $350,000 commercial revitalization grant, including a budget for its legal costs. Stadtmauer says that he was not personally involved in any way with either Theatre Row project and that, since leaving UDC, he has been primarily engaged in development work in New Jersey. However he did acknowledge that he now serves as counsel to the Greater Jamaica Local Development Corp., developer of several city projects. Their firm has also done work on two incentive projects begun while Bailkin and Stadtmauer were still in government, but Stadtmauer contends they received no fees on one and were paid as UDC consultants on the other.
Bailkin did go to the city’s Board of Ethics for an opinion on his post with the 42nd Street Corp. But the narrow issue before the board, according to Bailkin, was whether his work on incorporating the organization while still a city employee disqualified him from employment with them. Bailkin says the board initially barred him from taking the job on even those narrow grounds. He then marshaled some of his powerful allies in city government and went back to the board, which reversed itself.
The board opinion, however, apparently didn’t address Bailkin’s continuing involvement as a private attorney with the public program he’d originally designed and was still shaping in his capacity as consultant to the city. Bailkin showed me the board’s letter dated July 15, approving his retainer with 42nd St. almost two months after he’d begun to work for them. He insisted that the board notified him by phone before he joined the company. I asked if he would waive the confidentiality of his board file and allow me to examine the records. He refused.
The final link between the Bailkin firm and the Commodore project is an attorney who worked for Bailkin through most of 1977, Stephen Seldin. Seldin also represented Trump on the closing of the Commodore deal. Indeed, he is an officer in Wembey Realty, the Trump firm that is developing the Commodore.
Bailkin attempted to minimize his association with their firm, claiming Seldin had left them in October 1977. Yet he appeared with Bailkin, representing the 42nd Street Corp. at the Theatre Row closing in November 1977, and two weeks later Seldin represented Trump at the escrow closing of the Commodore. In March 1978, while representing Trump in final negotiations, Seldin joined Stadtmauer as part of a group that applied for a state commercial revitalization grant. Bailkin also claimed that Seldin did not begin his association with their firm until March 1977; but he had notarized Bailkin’s purchase of the Theatre Row properties nine months earlier.
Bailkin also did the legal work on a City Planning Commission report favorable to Trump’s planned housing project on the 60th Street railyards. While a consultant to the city, after he’d left full-time employment, he generated the financing schemes (Triboro Authority bonds with UDC ownership) that was subsequently applied to Trump’s convention-center site. He and Trump were calling each other and comparing notes on my recent interviews with them. The Seldin link to both is a tangible sign of the relationship between Bailkin and Trump during the Commodore negotiations.
The Web of Connections
Bailkin’s connections are more than matched by the questions that surround his successor as chief city negotiator on the remaining Commodore questions, Mark Levine, the corporation counsel’s former real-estate director. It was he who had asked for a copy of Trump’s Commodore option and received the copy signed only by the developer. Levine had been involved with Bailkin in the early negotiations before the Board of Estimate approval and worked intensely on the project until he left the city in September 1977. He had worked out the detailed terms of the 150-page lease and many subsidiary agreements vital to the final closing of the deal. Levine is now an associate in Sandy Lindenbaum’s law firm, which represented Trump on several aspects of the Commodore. I talked with Levine, but, when I told him I was writing about the Commodore, he abruptly ended the conversation, promising to get back to me. But he never returned several calls from me.
Stanley Friedman, as deputy mayor, rushed all the city commitments on the Commodore to conclusion in the final weeks of the Beame administration, then went to work for another law firm retained by Trump on the Commodore. Richard Kahan, as UDC director of commercial projects, joined Friedman in the last-minute march, similarly committing the state to the deal, then was backed by Trump — and Trump’s top political guns — for Carey’s appointment as president of the agency.
Victor Palmieri and Co. represented the Penn Central trustees in the sale of the hotel to Trump, completed in May 1978, though Trump had failed to meet the terms of the option three times and in fact had no legal option when Palmieri permitted him to exercise it. Palmieri and Penn Central lawyers conducted the sale at the same price set in 1975 discussions, though the city’s hotel market had boomed in the interim. While Palmieri let Trump’s price stand, it was simultaneously at the receiving end of a bid war on three other Manhattan hotels that resulted in a $10 million increase in the previously accepted price. Palmieri did not get an updated appraisal on the property (his last update was nearly two years old).
The Commodore sale was consummated one month after Trump brokered a lucrative deal for the Palmieri Co. on another, unrelated contract. Trump arranged the sale of Levitt and Sons, Inc., a home-building company divested by International Telephone and Telegraph in a federal antitrust case. Palmieri Co. was the court-appointed management firm assigned to sell Levitt — a task no one had been able to accomplish since 1971. Trump found a buyer, Starrett Housing Co., which purchased Levitt for $30 million, out of which the court paid Palmieri a healthy fee. Trump says Starrett paid him a brokerage commission on the sale.
John Koskinen, the Palmieri president who handled both the Commodore and the Levitt sale, says that discussions between Levitt and Starrett began in December 1977. At the same time, though the option agreement had clearly expired, Palmieri and a single trustee — without the required approval of the bankruptcy court — amended their agreement with Trump and gave him a three-month extension though, by the terms of the court-approved agreement, Trump’s option was automatically voided by his failure to meet the deadlines. At the end of February 1978, the Levitt/Starrett sale was completed. When Trump failed to comply with even this three-month extension, he was permitted to buy the hotel a month later, subject to the terms of his expired option.
This is the ethos of a Trump deal. Harrison Goldin assigns the project to the political side of his office after his first discussion with Trump. Richard Ravitch is pulled by conflicting interests. The Bowery Savings Bank, with a strong economic interest in the Commodore renovation, uses its influence at UDC to shape public policy. Commerce and government blur together.
No Purpose But Profit
The Commodore plan had nothing going for it but connections. Its defenders said it would generate jobs. But all construction does. This project is less labor-intensive than most. At the time it was approved in 1976, the hotel market was depressed and there was no sign that the operation of the hotel would actually create jobs. A new hotel wasn’t likely to do much more than simply redirect tourists from one place to another. Neither can it be said that the city was prophetic, anticipating the hotel boom, knowing that by the time it was built it would create jobs. If the city had known that, it shouldn’t have had to subsidize what it was expecting to be a booming business.
In order for UDC to use all its statutory powers of exemption and condemnation, the board actually had to adopt a resolution that described the Grand Central area as a “substandard or insanitary area.” We have redefined triage if East 42nd Street is the “substandard” neighborhood that a post-default UDC sees as the site for its largest project.
To try to justify the project, a city study identified one statistical index reflecting a decline in the area — namely an unusually high rate of tax arrearages. The rate was almost wholly due to the enormous back taxes Penn Central owed on the Commodore itself, which, of course, the bankrupt company owed on all of its properties. The city’s report stated: “Some speculative assemblage activity is still occurring in the area, which may mean guarded confidence in the district’s future.” Nonetheless, the city and state rushed in with well in excess of $100 million in abatements to fight blight that apparently speculators couldn’t see.
The other rationale for the abatement plan — one advanced by Trump — was that Penn Central wasn’t paying taxes anyway and that anything he paid “was better than what the city is getting now.” But Penn Central had entered an agreement to pay its taxes on all city delinquent properties, completely independent of Trump’s purchase of the Commodore.
Palmieri Co. closed the hotel two days before the Board of Estimate hearing on the Commodore abatement. The company denies that the closing was an attempt to affect the Board’s decision on the Commodore. What seems clear to me is that it was Trump’s and the city’s interest in the hotel that precipitated Penn Central’s abandonment of it. In 1974, Penn Central spent $2 million on improvements at the hotel in an effort to restore it as a successful operating hotel. In January 1975, Palmieri asked for another $2 million from the trustees, though the hotel lost almost half a million in 1974 and more losses were anticipated in 1975. Their judgment was that the losses could be reversed. Then Trump offered $10 million for it. The capital improvements were then postponed “during discussions with Trump.” Palmieri Co. indicated they would make no deal with Trump until he got all of his pieces in place, including financing and city approvals. Everyone knew that would take a long time.
The effect of these decisions was that Penn Central gave up on the hotel. In effect, their position was not dissimilar to that of a slumlord seeking urban-renewal acquisition: the worse things get, the more likely it is that the city will be forced to buy. Whether the closing right before the Board of Estimate vote was intended to influence it is incidental. That was its effect. The hotel closing was merely the final, visible sign of a year-old process of abandonment that could lead nowhere except to a sale.
The need for the project was a sham — partially contrived by those who would profit from it. Trump’s claimed option on the property was a sham; he was working immense deals with nothing but a handshake. Then the project passed through a sham closing, orchestrated by its Trump-connected public sponsors, and binding the city and state. What is real, and will get more and more real in this busted city in the next 41 years, is what we gave away. Revenue not collected is as real a loss as revenue expended. The Commodore is the largest symbol of the new state and city resolve to “stimulate economic development” by giving away the future. IBM, ABC, CBS, WNET-TV, New York Telephone, the Palace Hotel, Howard Johnson’s have already gotten abatements under the new state program. Twenty-six projects have been abated in midtown already. Nine projects have been approved under the city’s incentive program, though it is still no more than a phantom program. These abatement programs are the moral-obligation bonds of a future city collapse.
-Article and images are courtesy of The Village Voice: https://www.villagevoice.com/2019/02/28/the-dirty-deal-that-helped-make-donald-trump/
December 1, 2016 — “There’s No Check on Trump Except Reality”: A Q&A With Wayne Barrett by Alex Shephard and Theodore Ross
The veteran New York journalist dishes on Trump, Giuliani, and more.
Lost amid the post-election clatter about what the media missed is an appreciation of the hardworking journalists who had Trump nailed when most of us were still in swaddling. Wayne Barrett, the longtime investigative reporter for the Village Voice, is one who only now is receiving his just due at the national level.
Barrett’s Trump: The Deals and the Downfall was first published in 1992 (it has since been reissued as Trump: The Greatest Show on Earth), at a moment when New Yorkers thought themselves rid of “the Donald’s” malign hold on their collective imagination. His biography is a rich and layered — Caro-esque — excavation of the dirty-dealing, insiderism, and blind greed that made Trump a powerful figure in 1980s New York, and which eventually brought him down, beset by a string of bankruptcies, a scandal-plagued public divorce, and a forced retreat from public view — which proved, to our great national misfortune, a temporary one.
What makes Barrett’s work so vital today is his prescient depiction of Trump: It was all there for us to see, if only we had known to look. We learn how Fred Trump, Donald’s father, leveraged his connections to the Brooklyn political machines to gain access to federally backed mortgage funding, which he then turned into a real estate empire in the city’s outer boroughs. We find a young Donald taking those experiences and political assets with him to Manhattan as a brash, young developer. And throughout, there are the deals: the Commodore Hotel, the West Side Railyards, Trump Tower, the United States Football League, and finally, and tragicomically, the Atlantic City casinos — a string of failures, or at best, semi-successes.
Barrett makes the links and names the names because his understanding of New York City politics and society is unrivaled. What’s more, at Trump’s lowest point, he discovers in Donald Trump a “fatalism” of character that will eventually take him to the White House. “His fatalism allowed him to hold himself blameless; his determinism convinced him he’d be a winner again,” Barrett writes. “On the public stage where he’d played out every act of his life he was too much of a showman to be embarrassed by a single disastrous performance. The cumulative effect of this life view — so deep seated it appeared to be instinctual — was the confidence that all of this would come and go.”
We sat down with Barrett in his home in Brooklyn to talk Trump, the media, and what America can expect of its new president. This interview has been edited and condensed for clarity.
There’s been a lot of talk about the media’s failings over the course of the election. Do you think that’s fair?
I don’t really feel like print journalism failed us in this campaign. I think there was some outstanding investigative work. I think there were some terrible failures on the part of print in how Hillary was covered. But I don’t think we failed as an investigative institution.
Mike McIntyre did a story in the spring about Trump SoHo that was absolutely devastating, it was the front page of the Times. And it was not just devastating about Donald, it was devastating about Donald Jr. and Ivanka. What he showed was remarkable, which is that Trump was under investigation and he wound up settling with his depositors who had bought units in Trump SoHo. The settlement agreement specifically provided that they couldn’t cooperate with the Manhattan District Attorney, which to me is obstruction of justice, an illegal document. And soon after Anderson Cooper did an interview with the family on CNN, you know, with the kids there—who are not Ted Cruz’s kids, these are grown-up adults, they’re supposed to be running a company.
Donald had virtually nothing to do with raising them. So why were they supposed to be emblematic of what a great father he was? Ivanka was eight years old when Ivana and Donald split, and she never lived with him again. She barely knew him when she was eight years old, by her own account. So Anderson Cooper has them all on. He doesn’t ask a single question about Trump SoHo of either Donald or the kids, who had been sprayed all over the front page of The New York Times with an extraordinarily well-documented story. And to me it was just one of many examples throughout the campaign of excellent print stories that could get no traction.
Do you think that was true down the stretch of the campaign as well?
The shame of the Comey letter is really not that Comey wrote it, but that it displaced all the news for the final two weeks of the campaign. That was when the Times did its second extraordinary tax story. Front page again. It was just completely pushed aside. The Wall Street Journal three days before the election revealed a $150,000 payoff that [National Enquirer chief executive David] Pecker made to silence a Playboy centerfold who claims she had an affair with Donald. I mean, if there is any story that sells on television, it is a sex story, but nobody reported on it on television.“Television journalism proved in the course of this campaign that it has no ethic.”
I was at Columbia Journalism School in 1968. It was the first year that they had a broadcast journalism program at the greatest journalism school in the world. Fred Friendly, who had been Edward R. Murrow’s producer, was hired to run it. And the concept of broadcast news, which was effectively written into law, was that if you get free airwaves, granted by the United States government—a trillion dollar asset at least—your only compensation is, you give us a little news. You give us a little fair news that meets journalistic standards. It wasn’t supposed to be a profit center. It was supposed to be a payback to the public for the free franchise. And now all it is is a profit center unguided by any journalistic principles. Guided purely by ratings and advertising. Television journalism proved in the course of this campaign that it has no ethic. It’s not like everybody who is on it is a bad guy. Some people are outstanding. But the industry as a whole has no ethic, owes us nothing. All it owes us is the same as what any other sitcom owes us, which is a product we are willing to consume.
Trump has no history of public service. While he’s partnered with the government on many projects, he has never given anything back. How will that affect his presidency?
There’s no better example of that than Atlantic City. His first hotel, Trump Plaza, you literally drive off the expressway and you drive right into his parking garage and then they have a moving sidewalk and you get out of the car and get on the moving sidewalk and it carries you right into the casino and there’s no windows in the casino and so you can literally go to Atlantic City without ever seeing Atlantic City. He didn’t keep any of the promises, he never built a single housing unit. He was supposed to build housing in exchange for all the benefits, the zoning benefits and all the other permits he got, which were quite extensive on all of his properties there. So you’re absolutely right that there was never any attempt to give back.
When I was writing my book, I sat down with Joe Sharkey, who was the Democratic Party boss in Brooklyn when that really meant something. And I said to him, and he was in his 80s when I interviewed him, “When did you first see Fred Trump at the Federal Housing Administration?” He said, “I went down to Roosevelt’s inaugural and after the inaugural I went over to the FHA and Fred was already there.” These guys were consummate state capitalists. Both father and son, everything that they did benefitted them one way or another by government program. The entire tax abatement program for The Commodore [now the Grand Hyatt New York, a hotel that Trump acquired and renovated in 1980, his first major construction project in Manhattan] was invented for him. It wasn’t like we slotted him into an existing program, we created this entire tax incentive program for Donald. And for Fred. And when Hugh Carey opened his campaign headquarters to run for governor in 1974, Fred Trump put the phones in. These guys were at the ground level of the Brooklyn Democratic machine when it was probably the most powerful machine in the United States. Certainly the most powerful in the state of New York.
They reached this pinnacle of power with Abe Beame in City Hall and Hugh Carey in Albany, both of whom came out of the Brooklyn Democratic organization, both of whom cooperated in creating this entire incentive program to launch Donald as a major figure. He actually kind of bragged about this during the campaign. He made no bones about the fact that he was somebody who knew how to manipulate politicians.
When he did that first deal for The Commodore he hired Louise Sunshine. She was on his payroll for many decades after that. She was Carey’s chief fundraiser. She was the perfect conduit to the Carey administration for him.
Then he meets Roy Cohn. Now, if you were in your late 20s or your early 30s and you were looking to hitch yourself to a wagon that would pull you forward—if you could sit down with Roy Cohn and be charmed—there was something wrong with you. I had lunch many times with Roy Cohn.
What was it like having lunch with Roy Cohn?
Roy Cohn ate with his fingers. I kid you not. He brought a little glass inside of his coat pocket. He would pop little white pills when he thought you weren’t looking. He was the most satanic figure I ever met in my life. He was almost reptilian. I think he’s going to handle the swearing-in at the inauguration. They’re not going to bring a judge, they’re going to have Roy. And then Roy’s going to go back to the White House and fuck a 12-year-old. In the Oval Office.
I think Roy was the second-most important figure in Donald’s life, next to Fred. The point is that if you could meet the guy and say to yourself, “I want to be with this guy … ” Roy was already representing the heads of all five crime families in the city of New York. And the FBI affidavit said that the five crime families would meet in his law office because the feds couldn’t eavesdrop. It was lawyer-client. That’s where the bosses got together, in his office. The feds couldn’t do anything. That was an attraction to Donald.
So these were signs from the get-go, Donald was looking for the dark side. He was angling for the dark side.
Why was he so attracted to the dark side?
He understood that the dark side was the way of power. And he proved to be correct.
In your book, you quote an anonymous Trump intimate as saying, “He is the most present human being I ever met. He lives entirely in the moment. He doesn’t define himself through relationships or through some spiritual interests or concerns. He defines himself and redefines himself from day to day by what happens in his life.” Do you think that could actually make him a good president?
I think it’s remarkably good description of Bill Clinton. I think it’s remarkable how similar in some respects Bill Clinton is to Donald.
These qualities, of course, also helped lead to Trump’s financial troubles in the 1990s.
Donald in ‘88 and ‘89 was doing incomprehensible deals that were unsustainable on their face, thinking he could not lose. Almost every one of those deals blew up in his face. It was like one lemon after another in a manic, manic state. I thought he was on the same kind of manic run the last two years. I thought he had damaged his brand and that it was all going to explode. I thought he was like on a 1988-89 re-run. And then it turns out that he wins.
In the 1990s, he was anything but manic. He was extremely subdued.He was less visible than any other time since he emerged in the 70s, because he was constantly negotiating his own survival.
The banks were really deplorable in how they handled this. He was not only too big to fail, he was too big to jail. They could have put him in jail at any point in time. It wasn’t a question of a dollar wrong here, a dollar wrong there, they were totally fraudulent financials. If you look at the financials for Trump Palace—the staff was instructed to create completely false financials to get the bank loan for Trump Palace, the evidence was right there in paper. And the banks wouldn’t complain and nobody investigated and so he was hiding in the ‘90s. He was just glad to be alive. And biding his time.
In your book, you write about Trump’s talent for side-stepping bodies and extricating himself from damaging situations. What do you think that will portend for his relationships in government, whether they be in his cabinet or in Congress—people like Paul Ryan and Mitch McConnell?
I don’t think they’re going to get fleeced. Ryan’s going to get his dream. He can go into every poor person’s kitchen and take out whatever’s in the refrigerator. He’s been waiting for years to do this. Now he’s going to have two houses of Congress and a president who will just … “OK, you wanna do the budget? OK, that’s fine with me, you just do the budget, Paul. When it comes to poor people, you’re in charge.”
A guy like Steve Bannon … I don’t know much about the guy, so I could be completely misunderstanding him, but I think that’s a guy Trump uses up quickly. That’ll be a body he steps over. Kellyanne Conway, that’s a body he could easily discard. I think the people he will chew up and step over are much more needy. You can’t be like that with a guy with an institutional base like Paul Ryan or Mitch McConnell.
I think Donald has an understanding with these guys. He had this preposterous tax cut in his campaign. Not even Paul Ryan or Mitch McConnell would do the Trump tax cut, but he’s gonna be perfectly satisfied to just let them draw up the tax cut that they’re gonna get. It’s gonna be the biggest tax cut in history, probably. And he’s perfectly willing to call it his own if he thinks it works. If it starts getting a lot of blowback, he’ll say, “Well, these guys did it. I’m still the man of the people. We made billionaires bigger billionaires, that wasn’t me.” But I do think largely the budget decisions are going to be driven by Congress.
Could Trump fly out of control as president?
Trump voters think Obamacare just benefits black people. We’re going to discover how many white people, and how many Trump voters, benefit from Obamacare. The guys in Congress don’t give a shit. They’ve made up their minds. They’re determined to get rid of it and there’s no way you can get rid of it the way Donald described on 60 Minutes. There’s no way you can do that and preserve what he regards as the best parts of it. Preexisting conditions—you can’t keep the provision that says you’re entitled to insurance with preexisting conditions because the insurance companies are not going to accept that. So you’re not going to be able to preserve pre-existing conditions without preserving the mandate itself. And you can’t preserve the mandate without preserving the subsidies. One thing leads to another. Congress understands that and they don’t care. So they are not going to preserve pre-existing conditions. You can’t do that when they work with all these lobbyists from the insurance companies. “I don’t think 60 Minutes did a single serious story about Donald Trump during the campaign.”
I don’t think 60 Minutes did a single serious story about Donald Trump during the campaign. We used to think of them as the epitome of investigative broadcast journalism. They go totally in the tank, and they get the post-election interview. CBS’s coverage generally was the worst of network broadcast journalism.
There’s no check on his power except reality. That’s what I’m saying about Obamacare. He would like to figure out a way to do what he said on 60 Minutes. He doesn’t want 32 million people off of health benefits. He’s a realistic enough politician. And so Donald is restrained. Yes, he’s putting [Michael] Flynn and this crazy woman [K.T.] McFarlane in his cabinet—I mean complete warmongers. If Rudy Giuliani gets in, these are all people who you would think would put us on a pathway to war. But I don’t think Donald has any interest in war. He doesn’t own a munitions factory. It’s too late for Donald Jr. to start one.
I’m saying, not that Trump is a rational actor, but that reality will rationalize him. If he starts a war with Iran it can bring down his presidency. Let’s give him credit for one thing. He understood his own voters. He ran against endless international adventures at such great cost.
He also said that he’d “bomb the shit out of ISIS” though, which is not exactly an isolationist position.
I don’t think his base will in any way embrace starting another war in the Middle East. Maybe he’s not gonna go Rudy. That would be a very, very dangerous combination, if Rudy is in there too. Very dangerous. I don’t know who the counterpoint is. You get a Romney in there you get a counterpoint. Put a Petraeus or a [Sen. Bob] Corker in there you might get a counterpoint. These guys are not regime change guys. But Rudy is a true believer in regime change.
But I think the restraint is reality. He does have his finger on the pulse of what these voters want. And voters do not want a new adventure.
Trump is a massive failure. Everything he does, it doesn’t work. And yet here we are, he’s the president. How do you account for his success?
The glamor is intoxicating. He understood that carrying this big dick, having a blonde on his arm, getting into the casino businesses where everything seemed to convey a fast life, when it’s really a dead end for so many people … Trump Tower is really the only great project that he actually built. As a builder, not as a developer, but as a builder. It’s the best corner in the world. It’s a triumph of a project. That can make your name. The triumphs are what last in this culture.https://tpc.googlesyndication.com/safeframe/1-0-37/html/container.html
He seemed to have it all, and that stays in the mindset. So he has a track record of bankruptcy and failure, but there’s also this narrative that he’s the embodiment of brashness, boldness, decisiveness, and that’s what people choose to see. You see that plane … This plane is in every American living room. Night after night after night, with his name emblazoned on it. What better conveys great wealth, unbelievable success? And no one even notices what Hillary flies in. It’s not that we never saw her walk down the steps from a plane, but I don’t remember ever seeing the plane.
Is greed what motivates Trump?
I think greed has been the driving force of his life, but now he can be a passive investor. So much money is going to come to him over the course of the next four years that he can be as greedy as he wants to be, and not actually have to do much to enhance his financial interests. I think he will step over the line here and there. He already seems willing to do that. But it’s going to be easy money. The easiest money he has ever earned.
-Article and images courtesy of The New Republic: https://newrepublic.com/article/139094/theres-no-check-trump-except-reality-qa-wayne-barrett
January 20, 2017 — Postscript: The Muckraker Who Tormented Trump, by Michael Kruse
Wayne Barrett died the day before the inauguration of a man whose rise he labored for decades to prevent.
He was the first reporter who took Donald Trump seriously. An old-school, pen-and-paper, document-driven, sourced-up investigative ace for the Village Voice in New York, Wayne Barrett nailed the aspiring real estate developer 38 years ago. “Donald Trump,” he wrote, in January of 1979, “is a user of other users.” Barrett’s unflagging work on Trump in the intervening years never disproved his initial read. He remained the most influential of Trump’s chroniclers right up until Thursday — one day before Trump was sworn in as president — when Barrett died, at 71, of complications from interstitial lung disease.
Nearly a year ago, when I contacted Barrett to ask if he could join fellow Trump biographers for a recorded conversation over lunch at Trump Grille at Trump Tower, he said he wasn’t well. He came anyway, though, in a wheelchair and with a nurse. His mind was still sharp as a scythe. From the others there that day — Tim O’Brien and Michael D’Antonio, Harry Hurt and Gwenda Blair, whose books followed Barrett’s — I saw deference, admiration and love.
“He was the first person to take a close look, the first person to realize that a close look needed to be taken,” Blair said Thursday when I called and told her our friend had died.
“The first person to deal with him head-on, and to do it so scrupulously,” D’Antonio said.
“It provided everyone with a roadmap,” O’Brien said.
Barrett was the son of a nuclear physicist and a librarian. A Goldwater Republican from Lynchburg, Virginia, in his teens and early 20s who flipped ideologically in the late 1960s as a graduate student at the Columbia School of Journalism, he was a community organizer and a public school teacher before he became a reporter. He once told his son’s elementary school classmates that his job was to be “a detective for the people.” He called his long line of devoted interns his “soldiers of detail.” He taught journalism classes at Columbia, Hunter College and Long Island University. The credo of the indefatigable Barrett: “the exposure of the plunderers, the steerers, the wirepullers, the bosses, the brokers, the campaign fixers and takers. … Stew, percolate, pester, track, burrow, besiege, confront, damage, level. Care.”
Barrett started looking into Trump in 1977. Trump had been sued by the federal government for racial bias in renting apartments in Brooklyn and Queens and at the time was renovating what would become Manhattan’s Grand Hyatt hotel thanks to tax breaks of historic proportions. Before network television made his name synonymous with being a boss, before his divorces and his affairs and the bankruptcies at his casinos, before Trump Tower was erected as the hub of his vanity and ambition, Barrett sat in a spare room at the offices of the State Urban Development Corporation and scoured for hours thousands of pages of public records. He was 33, and Trump was 32. “I was a rookie, he was a rookie,” Barrett would say. And one day, a nearby phone rang. “Wayne!” said the voice on the other end. “It’s Donald! I hear you’re doing a story on me!” Someone at the UDC had tipped off Trump to what Barrett was up to. And when Trump eventually saw that Barrett saw through him — that he was focused on the sham, not the show — first he tried to bribe Barrett with a new apartment, and then he threatened to sue, invoking the name of Roy Cohn, his pugnacious and politically connected mentor. What Barrett nonetheless published in the Voice made him, forever, the original authority on Trump.
“We’ve been looking into a world where only the greed is magnified,” he wrote at the end of his foundational two-part series. “The actors are pretty small and venal. Their ideas are small, never transcending profit. In it, however, are the men elected to lead us and those who buy them. And in it, unhappily, are the processes and decisions that shape our city and our lives.”
He didn’t stop reporting on Trump. On his entrance into Atlantic City. On his illustrative relationship with Cohn. On his ties to the mob. The resulting book, Trump: The Deals and the Downfall, came out in 1991, when Trump was all but done, swamped by debt racked up through recklessness and a blithe sense of invincibility—as beholden to the banks as the banks were to him, which was the chief reason, along with his family’s wealth, he was even able to contemplate a comeback.
But Barrett was unsparing in his assessment, and what he wrote back then still crackles with earned authority.
“He had prided himself on never having met a public official, a banker, a lawyer, a reporter, or a prosecutor he couldn’t seduce,” Barrett wrote. “Some he owned, and others he merely manipulated. As he saw it, it was not just that everyone had a price, it was that he knew what the price was. He believed he could look across a table and compute the price, then move on to another table and borrow the money to pay it. ‘Everybody tries to get some money’ was his assessment in one unpublished interview of what motivates the people he dealt with. It was his one-sentence summary of human nature.”
He concluded: “Somewhere on this odyssey of his, the image had devoured the man, and Donald had become the commercially useful personality he had helped invent. To some of those who watched him closely, he no longer behaved as if he believed he was merely living; he was now, in his own mind, portraying himself in a thrilling daily drama he scripted.”
Barrett worked exhaustively on far more than just Trump. He wrote an “investigative biography” of Rudy Giuliani, one of the mayors and governors he trained his eye on. His 1988 book, City for Sale: Ed Koch and the Betrayal of New York, is “a seminal work,” according to O’Brien. “I’m not an angry guy,” Barrett once said. “There’s just a lot to be outraged about.” But Trump was a particular and recurring target. He knew precisely who and what he was before most people outside of New York even knew his name.
And throughout this last year, as he was sick and getting sicker but kept letting into his house reporters from all over the country, from all over the world, he was with me the way he has been with so many others over so many years — welcoming and wise, generous with his insight and time, sharing with me this meaningful piece of his life’s work. I went to Brooklyn. I went into the basement. I sat on the chair by his bed. I called often.
“He’s the consummate example of what his voters rail against,” Barrett said last March, identifying the central paradox of what would become Trump’s surprising, unprecedented rise.
In October, in the aftermath of the lascivious comments in which Trump discussed his pattern of behavior toward women that sounded like sexual assault, drawing on decades of reporting on his power-hungry habits of subjugation, Barrett called him “a predator.”
“Shamelessness is a skill,” he said the day after Trump was elected president.
The last time we spoke, he told me he was going to try his best to join me and O’Brien, Blair and D’Antonio for another conversation — “I’ve been sick lately (more than usual),” he told us in an email, “but I’m even better on Trump when I have a fever” — but he told me on the phone he was getting worse. His wife of 48 years, the former Frances Marie McGettigan, with whom he raised their beloved son, Mac, wanted him to go to the hospital, he said. That was only a week and a half ago.
Former New York Mayor Michael Bloomberg, a not infrequent subject of Barrett’s critical, clear-eyed reporting as well, has called Barrett “a tenacious reporter” motivated by “a deep sense of moral purpose.” Governor Andrew Cuomo has called him “a lion in the field of journalism” who “did his job without malice and with an absolute dedication to the facts.” Current mayor Bill de Blasio has said he “inspired generations of journalists” and “held the powerful accountable.” Trump, through the years, has called Barrett “a very bad writer,” “a second-rate writer” and “a jerk.”
I was reporting at the Capitol in Washington Thursday afternoon when I heard he had died. After leaving and heading out into the cold, I walked to Union Station, past the fences and barricades and police force in place for what was to come, past vendor after vendor hawking Trump hats and Trump pins and Trump shirts and Trump dolls and Trump flags. The surreal juxtaposition of Barrett’s death and the beginning of the administration of President Trump, an event Barrett had thought impossible given Trump’s damning past, left me blinking back tears and grasping for words.
“He was the most Christian, in the best sense of the word, of any journalist I ever met,” D’Antonio told me Thursday night. “He believed in comforting the afflicted and afflicting the comfortable. You were OK with Wayne if you were doing good, honest work.”
“He planted a flag on the history of Donald Trump that can’t be ignored,” O’Brien said. “And given the fact that Trump is now a historical figure, his work will ride along with that.”
“We are all,” Blair said, “in his debt.”