Trump, page 20
He certainly was aware that Carey was beholden to the Trumps; indeed the governor had named Donald to his housing advisory group as soon as he took office. And then there was his own and HRH’s history with the Trumps: He respected Fred, but did not like the brash, overreaching style of the younger Trump. Their sparring match over the West Side yards had left a bad taste in Ravitch’s mouth. While he remembered Fred’s appetite for private profit in public projects as a bit excessive, he sensed that Fred’s son knew no limits. The terms of the Commodore deal struck Ravitch as just too rich an abatement for Donald.
When Trump first went to meet with the wary Ravitch, he overplayed his hand by bringing along his new employee, Louise Sunshine, the governor’s chief political fund-raiser. The daughter of a New Jersey real estate family, Sunshine was at that very moment in charge of raising several million dollars to pay off the governor’s 1974 debt and to prepare for a 1978 reelection campaign. In addition to her volunteer role as director of the Friends of Hugh Carey committee, she was the Carey-installed treasurer of the state Democratic Party, a national Democratic committeewoman, and a board member of the state Job Development Authority. Just four months after Carey took office, Donald had begun talking to her about coming to work for him. But since he was still just an employee of his father’s without a staff of his own, a charmed Sunshine began in the latter half of 1975 to lobby for his convention center site without getting paid. Married to a wealthy doctor, the heavyset Sunshine undertook her early lobbying for Donald as a form of pre-employment work, getting a large foot in promising doors.
Her efforts for the Trump site were widely interpreted as a signal of the governor’s support, but site selection was a city, not a state decision. So all Sunshine’s state contacts could produce were influential endorsements of Trump’s controversial site. She could be a far more decisive factor on the Commodore, however, since it was now being proposed as a state project. So two days after the city’s first meeting with UDC brass about the agency’s possible participation in the Commodore project, Trump actually hired her. The press announcement suggested that her only role with Donald was to coordinate the convention center effort, but her appearance at the Ravitch meeting suggested another agenda.
Ravitch was aghast when Sunshine arrived and became even angrier when Trump “hinted that they’d go over my head,” as he recalled it, if there were problems at the agency. “Don’t raise money for Carey and go around representing people here,” bellowed Ravitch. The city-toughened Sunshine’s capacity to shift from sweet solicitation to brusque aversion had set speed records in the highly competitive circles of hard-nosed New York politics. But Ravitch’s directness proved too much for her, and she broke down in tears.
Trump tried to salvage the situation with a hurried letter to Ravitch, claiming that he’d been working on the Commodore for a year and that Sunshine “has not been involved.” He insisted that Sunshine had become “aware of those activities only last week” and promised that she would “work exclusively on the Convention Center and have no involvement with any aspects of the Commodore project, either on the staff or decision-making level.” Ravitch nevertheless called Carey and told him he “thought the whole thing with Sunshine was tasteless.” He described the Trump proposal to the governor and, conceding that the project had no financial implications for UDC, said he was concerned about whether or not it was “prudent public policy.” Carey told him to do what he thought was right.
Ravitch pressed the city to obtain a better deal, warning in writing of a Trump windfall. He insisted that Equitable come forward and commit on the financing, offering to subordinate the property taxes to the mortgage, which would’ve meant that any financial institution backing the project would be assured of getting its regular payments before taxes were paid. And finally, he warned that the city had to see to it that Trump didn’t just mortgage out, using the generosity of the abatement to get financing that exceeded the total project costs. Ravitch wanted a mechanism to assure that Trump put real equity into the Commodore project. When each of his suggestions was rejected by the city, it became clear that he could not fundamentally change the elements of the deal.
The pressure on Ravitch was tremendous. The two top Democratic legislative leaders in Albany—Steingut and Senate Minority Leader Manfred Ohrenstein—called to push him to do the deal quickly. A prominent West Side liberal, Ohrenstein had been pulled into the Trump camp on the convention center and the Commodore by Sunshine, who was also fund-raising for his Senate Democratic committee. He had reversed himself on the convention center site, after having opposed the 34th Street location when others suggested it years earlier. Ten thousand Trump dollars found their way into his campaign coffers at the same time as his switch.
Ravitch also felt the heat of personal calls from Abe Beame and John Zuccotti. A massive city-assisted housing project on the far West Side on 42nd Street called Manhattan Plaza, under construction by HRH, Ravitch’s family company, was in dire trouble. The fiscal crisis had forced the city to suspend making mortgage advances on the project, and Ravitch was now looking for a joint city-federal bailout. The Commodore controversy was putting him at war with the very officials who held the fate of his own business in their hands—just one more complication for a man struggling with many.
Undaunted, Ravitch began working behind the scenes, feeding information on the deal to several aggressive Manhattan city councilmen, including Henry Stern, who began pushing the city to better its terms. This guerrilla warfare led to yet another Bailkin idea, geared to counter the objections of the Stern group and Ravitch. This one, finally, pushed the deal over the top.
Bailkin had by then become a social friend of Donald Trump’s. Donald liked to frequent a Third Avenue bar called Harper’s, which was often filled with gorgeous models. Trump and Bailkin sometimes talked well into the night there, and the subject was usually business. Donald never really relaxed at the bar and rarely started a conversation with a woman. When he did make a move and pick up a phone number, his selections seemed to Bailkin to be triggered by the impact the woman might make on a room, never his ease with her.
But through it all, Bailkin saw past the blowhard in Donald and decided he liked him. While the older, more experienced government people who met Donald during the Commodore discussions dismissed him as shallow and offensive, Bailkin prided himself on being one of the first to see the substance behind the show. He realized that Donald was trying to co-opt and seduce him, but he also believed they had developed a genuine friendship. In the middle of the negotiations of the final terms of the deal, the two grew closer still, with Donald even occasionally touching on his personal troubles in their private talks—including the alcoholism of his older brother, Fred Jr., who was nearing forty years old and doing little with his life.
Bailkin’s final Commodore proposal, first broached in one of these bar conversations, was a percentage rent on Donald’s profits. The initial deal had required Donald to make only a flat rental payment, increasing every few years at first, then easing upward annually over the life of the abatement until it reached full taxes forty years into the future. The stretching out of the abatement over four decades was the special grease Donald had brought to the deal; Bailkin’s new scheme would limit the grease.
Bailkin raised the subject of a city slice of Donald’s profits deceptively. He told Donald that City Hall and the Board of Estimate would not go along with the deal without a sliding scale of secondary rents pegged to his revenue. In fact, Bailkin had been meeting only with the city council critics, and no administration official had forced him to seek this concession. Trump at first adamantly resisted, but eventually assented to the terms. Once they had an agreement on the concept, they began to hammer out the specifics, until Donald came to one of the numbers sessions with a look of angry recognition on his face.
“This is all you!” he blew up at Bailkin. “Nobody in City Hall is demanding these things, nobody gives a shit.”
“No,” Bailkin insisted, “this comes from the highest levels.”
“Bullshit!” Trump screamed. “No one cares but you.” Bailkin smiled an acknowledgment, but said Trump had already agreed to the concept, and was now committed to it.
When the deal was finally submitted to both the UDC board and the Board of Estimate, the percentage rent was included, but only vaguely described. Bailkin had won on the concept, but he had agreed to put a cap on the percent of profit the city could take so that Trump would never pay more than full taxes, and he had left the definition of profits to the framers of the actual lease, which wouldn’t be drafted until after the authorizing resolutions passed both boards.
The UDC vote came first. To allow it to qualify as a UDC project, the board had to stretch its statutory authority in new directions—defining a hotel renovation as an industrial project and finding East 42nd Street a “substandard area.” Four of the board’s six members had to support the project if it was to pass, and only four did, with the other two votes abstentions—an almost unprecedented occurrence for the usually unanimous group.
One of the favorable votes was cast by the Bowery Savings Bank’s vice president Pazel Jackson. The Bowery’s main branch was located right across the street from the hotel, and the bank had written the city a strong letter of support for the project, warning that the Commodore was “a major blighting influence in midtown Manhattan.” The bank was ultimately so moved by the need to dress up its own neighborhood it became the lead bank on a $45 million syndication to finance the project. But the decisive vote in favor was cast by the man of two minds, Richard Ravitch. He would later publicly declare it “a mistake.”
The UDC vote left one more hurdle: the Board of Estimate. Opposition to the project was, however, beginning to coalesce. The Hotel Association and individual hotel operators like Harry Helmsley were criticizing the deal as overly generous. They wanted to know how they were supposed to compete at full taxes with the newest hotel in town paying virtually none. Henry Stern now had all but one of the Manhattan city council delegation vociferously opposed to the giveaway terms, but the council did not have the power to vote on land use issues. When the council members held a press conference in front of the hotel to question the deal, Trump suddenly appeared and warmly greeted his critics. It was one of his favorite ploys—a measure of his disarming confidence. He even offered Stern a political contribution.
The city board’s vote was postponed three more times, but not because any one member was ready to oppose it. A few were just not certain they wanted to approve it and were looking for some improvement in the terms. A dramatic act was needed to finally get it to a vote, and Victor Palmieri provided it: The day before the scheduled board vote, he closed the hotel. While the company had indicated a possible September closing, the suddenness of the action was a shrill demand for passage, at last, of the abatement plan.
The closing had all but been dictated by the city and state. As UDC’s executive director expressed it in a series of March internal memos: “The closing of the hotel must be imminent and definite to provide a basis for a blight finding required for an industrial project under the UDC Act,” meaning that UDC could only use its extraordinary powers to revive the hotel if it was shut. “When the hotel is closed and boarded up,” the UDC executive noted, “the property WILL BECOME a major blighting influence,” suggesting that the state was now in the business of encouraging blight to justify the use of its power to combat it.
On May 20, 1976, the board, which met in the upper floor of City Hall, unanimously passed the Commodore deal, amid proclamations about how the project demonstrated the confidence private investors still had in the struggling city. In fact, Donald still had no option on the hotel, and had stalled obtaining it, thereby saving the $250,000 deposit he would have had to put down. Equitable had dodged any financing commitment as well. The private parties hadn’t put a dime on the table, while the public sector had delivered a gigantic and exclusive tax break. The debut project of this bold entrepreneur was, in truth, a breakthrough example of the new state capitalism—public risk for private profit. Trump had been handpicked by bureaucrats and politicians to become the solitary recipient of an unprecedented giveaway, stretched so far into the future that it was statistically likely to outlive even its thirty-year-old beneficiary. Though other projects were later funded under the incentive program created to justify Trump’s abatement, no other Manhattan hotel would ever receive so selective and grand a subsidy.
Mike Bailkin and UDC’s economic development director, Dave Stadtmauer, who had steered the deal through the state process, sat that night on the steps of City Hall savoring their triumph and sensing that the business incentive plan that had grown out of the Commodore deal might have also created an opportunity for them. Bailkin had recently asked Zuccotti for a City Hall position as a kind of development commissar, but with Eisenpreiss still in place the promotion just wasn’t feasible.
He had also talked to his friend Donald about his desire to move up or out of government. “I’d love to have you with me,” Donald had offered. “I’m going to be going places.”
“I think that might taint our deal,” Bailkin said. “I don’t think it’d be good for either of us.”
Donald agreed, but then suggested that Bailkin ought to “go to work for Roy Cohn, the greatest lawyer in the world.” Bailkin had taken this suggestion seriously and, at Donald’s invitation, met Cohn. But he was put off by the Cohn ego.
So that spring night, on a high over their triumph, Mike Bailkin and Dave Stadtmauer decided to open a law firm together. Bailkin would leave the city the next day, and Stadtmauer would stay on at UDC for a few months, to steer the Trump deal through a public hearing and the necessary second vote confirming a final project and plan. The new firm, Stadtmauer & Bailkin, would highlight their own specialty: economic development deals with the city and state. Bailkin had already lined up a major client—a nonprofit theater group—that would redevelop most of a block on the far West Side on 42nd Street, using the same new abatement program he’d designed for the Commodore. As a paid consultant to the city, he would also come up with the financing device that would soon make Trump’s convention center at 34th Street buildable—suggesting that the center use the state bridge authority to float hundreds of millions in bonds.
Ironically enough—perhaps because they’d decided to do it their own way—Stadtmauer & Bailkin would become one of the only major development firms in New York that Donald Trump would never retain.
Even though both UDC and the city formally approved the Commodore abatement by the spring of 1976, it would still take two long years before final closing papers were signed by all the parties and construction could start. Part of the delay was attributable to the mirage the project was when the resolutions authorizing it were approved, with title to the land, financing, and a hotel operator up in the air. But many practical public obstacles remained—a legally mandated UDC public hearing, a second vote of the state agency, and the negotiation of a detailed lease. The continued uncertainty of all the private pieces to the deal, particularly the bank loans, made it all the more difficult to nail down the state and city commitments. But Donald, with the withdrawal of Mike Bailkin, had a new ace in the hole.
If Bailkin had been the architect of the deal, Stanley Friedman was to become the mechanical engineer who would finally make it happen. “Bugsy” Friedman, who’d worked his way up the patronage career ladder from a Bronx clubhouse grunt to deputy mayor, was to the fix what Bailkin was to the structural concept. Indeed it was the master fixer, Roy Cohn, who had arranged Friedman’s and Donald’s first meeting, and as surely as the historical ties between Abe Beame and Fred Trump had made the abatement bonanza politically plausible in the early stages, the bond between Cohn and Friedman would guide it to conclusion.
Though Cohn had ostensibly been retained by Donald to handle a single piece of litigation, the Trumps’ racial discrimination case, he began in the midseventies to assume a role in Donald’s life far transcending that of a lawyer. He became Donald’s mentor, his constant adviser on every significant aspect of his business and personal life. Like Friedman, many of those with public and private power who met young Donald in those days were introduced to him by Cohn, whose Rolodex knew no bounds. The unmarried and childless Cohn, who concealed his frantic gay nightlife behind a façade of daytime homophobic toughness, literally adopted Donald. He began to see Trump as potentially his most successful protégé and instrument. While Cohn would ultimately be disbarred for stealing from other clients, he did not bill Donald for his on-call attentiveness, seeking occasional payments only when the firm was short of cash. There was no way to reduce what Cohn was getting from Trump—whom he saw as an extension of himself—to billable hours.
Cohn’s exploitation of Friedman to secure the Commodore booty was an unforgettable lesson for Donald, exposing him to the full reach of his mentor’s influence and introducing him to the netherworld of sordid quid pro quos that Cohn ruled. This almost ritualistic initiation not only inducted Donald into the circle of sleaze that engulfed Cohn, the bountiful success of it transferred the predatory values and habits Cohn embodied to his yearning understudy.
Cohn’s hold on Friedman was simultaneously rooted in the past and framed by future promise. In addition to his City Hall title, Friedman was also secretary of the Bronx party, which made him county leader Pat Cunningham’s right hand as well as his top city jobholder. Cunningham—whose three eventual indictments would exceed Friedman’s tally by one—was a confidant of Cohn’s. His father had been a Bronx judge and behind-the-scenes prince of the Bronx machine. To Friedman, a county leader like Cunningham was a near deity, all he had ever wanted to be.
In the middle of all the maneuvering around the Commodore deal, Friedman had actually been summoned to a grand jury probing Cunningham shenanigans. He hardly blinked. He would no sooner rat on the party’s leader than he would drop one of the boss’s contracts, and Friedman understood that the Commodore was a deal Cunningham wanted done. Cunningham backed it not just because of Cohn. Carey had made Cunningham chairman of the state party, and that meant Louise Sunshine was his treasurer. When she wasn’t over at Donald’s new two-room office at 466 Lexington Avenue—in Penn Central space offered Trump by the Palmieri group—she was in Cunningham’s party headquarters. In fact, Cunningham, Sunshine, Friedman, and a young Republican named Trump worked together in 1976 to bring the Democratic National Convention to Madison Square Garden.
