Trump, page 56
But on May 26, a few days after the Biggins discussions with Donald ended so optimistically, Ed Koch said no.
Donald had come to within a hair of winning approval of a project that he saw, according to his consultant Jim Capalino, as “absolutely central to [his] view of how history will judge him”—determining whether or not he would be viewed “as one of the twentieth century’s greatest urban planners and developers.” Koch knew that by refusing Trump, he ran the risk of losing NBC, a blow from which he might never recover politically. As determined as he was to demonstrate that he had survived the great corruption scandal by winning a fourth term in 1989, the mayor was ready to gamble his reelection rather than concede to Donald. The zoning and profit issues were factors in his decision, but with a vengeful Koch, they were merely the rationale that could justify a rejection. The mayor was too pragmatic a politician to have taken such a chance only because his judgment required to do it. His gut took precedence, and those who sat in the room with him and watched him make this decision were convinced that Wollman had been the final straw for him. He simply could not give in to Donald. “The kind of brinkmanship and misstatement of the facts we have seen,” concluded Biggins in a June 1 memo written to Koch to attempt to disprove Trump’s claim that the city had reneged on an agreement, “is not the kind of conduct we can tolerate in a partner with so much at stake.”
On the day Donald received the bad news, he had a number of choices. He could come up with a new plan, still using the NBC lure—as indeed he later would. Or he could issue a declaration of war, killing any chance of a deal. He once again chose the low road, and this time his threatening bombast was addressed directly to Koch. “Your attitude on keeping NBC is unbelievable and will lead to NBC leaving the city,” he wrote. Characterizing the decision as “ludicrous” and “disgraceful,” he charged Koch with playing “Russian Roulette” with NBC “because you are afraid that Donald Trump may actually make more than a dollar of profit.” Trump carefully exempted Townsend and her staff from his salvo, saying they were being “second-guessed by people who have absolutely no understanding of the proposed transaction.” The rejection, he said, was part of a pattern of decisions from “Ed Koch’s City Hall” that were draining “the lifeblood out of New York.”
Koch answered the next day, accusing Trump of attempting “to force the city’s hand to your advantage through intimidation” and declaring that he could not “put zoning restrictions up for auction.” He told Trump that the city had delivered its best offer to NBC—a “traveling” group of city concessions, including a fifteen-year abatement, that would attach to any site the network selected, including Trump’s. The city had also given NBC a new proposal of benefits applicable to any major renovation at Rockefeller Center, where the network had made its home for decades.
On May 28 Koch released publicly the two letters in what he conceded was a preemptive strike on Donald, whom he accused of leaking stories throughout the negotiating process in an attempt to embarrass the city into submission. Moments after the mayor’s press conference, Trump issued a prepared statement blasting Koch for having “absolutely no sense of economic development” and urging him to resign. “He can’t hack it anymore,” said Donald, calling Koch “a disaster waiting to explode.”
The mayor retorted: “If Donald Trump is squealing like a stuck pig, I must have done something right.”
In succeeding days, Trump branded Koch a “moron,” and Koch wagged a “piggy, piggy, piggy” finger at Donald. Any developer’s project would always have to go through the regular city processes “whether I like him or dislike him,” said Koch. “And I do dislike him.”
By June, however, Koch was so far out on a banner-headlined limb that he absolutely could not afford to lose NBC. UDC’s Holzer was now publicly criticizing the city, saying it was “too timid” in its offer to keep the network. “If you don’t spend on economic development,” said Holzer, “you’re a paper tiger.” Published polls revealed that 70 percent of New Yorkers favored granting NBC the incentives necessary to stay, and the overwhelming majority thought Trump was doing more to keep the network than Koch. The polls and Republican leaders had even begun promoting Trump as a candidate against Koch, though Trump quickly demurred.
The fear that the city might have lost its chance of retaining NBC ran so deep that the mayor woke NBC president Bob Wright up at 6:00 A.M. one June morning to try to persuade him to look at other city sites, but the network insisted on Donald’s and Rockefeller Center, the two alternatives to New Jersey they had decided upon at the end of 1986. Tony Gliedman, ever the mediator, tried to open a new dialogue with Townsend in late June, offering a revised Trump proposal that sought only the abatements that by law would be granted to any West Side development. But Gliedman still wanted some form of “zoning assistance,” with NBC’s rent conditioned on the density the city ultimately approved for the rest of the project. Townsend replied that no zoning concessions would be made.
Then NBC approached the city with another proposal for the Trump site. If Trump sold the network its portion of the site at a discount, would the city be willing to permanently peg the tax assessment on the land to the nominal price the network paid Trump, in effect granting NBC and Trump an abatement forever? When the city rejected that as well in early September, Trump exploded again, though this time the media exchange contained no references to this final secret offer and its rejection. Donald called Koch an “idiot,” “the pits,” and “incompetent.” Koch referred to Donald’s site as a “swamp.”
A way out of the mayor’s dilemma was emerging, however, on an unexpected front. While the city was taking an increasingly inflexible position on the Trump site, its offer at Rockefeller Center was getting better with time.
Back in mid-April, before the rupture of the Trump talks, Townsend had written NBC a letter flatly rejecting any form of tax assistance if NBC remained at Rockefeller. As Townsend pointed out, granting a break on existing taxes to a user who still had thirteen years left on a lease “would require a complete reversal of city policy.” Tax abatements, Townsend pointed out, are usually granted on a share of the increase in value that comes with an improvement, and NBC wanted the city “to forego taxes it is now collecting” from Rockefeller Center. Even Trump, under his most self-serving plan, promised to continue paying the annual $3.5 million base taxes already being paid on the West Side land he owned.
The deputy mayor also contended that the only way a renovation of NBC’s facilities at 30 Rockefeller Plaza could qualify for tax breaks that normally accompanied new construction was if the space were classified as “valueless real estate” and a finding was made that only the renovation would create value for real estate tax purposes.
Townsend dismissed any such proposition since, she said, the existing NBC facilities were “regarded by most as a first class complex on a premier site.” In fact, the city had amended its existing tax abatement program to exclude East Side and Midtown properties precisely because the areas were so lucrative that no incentives were necessary to encourage development, as they were believed to be on the West Side. For this catalogue of reasons, sound public policy, she concluded, “makes it impossible for us to grant such tax treatment.”
But in late May, in the middle of the dispute with Donald, the city reconsidered. The Department of Finance reassessed the entire Rockefeller Center complex, lowering the tax rate. Townsend then wrote NBC a letter pledging to maintain the per-square-foot tax charges for the network’s space at the new rate until 2006. At that point, said Townsend, taxes would then be evenly phased in over seventeen years until they reached roughly twice the lowered rate by 2023. This constituted a $73 million tax savings for NBC, since, under the new plan, the city would in effect become the temporary condominium owner of the network’s expanded Rockefeller Center space, entitling the network to hundreds of millions of dollars in city industrial bond financing, as well as full sales tax exemption. All of these advantages cut the anticipated Rockefeller Center costs for NBC by half a billion dollars.
Ironically, the creative mind that put the package together for Rockefeller Center was none other than Michael Bailkin, who was retained by the center’s development entity in late 1986 to see if anything could be done to rescue the NBC tenancy. When he entered the picture, his clients at Rockefeller Center believed that Trump had a lock on the network and that the city was dealing with Donald as if he were NBC’s exclusive agent. While Bailkin agreed, he said NBC was “Donald’s to lose” and told his clients that “there was a good chance Donald would shoot himself in the foot.”
Bailkin, who’d built a thriving boutique firm with his old friend David Stadtmauer, began pressing city economic development officials to “put Trump and Rockefeller Center on a level playing field,” contending in early 1987 that the city had to “let NBC go where they wanted to go” by equalizing the benefits offered to each option. Since Trump’s site was automatically entitled to a significant tax reduction, any leveling agreed to by the city would put Rockefeller Center in line for a highly unusual break. Bailkin knew how to negotiate with Townsend and her aides—he’d done a variety of crucial projects with them. He also knew, long before “piggy, piggy, piggy,” that “the city did not like or trust Trump, and was being forced to do business with him.”
Despite Townsend’s mistrust of Trump, Bailkin could not make any headway with her and was told in late May that she and Biggins “had a handshake, conceptual deal with him,” leading Bailkin to the unhappy conclusion that his client had “basically lost the deal.” But Townsend turned out to be “far out in front of the mayor,” and when Koch turned the proposal down, Bailkin and Rockefeller Center were suddenly very welcome visitors at City Hall. They also made their move on NBC, which was increasingly troubled by fears of West Side resistance, especially if it wasn’t going to get any zoning guarantee from the city. Lawsuits and barricades began to loom as real obstacles to the venture.
Bailkin also watched the effect of the headlined banter on NBC’s leadership, which perceptibly began to lose confidence in Trump, and he sensed that “the goings-on in the press had made such a spectacle of Trump that they were deflecting serious business people.”
The turnabout at City Hall proceeded over the next few weeks, the WASPy Townsend dealing comfortably with her WASPy counterparts from Rockefeller Center. Trump gave up in October, withdrawing his bid with the writing already on the wall. Rockefeller Center’s thirty-five-year property tax abatement, $800 million in partially tax exempt bond financing, and fifteen-year sales tax write-off on most of an estimated billion in machinery and equipment purchases was the richest package of public benefits ever given a city business—a point Townsend readily conceded.
When the plan was announced, Trump’s first reaction was a warning that it might experience “legal problems,” and he insisted the deal was “unconstitutional,” though he declined to specify who might sue. He claimed that the city had given NBC “substantially more tax abatements” at Rockefeller Center than had ever been offered for Television City, creating “a horrible precedent” by granting huge breaks “to tenants already occupying their space.” No one from the city seriously contested these arguments, and Bailkin, who never talked with Trump during or after the NBC competition, later conceded in an interview that his client’s package was better than anything offered Trump. “You’ve been had,” Trump wound up telling the mayor through the newspapers, claiming that NBC and Rockefeller Center had “played him like a drum.”
Donald’s comments—freely described in a New York Daily News caption as “mouthing off”—had such a bitter quality to them that no one paid any attention to their substance. The irony of the city’s granting so sweeping a package to a tenant who was staying in place, and agreeing to make only $400 million in actual construction improvements over fifteen years, was lost on a city weary of Trump’s insolence and delirious over NBC’s decision to stay. Donald was serious enough that he wrote Wright, whom he’d gotten along with quite well during the protracted negotiations, inferring that the network knew all along it would stay at 30 Rockefeller Plaza and had merely used Trump as a bargaining chip with Rockefeller Center. Trump asked for a multimillion-dollar payment to cover his expenses, but NBC dismissed the notion.
At the same time that the Rockefeller Center deal was consummated, Koch announced his opposition, for the first time, to any project on the West Side yards substantially greater than the 7 million square feet approved for Lincoln West. Despite the mayor’s explicit and detailed rejection of the plan, Donald went forward anyway with a series of environmental and planning submissions for a project—renamed Trump City—that was twice as large. The submissions would continue throughout 1988 and into 1989 and form a mountain of petitioning paper, produced at a cost of millions by every conceivable kind of consultant.
The project was soon assailed publicly on several counts. The housing density was twice that of any existing residential district in the city. The shopping mall and other project features would attract 22,000 cars and 80,000 people a day, as well as generating 3.5 million gallons of sewage a day. It would also block all access to the waterfront.
Among the critics were the philosophers like Brendan Gill, who described Donald’s dream as “something like the condos of Miami Beach—a whole rank, a palisade of 50-story-high, blank-faced, grim, battery-like condos, shutting out the whole western sky.” Gill put to words the impact such a wall of giants would have on the people of the city: “We pile one skyscraper next to another, so the squirrels could leap from one top to the next, and pretty soon we’re living in the bottom of a well. Psychologically you feel uneasy. Feel in shadow. Something is threatening you. You’re trapped inside something that is beyond the human scale, and none of the things we need, like light and air and the sun on our skins is any longer present.”
Opposing Donald became New York chic, especially when a member of Westpride, an anti-Trump coalition of community groups, looked out her window in late 1987 and noticed truckloads of soil being hauled off the yards. At least 1,727 truckloads, carrying 1,350,000 cubic feet of dirt, were hauled from the site and deposited as landfill at a Staten Island dump. The sighting was like another Sally Goodgold alarm all along the West Side. Westpride officials discovered that the city’s Department of Environmental Protection had not been notified of Trump’s intent to remove the soil, which apparently had been inadequately tested by Trump to meet DEP toxic standards. When DEP Commissioner Harvey Schultz called Trump staffers to complain, Trump went right on hauling it.
Federal Environmental Protection Agency inspectors rushed to the site to test the soil, suspecting the presence of PCBs in an old rail yard where transformers were once used, but Trump barred them, urging them instead to test the landfill already delivered to the city-owned dump. Their tests came up negative, just as Trump claimed his tests at the yard had. But DEP concluded that Trump’s tests did not provide “sufficient information to determine the nature” of the soil removed, and the West Side groups continued to fear the worst.
Donald had rushed the excavation, starting on November 23 and ending the day before Christmas Eve, hauling as many as 118 truck-loads in a single day. He had ignored a letter from DEP, sent back in June, asking to review all soil and groundwater sampling Trump undertook on the site. What aroused the most suspicion, however, was the sudden resignation of Trump’s environmental attorney, Steve Kass, on December 23, the day the dumping in the city landfill suddenly ended. While Kass would not explain publicly why he quit, his and Donald’s associates agree that the two reached a bitter impasse on the soil removal. Kass, who opposed the initial decision to remove it without prior DEP clearance, believed that the testing results still required that the soil be taken out in special containers and trucked to toxic dumpsites. Donald had hired Kass in the first place because he believed that the lawyer’s impeccable environmental reputation would lend credibility to his controversial project, but when Kass insisted on the safest possible soil removal, costing up to $800,000, Donald lost patience with him. After bitter disagreements, Kass finally offered to resign and not go public.*
With all of these problems, a frustrated Donald finally began flirting with the notion of ending his obsession. In the summer of 1988, he began serious talks with William Zeckendorf, Jr., the son of the visionary New York developer whose rise and fall decades earlier had so poignantly anticipated Donald’s. Zeckendorf, Jr. had assembled a group of Japanese, English, and New York investors who were willing to pay a premium price for an option on the site. A contract was drafted requiring a $62.5 million down payment on a $550 million purchase price. The Zeckendorf group agreed to pay Donald $25 million for each of several six-month extensions while they tried to get the site zoned for a buildable project. The down payment and all extension payments would be forfeited if they failed to close on the property within a set term of five years. Whenever they closed, they’d pay whatever was outstanding on the $550 million price.
Donald and his partner Abe Hirschfeld had successfully wrangled into the fine print a commitment from Zeckendorf that “the most prominent thoroughfare” on the site would be “prominently named Donald J. Trump Boulevard” and that another street in the project would be named Abraham Hirschfeld Way. Trump leaks from the negotiating table falsely suggested that the Zeckendorf offer was as high as $800 million, and Donald even claimed in a letter to Zeckendorf that he had a last-minute competing bid of $770 million, but this was just more whistling in the wind.
In a New York Times article in mid-October, Trump publicly agonized about what he called his toughest choice: “I am torn between two worlds. I love the idea of building this wonderful city,” he said, claiming that the zoning was about to be approved. “But I am being offered sums of money that are staggering.” The down payment was deposited in a bank, and Zeckendorf aides began calling West Side leaders to indicate they were taking an option and were “willing to start from scratch to work with the community.” But just as Donald had sabotaged the imminent sale of his Central Park South properties in the mid-eighties, raising the price at the last minute, he thwarted this deal with ever-escalating demands, even seeking a free one-eighth interest in Zeckendorf’s project. He could not break with his dream.
