Wayne Barrett: How Donald Trump Managed To Turn Triumph Into Disaster
Until November 8, 2016, rebuilding Central Park’s Wollman Rink was the zenith of Donald Trump’s public acceptance. In less than six months he’d completed a job that the city had been unable to finish for six years. Even those who mocked Trump’s glitz and self-obsession, as well as those who recoiled at his grand design for the West Side rail yards, had to give him credit for the rink.
And yet, Donald managed to transform this triumph into a prelude to disaster. In Wayne Barrett’s Village Voice cover story from December 1991 (which was excerpted from his book Trump: The Deals and the Downfall,) the Donald’s fiercest adversary would show how, in a peculiar sort of way, Wollman would prove to be his (sadly temporary) undoing.
Here's that chapter from Barrett's book, reprinted with permission:
Trump: Beginning of the End
By Wayne Barrett
The humdrum conventional world could not brook his daring, his insouciance, his constant desire to call a spade a spade. His genial sufficiency was a taunt and a mockery to many. e hard implication of his eye was dreaded by the weaker as re is feared by a burned child.
— Theodore Dreiser
The Titan ere is no one my age who has accomplished more. Everyone can’t be the best. — Donald Trump, Newsweek, 1988
ON A CRISP AND SUNNY November day in 1986, Donald Trump hosted the ceremonial first skate at Wollman Rink in Central Park, six years after the city had closed it for major renovations and slightly less than six months a er Donald himself had taken over the long-botched job and completed it. In early June he had convinced Ed Koch to let him rescue a project delayed so long and for so many different reasons that a several-hundred-page city report on the disaster was likened by one city commissioner to Murder on the Orient Express. In Agatha Christie’s mystery, said the commissioner, “Hercule Poirot, the detective on the case, finds out that there was not one murderer, but that everybody was the murderer.”
Trump had managed to redo the rink entirely, taking apart the faulty new facility the city had constructed and completing a magnificent 33,000-square-foot functioning rink on time, under budget, and without having taken a cent of profit. Not even the half dozen press events he hosted on the site—ranging from the laying-of-the-pipes press conference to the pouring-of-the-cement conference the following day—slowed the rink’s progress, a reconstruction that was, as Donald would express it, a testament to the will and savvy of private enterprise.
The two final press events, the grand opening in mid-November and the gala grand opening on November 23, were attended by everyone from John Cardinal O’Connor to Lee Iacocca to skaters Peggy Fleming and Dorothy Hamill to city officials like Andy Stein, David Dinkins, and, of course, the mayor. The two openings were so similar that no one could remember just who had attended which. “We went to the first few press conferences,” explained Parks Commissioner Henry Stern, “but we stopped after a while.”
Though Donald had almost comically overworked it, the Wollman revival was, by all accounts, the peak moment of his public acceptance. Even those who mocked his glitz and self-obsession, as well as those who recoiled at his grand design for the West Side, had to give him credit for the rink. “You beat nature,” declared an appreciative Stern. And yet, Donald managed to transform this triumph into a prelude to disaster. In a peculiar sort of way, Wollman would prove to be his undoing.
Trump had a choice: When asked why he had succeeded so rapidly where the city had stumbled so badly, he could simply have accepted the plaudits, praised his contractors, and attributed the city’s prior delays to the legislated constraints that made public construction so difficult. Predictably, though, he couldn’t resist the opportunity to gloat. Donald rejected the diplomatic advice of his in-house Koch veteran, Tony Gliedman, who had skillfully processed the project through the city bureaucracy, and declared, “There isn’t the expertise in the city to really understand construction. There is no great longing to work in city government whereas it used to be a great honor. Basically, the city didn’t know how to build a skating rink. If the city could just plan and execute, it would be billions and billions of dollars that could be saved.”
These comments launched a new season of escalating exchanges with the Koch administration, during which Trump, in sharp contrast with the guile of the Cuomo seduction, displayed the offensive side of his sometimes engaging and sometimes intimidating political personality. As if the humiliation of the mayor implicit in Donald’s initial condemnation of the city was insufficient punishment, he began twisting the central facts of the rink restoration to make the city look even more ridiculous. “I went to Canada, to get a rink expert,” he said. “The city had hired a contractor from Florida.” The story he spun, spelled out later in The Art of the Deal, was that “logic suggested that the best place to look was Canada” and that “everyone I talked to said use Cimco,” a Canadian company Donald claimed he found by searching for the contractor that had built the rink for the Montreal Canadiens. City Hall knew otherwise.
In fact, before Donald first wrote Koch to ask that the city let him do the Wollman job, the Parks Department had decided to hire a new consultant, a Pennsylvania firm called SORA (St. Onge Ru Associates), and SORA had already engaged a Canadian rink designer who had, in turn, brought Cimco into the picture. At Donald’s initial meeting and walk-through of the site with Parks Department officials in early June, two SORA consultants (and their Canadian associate on a conference call) had recommended virtually all of the major changes in the renovation plan that Donald later successfully adopted.
According to minutes prepared by Donald’s construction manager, SORA recommended that the city’s old freon refrigeration system be replaced with the brine system that has worked so well since. SORA also urged that a new concrete slab be laid on top of the one the city had installed, rather than trying to remove the old one. And while Trump and his engineers wanted to use twenty-two miles of steel pipe for the refrigeration system, SORA’s widely experienced Canadian consultant convinced them that plastic would be a lot quicker to lay and just as dependable. The first conference call went so well that the consultant came down from Canada for further meetings with SORA and the Trump team. (As soon as Trump adopted all its suggestions, he dropped SORA, bad-mouthing the consultants as know-nothings in his book. When the city insisted he pay the meager $12,000 due SORA out of the $3.8 million of city funds allocated for the job, he refused, and it took almost two years before he nally approved a half payment.)
A memo outlining much of this history was prepared by the Parks Department and sent to the mayor’s office in late October, shortly before Donald began promoting himself at the expense of the city. Yet Koch never countered Donald’s performance with the truth, perhaps fearing he would appear too defensive. Koch’s close aides knew, though, that after all the on-again, off-again years of this tumultuous relationship, Donald had finally put himself on the mayor’s deeply personal enemies list, a category from which there was no reprieve.
Ever since the mayor’s friend and political ally Donald Manes had first attempted suicide at the start of the year, the once ebullient Koch had taken on a gallows look, his body drooping, weighed down by each new revelation about the corruption of his administration. Were it not for this vulnerability, Koch knew, Donald would never have dared to take him on personally, as he did in an extended television interview occasioned by the Wollman success. He blasted Koch as a man who would only “fight for his enemies,” rather than “be criticized for fighting for his friends,” adding that he “grew up on a different side of the street.” As Koch saw it, Trump was using the Wollman platform to launch an attack on his character and his government.
On the day the rink opened for public use, the mayor’s other friend, Stanley Friedman, and the director of his Parking Violations Bureau, Lester Shafran, were in a federal courtroom waiting for a verdict in their racketeering case. While Friedman’s and Shafran’s guilt remained in doubt for two further days, the ten-week trial had clearly established that the self-described reform mayor had, over the course of years, quietly handed out profitable pieces of his government to both Manes and Friedman. Their brazen looting of the public fiefdoms they were given had gravely damaged Koch, just as their sudden absence in the power politics of the city had weakened Trump.
But Donald understood more quickly than most that “the scandal,” as it was referred to generically in the tabloids, was reshaping the city at its roots. Several hundred city officials would be indicted before it was over, and eventually it would even help do away with the Board of Estimate, eliminated by the voters in a 1989 charter change. Friedman, Manes, Brooklyn boss Meade Esposito, Bronx Borough President Stanley Simon, and city transportation czar Tony Ameruso were among the Trump benefactors convicted in this upheaval. And in the middle of it, Roy Cohn died. Donald recognized that the shadowy fixers and clubhouse creatures who’d given him, and Fred before him, such clout deep inside the permanent government of the city were out of business, at least for a while.
Wollman was his answer, for if he could no longer count on the inside track, he’d have to build a base of public support—one that was broad enough to carry his projects, particularly the one on the West Side, through the city approval processes. He settled with the tenants at 100 Central Park South, ridding himself of what any pollster would have called his worst negative. And he gloriously reconstructed the skating rink, giving himself the strongest public positive of his career—at least until he insisted on rubbing the mayor’s face in the new ice.
A Koch response—muted by the weakness of his scandal-scarred administration— finally did begin to emerge. The mayor began to connect Trump’s Wollman “exaggerations,” as he briefly described them, with the West Side project that was then weaving its way through city agencies. Trump was exploiting Wollman because he wanted “an edge” in getting Television City approved easily, the mayor told the New York Post, adding “that’s not the way it works.” At one of the November ceremonies at the rink, Donald thanked the mayor for the city’s cooperation in eliminating red tape and helping him get Wollman done so quickly. “I wish I could get the same cooperation on my private business,” he added, an apparent allusion to the already one-year-long city review of his West Side proposal.
“If you do it pro bono,” Koch replied. It was all in jest, but the Wollman dispute was in fact beginning to cast an ominous pall over Donald’s bid for West Side approvals.
Sam Horwitz, the old family friend and Coney Island councilman, was at the ceremony as well, standing beside his onetime theater partner, a beaming Fred Trump. The always upbeat Horwitz raved to Fred about Donald’s string of successes, but Fred suddenly turned troubled, declaring: “I hope he hasn’t bitten off more than he can chew.” The $700 million in bank and bond financing for the two Atlantic City casinos was imprudently un-Fredlike, as was the 1986 purchase of the West Palm Beach condominium far away from the Trump base. The extraordinary multibillion-dollar plans for the West Side may have also been a worrisome prospect for the old man—where was the market, after all, for the world’s tallest building, the world’s grandest shopping mall, and the world’s most expensive colony of waterfront luxury apartments?
Donald’s Television City proposal was now simultaneously at different stages in the city’s economic development and planning processes. The city Planning Commission was engaged in an intensive review of the environmental impact and design implications of Donald’s second plan for the project, submitted in October of 1986. On another front, Alair Townsend, the deputy mayor for economic development, and her top staff were actively working to put together an acceptable package of tax abatement and other city concessions designed to persuade NBC to reject a move to Jersey and remain in New York. While other city sites were nominally still under consideration, Trump had convinced the city, beginning with his initial approaches in 1985, that NBC favored his. The Koch administration was prepared to make major accommodations to keep the network and its 4,000 jobs from following the Jets to Jersey.
On May 1, 1987, Donald spelled out the incentives the project would need to become economically viable in a formal proposal to Townsend, citing his two day talks with NBC, which had just concluded. His plan was a 1980s version of the Hyatt deal. He would convey title for the West Side yards to UDC for a dollar, and UDC would lease it back to him for ninety-nine years. He’d pay the current taxes for the first five years of the lease, a million-dollar-a-year increase for the next twenty-five, and full taxes thereafter (when he could reclaim the site for a dollar). In addition to the property tax abatement and a sales tax exemption on construction materials, Donald wanted the city to agree to allow UDC to override zoning restrictions on the site “so that NBC will not end up with years of uncertainty, a primary concern to them.” In exchange for all these public concessions, Donald promised to “enter into a competitive low-cost lease with NBC,” meaning that he would use the tax break granted the entire site to lower his rent charges to NBC so significantly that the network would find it advantageous to remain in New York.
A few days after submitting the plan in a two-page letter, Trump began lobbying for its acceptance in the press and his reliable friends from UDC lobbied right along with him. Vincent Tese’s vice president and spokesman, Harold Holzer, told the New York Times that the NBC deal was “an idea that’s been proposed by the developer, but has been discussed by UDC only in its broadest outline form.” Noting that the key actor in the deal was the city, Holzer added: “We hope that the next move is theirs, not NBC’s.” Holzer was even clearer with the New York Post: “The ball is in the city’s court. We’d like to take it, but they have to pass it.” Tese had rallied to the Trump cause without ever having received so much as a conceptual plan in writing.
Trump tried to increase the pressure with a panicky phone call to Townsend in the middle of a Friday afternoon in early May. He gave her a two-hour deadline to accept or reject his proposal, warning that NBC was “on the precipice of making a decision” and would otherwise be Jersey-bound. Townsend pressed him for an estimate of the tax write-off’s cost to the city, but Donald could offer none. The city quickly calculated it at a billion dollars. Although Townsend told Trump his proposal “was ridiculous,” he met with NBC officials later that day “and le them with the impression that the city had approved this proposal.” When the network called Koch the following Monday to confirm that the city had agreed in concept with the site-wide tax exemption, a distressed mayor replied that “no such agreement” had been reached.
Townsend quickly wrote to Trump saying that the city’s preliminary analysis indicated that its tax loss under Trump’s plan would be “well in excess of what is needed and defensible” and would give Trump “tax benefits beyond those that would benefit NBC.” She added that the city was determined to negotiate a deal directly with NBC, not with Trump. Donald responded with a furious memo, charging that Townsend’s claim that the city had made “substantial progress” with NBC was “both incorrect and patently self-serving” and listing a dozen other major companies that had fled the city in the past year. Citing the “extreme urgency” of the situation, he demanded that the city respond immediately to his UDC suggestion or “step into my position and provide the necessary annual cost subsidy on a direct basis to NBC.”
Koch was so irate over Trump’s letter that he sent Townsend a note saying it exhibited Donald’s “normal bullying self to the utmost” and urging a “very tough” reply. A number of his top advisers sensed that Koch was still smarting over the rink insults and that while he felt the city might have to deal with Trump if Trump had the network as an anchor tenant, he was not about to give Donald “a dollar more,” as Koch put it, than he had to.
The New York Times weighed in with an editorial that backed Koch’s rejection of the site-wide tax abatement, but urged the city to give Trump what he wanted on the nine-acre portion of the site where the NBC building would be built, including a waiver of all zoning regulations through the use of a UDC override. A New York Daily News editorial several days later blasted Koch for not having begun direct talks with Trump more than a week after his written submission. Instead of the tough reply ordered by Koch, Townsend attacked Donald in the tabloids, referring to his letter as “baloney” and insisting that it wouldn’t leave her “cowering in her skirt behind her desk.” But she also initiated real, head-to-head negotiations with Donald, pushed no doubt by the editorials. Townsend had little choice but to deal with Donald—she had made little headway talking to NBC directly, and so Donald had come to symbolize the city’s best, if not only, hope.
Townsend attended the first two-hour session with Donald, enduring his references to her as “honey” and “sweets” and “darling” and leaving the detailed talks to a team of city lawyers and negotiators headed by Jay Biggins. The discussions, many of which occurred in Donald’s conference room at Trump Tower, continued for more than a week, with Biggins in constant touch with Townsend at City Hall and Townsend updating the mayor. A top NBC executive appeared at some of the meetings, reinforcing the city view that Trump indeed had the network.
Trump’s friends at UDC kept the pressure on in the media, the quotable Holzer announcing publicly midway through the city’s talks with Trump: “We’re ready and able to do anything to keep NBC, but we can’t just send a taxi and get the city over here. . . . the way we look at this situation is that NBC is on a par with the Brooklyn Dodgers and the football teams. It has to be taken very seriously.” Even though the Times had already reported that Townsend was opposed to the Trump concept of shifting the zoning to UDC, an unidentified high state development official was quoted in a news story during the negotiations endorsing the concept: “Otherwise, NBC wouldn’t be comfortable with going into Television City.”
The deal that Biggins finally nailed down with Trump called for a twenty-year abatement for the entire site, with the proviso that the city would get a 25 percent share in project profits for forty years and thus recapture over time the taxes that had been deferred upfront. City officials pegged the short-term cost at $700 million, “a far richer tax break than had ever been given anyone,” according to a Biggins memo. Trump adamantly refused to give the city a guarantee that the profit-sharing formula would, after forty years, repay the city’s full tax investment in the project. Nonetheless, accepting Trump’s assurance that he would offer NBC rents competitive with New Jersey’s $15-a-square-foot bid, the Biggins group felt it had achieved the best possible deal for the city and the only one that would keep the elusive, New Jersey–leaning NBC in New York.
Donald, his brother Robert, and Harvey Freeman were the key bargainers on the Trump side. Allen Schwartz, the onetime Trump lawyer who had so effectively cleared the way for the West Side plan in 1985, was by this time nowhere to be found. He had attended Donald’s weekly staff meetings on the West Side project well into 1986, but as the differences between Donald and the Koch administration deepened over the Wollman revival, Schwartz became increasingly uncomfortable and quit. His sudden absence may well have been as sound a harbinger of the mayor’s likely disposition as his presence had once been.
The Biggins team, nonetheless, reached a tentative agreement with Trump on the broad outlines of a deal that, if approved by the mayor, gave Donald much of what he wanted. With Donald’s apparent hold on NBC, the city negotiators did not feel they had the option of coming back to City Hall without some sort of an acceptable package. While Biggins would later claim that there was never a city commitment to the conceptual arrangement, both sides did agree to a term sheet. Donald understandably believed that he had his ultimate deal.
Everyone understood that there was one pivotal business detail left to be worked out: the definition of profit, a familiar knotty question from the Hyatt days. But Townsend and Biggins were so confident that they otherwise had the broad outlines of an agreement that they hired a law firm, Kramer, Levin, to work out a city position on the profit question. And while the lawyers were drafting the profit language, Townsend put the overall proposition before the mayor for a final decision. By doing so, she was implicitly recommending it.
Koch brought in a number of prominent businessmen to review the terms, and they signed off on the deal, too. He then summoned the city’s tough budget director, Paul Dickstein, and Finance Commissioner Abe Biderman to get their bottom lines. Dickstein contributed the startling information regarding Trump’s controversial, sharply reduced payment to the city under the Hyatt lease.
In addition to prompting the Burstein audit that would ultimately unveil Donald’s apparent shortchanging of the city on Hyatt payments, the Dickstein revelation confirmed the mayor’s suspicions, which he announced at one of the two-day sessions. “If you’re dealing with Donald Trump,” Koch said, “you’re gonna get screwed.” Donald’s dramatic $2.8 million cut had given Koch fresh evidence of how he might shortchange the city in any West Side profit-sharing arrangement. “We were simply not convinced that the city would be able to get Trump to agree” on a profit plan “that would adequately protect the city’s interests,” Biggins noted in a postmortem memo.
The other sticking point for the mayor, though, was the nagging question of UDC’s bypass of the zoning process. The Biggins team had hammered out only business terms, but the underlying assumption of Trump’s maneuvering was that he’d automatically obtain the zoning he needed—at least for the world’s tallest building, which would house NBC. Indeed, he had made his cut-rate rental subsidy to NBC dependent upon the income stream elsewhere in his 15-million-square-foot project, making it virtually impossible to approve the network’s deal without approving the total development. Koch understood that this interdependence was designed to “employ the mayor as an advocate for the zoning approvals,” as the Biggins memo expressed it. In effect, Trump was attempting to buy the city’s zoning authority with a share of project profits. As Donald and his state friends had framed it, the waiver of all city zoning restrictions on the densest project in recent history was the ransom Koch had to pay to keep NBC.
While Koch and his aides talked the plan out, Donald kept the pressure on, leaning on the mayor by phone. “You’ve got to make a decision,” he told Koch. “I can taste the deal in my mouth. Today. Today.” The mayor dismissed the call as Trump chutzpah. “He becomes so overbearing that people capitulate,” Koch said.
But on May 26, a few days a er 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 judg- ment 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.”
Mayor Ed Koch, Donald Trump, and Ivana Trump attend the Trump Tower opening in October 1983 at The Trump Tower in New York City.
Sonia Moskowitz / Getty Images
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 in exible 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. e 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.
The publicity about the near sale helped create a market nonetheless, and Donald used the prices bandied about to hype his own net worth. The more highly the banks valued the yards, the more he could borrow, even without pledging them as collateral, and the new loans could help pay for all the other highly leveraged new projects in which he was involved. Indeed, though Donald already had his $200 million Chase loan on the yards, he went out in the a aftermath of the Zeckendorf hoopla and borrowed another $24 million from Manufacturers Hanover for Trump City development costs. Had Donald sold the yards, the proceeds could have helped nance his late eighties buying spree, but he could not consummate the one asset sale that would have reduced the debt required by all his purchases.
One of Donald’s Atlantic City consultants, the clever casino analyst Al Glasgow, told him that the problem with vacant land was that “it eats, but it don’t shit.” By the end of the decade, Donald had already carried the yards’ burgeoning costs, with no compensating income, for five years. The property was consuming between $15 and $20 million a year in taxes, interest, and legal and consultant costs. Donald could live with the cash drain so long as the Chase loans, abetted by Manufacturers Hanover’s recent generosity, were paying the bills. But the day would come when he would no longer be able to pay the interest costs with the bank’s money, to say nothing of all the other expenses.
Within a few days of the collapse of the Zeckendorf deal, Donald launched a new campaign to obtain the zoning he wanted by picking the mayor he wanted. In early December 1988, Donald began to suggest publicly that he might take on Ed Koch in the 1989 election, not as a candidate, but as a funder of the anti- Koch forces. He met in Trump Tower with Lee Atwater, head of the Republican National Committee, and Roger Stone, the GOP consultant who was also Donald’s lobbyist, and discussed ways he could put a fortune on the line against Koch without violating campaign finance limits. The strategy they came up with, leaked to the newspapers, was that he would spend up to $2 million on commercials that assailed Koch yet endorsed no one. Though Donald was still professing the innocence of scandal lynchpin Stanley Friedman, he claimed he wanted to finance the negative publicity because “New York has become a cesspool of corruption and incompetence.”
His preferred candidate was Andy Stein, who refused even to answer a Westpride questionnaire about Trump City despite his vote against the much smaller Lincoln West. In anticipation of a possible Stein race, as well as commemorating Stein’s twenty years in politics, Trump hosted a late November fund-raiser for him. Donald was overheard telling Stein on the dais about several $4,000 and $5,000 contributions he’d collected but was returning because they exceeded the new $3,000 nance limits imposed in a Koch-backed reform. In his thank-you speech, Stein joked that some people said the mayor didn’t take care of his friends but, attributing the new limits to Koch, added: “Donald, trust me—the mayor just saved you a lot of money.”
But Stein backed out of the race and with Koch making a comeback in the polls, Donald withdrew his advertising threat and instead tried to ride out the 1989 election quietly. He did raise $20,000 for GOP candidate Rudy Giuliani, cochairing one fund-raiser at the Waldorf-Astoria in the spring, but he receded from the campaign when the former federal prosecutor began to stumble, losing a gigantic early lead in the polls. Even while he endorsed Giuliani he had Tony Gliedman, an old tennis buddy of David Dinkins, heading a real estate fund-raising committee for the Dinkins campaign. And to cover himself when the mayor began rebounding in the polls, he suspended all attacks on Koch, trying to mediate a low-key peace.
At one happenstance meeting of Trump and Koch in the hallway of John Cardinal O’Connor’s residence, when both stopped by after midnight mass on Christmas Eve in 1988, Donald confided that he wasn’t really going to buy the commercials attacking Koch that he’d announced only days before. Koch teased that he’d tell the press and said he had a witness—gesturing toward the man who was with him, Dick Condon, the new police commissioner. While Koch handled Trump’s banter about the commercials lightly, he was quite serious about the enmity. When a top City Hall aide and longtime Koch friend, Herb Rickman, tried during the campaign to broker a peace meeting one evening at Gracie Mansion, Koch refused: He wanted Trump’s public apology before he would sit with him, and Donald would not go that far.
After Koch lost narrowly to Dinkins in the September Democratic primary and Dinkins beat Giuliani in a tight November race, Donald made one last attempt to get Trump City certified by the City Planning Commission. He desperately wanted it certified before the end of the year because, in addition to Koch’s loss, the city charter had gone down in defeat, and the new charter mandated the abolition of the pliable Board of Estimate six months into 1990. The only chance for Trump City to go before the old board, rather than have to start over with a whole new set of city players and charter processes, was if it was certified quickly.
Instead, in the final months of the mayor’s twelve-year reign, top Koch officials moved to push the administration’s favorite projects to the top of the certification list, namely, an East Side waterfront development called Riverwalk and a massive middle-income project in the Arverne section of Queens. The reshuffling, personally approved by the mayor, placed Donald at the bottom of the list. It was the first time that City Hall had ever dictated the priority list for certification. Ironically, Donald found himself in a situation that was the reverse of the mad dash for the Commodore tax abatement engineered by Stanley Friedman in the final weeks of Beame’s term. Arverne had been in the complicated review process for a mere three months, while Trump’s various versions of a West Side project had been there for three and a half years.
With the last-minute announcement of the Hyatt audit and the forced settlement of the 100 Central Park South city suit as well, spiteful old Ed Koch was getting the last laugh. A decade of tensions between these bookend egos had begun with a nasty dispute over a few hundred square feet of stairwell space and ended in a torrent of exchanged abuse over a 14-million-square-foot project. The actual size of the issues between them never mattered, however. While they had their moments of mutual back-scratching, the mayor and the mogul seemed destined to get ugly with one another.
Donald should have understood all along that there was no way he would wind up the winner in this blood feud. He had learned the upside of politics so well; he knew precisely what it would mean for him if he could induce public officials to exercise their discretion on his behalf. But it took this very expensive war with Koch to teach him the opposite lesson—that public discretion could also be fatal to a career-making project.
* Kass also repeatedly objected within the Trump Organization to the possible disruption the digging might bring to archaeological treasures on the site, such as the remains of the Leni-Lenape Indian tribe. The on-site relic issue was so significant that the Landmark Preservation Commission sent a letter asking that the excavation stop until “all archeological work has been completed and signed to by our agency.”
Reprinted with permission from Trump: The Greatest Show on Earth—The Deals, The Downfall, The Reinvention by Wayne Barrett (Regan Arts, 2016).
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