Donald Trump tricks New York into paying for the purchase of his first hotel

Filed In

Recently Updated

Top Folders

Dates on Trump File reflect when something happens, not when it’s first reported.

Around May 1975, Donald Trump attempts an elaborate plan to buy the struggling, historical Commodore Hotel and turn it into the Grand Hyatt. The plan includes convincing the government that he’s doing them a favor and needs a tax exemption in return.

As Kim Phillips-Fein writes in Fear City: New York’s Fiscal Crisis and the Rise of Austerity Politics, “Trump’s plan was elaborate. Trump would be allowed to purchase the property from the railroad for $9.5 million. Then he would sell it for a dollar to the Urban Development Corporation… [a state agency that had] its roots in low-income housing. Finally, the UDC would lease the property back to Trump and Hyatt Corporation for ninety-nine years, allowing the developers to pay taxes far below the normal rate for four decades—a windfall worth hundreds of millions of dollars.”

To make the deal happen, Trump had his surrogates and Penn Central’s spread the idea that if the Commodore shut down it would, in the words of a WCBS editorial, “lie vacant, taxes unpaid, a monument to urban failure.”

City officials concurred: “A closed Commodore would have a very serious blighting influence on the east midtown area,” said Alfred Eisenpreis, New York’s Economic Development Administrator. Trump needed to play up the urban blight angle both to keep the purchase price low and to ensure that no one else would swoop in and offer more than $9.5 million.

James Nevius, Curbed.com

Trump and representatives begin telling the press that he has already signed a purchase contract to buy the hotel, on the terms that the city agrees to his requested tax abatement.

Mary L. Trump writes in her book Too Much And Never Enough that her uncle held a widely reported press conference in 1975 to announce that he’d obtained the rights to the hotel and had a massive plan to turn it into the Grand Hyatt. However, according to documents and Penn Central officials, a contract isn’t signed until two years later.

During that time, the city could have auctioned the property to a builder who offered to renovate it at the least expensive cost to the city. They didn’t even try because they thought Trump had contractual rights to the property.

In March 1976, the Urban Development Corporation votes initial approval of a two-part deal to sell the Commodore to Trump, but Richard Ravitch of the UDC warns that the deal might be a scheme for Trump to make a “windfall profit.”

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 (Mayor Abraham) Beame, John 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.”

Wayne Barrett

The deal goes through anyways in May 1976.

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.

Wayne Barrett

Sources

https://www.villagevoice.com/2019/02/28/the-dirty-deal-that-helped-make-donald-trump/

https://ny.curbed.com/2019/4/3/18290394/trump-grand-hyatt-nyc-commodore-hotel

Too Much And Never Enough by Mary L. Trump, Ph.D.

Photo: Getty Images

Note From TF

Some Trump File posts are incomplete as the site is still young and Trump world moves fast. Please use the source links to read further if a topic interests you or if you doubt its authenticity. If a post does not have source links, it is an early draft and will be updated soon. I plan to go back and build on every post in the future.

If If there is content you’d like to add context to or something that should be corrected, please contact TF by clicking here or email us at trumpfile@protonmail.com. You can also find us on Twitter.

Support The Site:

Donate Today

Donate Monthly

Keep Reading

Recommended

Dates on Trump File reflect when something happens, not when it’s first reported.

Around May 1975, Donald Trump attempts an elaborate plan to buy the struggling, historical Commodore Hotel and turn it into the Grand Hyatt. The plan includes convincing the government that he’s doing them a favor and needs a tax exemption in return.

As Kim Phillips-Fein writes in Fear City: New York’s Fiscal Crisis and the Rise of Austerity Politics, “Trump’s plan was elaborate. Trump would be allowed to purchase the property from the railroad for $9.5 million. Then he would sell it for a dollar to the Urban Development Corporation… [a state agency that had] its roots in low-income housing. Finally, the UDC would lease the property back to Trump and Hyatt Corporation for ninety-nine years, allowing the developers to pay taxes far below the normal rate for four decades—a windfall worth hundreds of millions of dollars.”

To make the deal happen, Trump had his surrogates and Penn Central’s spread the idea that if the Commodore shut down it would, in the words of a WCBS editorial, “lie vacant, taxes unpaid, a monument to urban failure.”

City officials concurred: “A closed Commodore would have a very serious blighting influence on the east midtown area,” said Alfred Eisenpreis, New York’s Economic Development Administrator. Trump needed to play up the urban blight angle both to keep the purchase price low and to ensure that no one else would swoop in and offer more than $9.5 million.

James Nevius, Curbed.com

Trump and representatives begin telling the press that he has already signed a purchase contract to buy the hotel, on the terms that the city agrees to his requested tax abatement.

Mary L. Trump writes in her book Too Much And Never Enough that her uncle held a widely reported press conference in 1975 to announce that he’d obtained the rights to the hotel and had a massive plan to turn it into the Grand Hyatt. However, according to documents and Penn Central officials, a contract isn’t signed until two years later.

During that time, the city could have auctioned the property to a builder who offered to renovate it at the least expensive cost to the city. They didn’t even try because they thought Trump had contractual rights to the property.

In March 1976, the Urban Development Corporation votes initial approval of a two-part deal to sell the Commodore to Trump, but Richard Ravitch of the UDC warns that the deal might be a scheme for Trump to make a “windfall profit.”

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 (Mayor Abraham) Beame, John 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.”

Wayne Barrett

The deal goes through anyways in May 1976.

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.

Wayne Barrett

Sources

https://www.villagevoice.com/2019/02/28/the-dirty-deal-that-helped-make-donald-trump/

https://ny.curbed.com/2019/4/3/18290394/trump-grand-hyatt-nyc-commodore-hotel

Too Much And Never Enough by Mary L. Trump, Ph.D.

Photo: Getty Images

NOTE FROM TF

Some files are incomplete as the site is still young and Trump world moves fast. Please use the source links to read further if a topic interests you or if you doubt its authenticity. I plan to go back and build on every file in the future.

If there is content you’d like to add context to or something that should be corrected, please contact us by clicking here or email us at trumpfile@protonmail.com

Support The Site:

Donate Today

Donate Monthly

Keep Reading

Recently Added & Updated

Keep Reading