Tag Archives | Ed Koch

Tax Abatements Down by the Riverside

Hundred of millions of dollars were awarded unnecessarily to developers

By Sydney H. Schanberg 

Originally published in Newsday, June 13, 1986

Six years ago, when all the heavyweight builders, architects, real estate lawyers, financiers and public relations men were fighting each other for the right to develop a chunk of prime East River waterfront property known as the “Billion-Dollar Gold Coast” one of the competing lawyers, Charles Moerdler, a former city buildings commissioner, told a reporter: “We’re talking here of potentially the most meaningful dollar investment in the City of New York in many a year. That’s why there’s so much competition.”

One would not have thought with so many biggies painting to be picked by the city to develop the juicy tract, that the city had to put any sweeteners in the pot. Why offer tax incentives when the tongues are already hanging out? In fact, the same newspaper story that recorded the Moerdler comment also said of the $500-million project that “no city or state money is expected to be involved.”

Newspaper archives, it’s been noted before, are always good for a laugh. The private project will now receive tens of millions of dollars in city tax abatements.

Awarded in 1980 to a group of bidders who called their design River Walk, it is still going through the city’s permit process but is slated to go into construction late next year.

How it came to receive this major tax forgiveness is an instructive lesson in the fine-print skills of the Koch administration.

The state statute governing the tax gift is known as 421-a — short for Section 421-a of the Real Property Tax Law. It was enacted in 1971 to stimulate the building of apartments on economically unattractive sites in New York City where housing would otherwise not be built; sites defined in the statute as “vacant, predominantly vacant, or underutilized.” (The developer pays no taxes during construction and then only partial taxes for 10 years afterward.)

Over the years, the program became a giveaway. Hundreds of millions of dollars were awarded unnecessarily to developers who were building luxury projects and would have carries them out anyway, without the tax concessions. Almost all the projects were done in the better neighborhoods of Manhattan.

No one imagines in 1971 that the Trump Tower, on “underutilized” Fifth Avenue, would qualify for these tax gifts, but it got them– $40 million to $50 million worth.

These distortions of the law’s original intent led to a crescendo of protest and pressures against the Koch administration, which finally agreed, after years of foot-dragging, to put limitations of 421-a.

The mayor acknowledged that much of Manhattan had become so attractive and lucrative for developers that tax indictments were no longer needed. So he agreed that from 96th Street southward to 14th Street, and also in parts of Lower Manhattan, 421-a was dead. (He did push through certain geographic exceptions, however — such as the the Times Square redevelopment area, Union Square and the Lower East Side. The critics of 421-a had wanted more of Manhattan covered by the ban, with no exceptions, but this was the best they could negotiate.)

The next step was enactment of the restrictive language — first through enabling legislation in Albany and then in a detailed, implementing statute in the City Council. The new rules when into effect last Nov. 29; projects in the proscribed areas that had not broken ground for their foundations by that cutoff date could not receive 421-a abatements.

Which brings us to River Walk, a project that will run from 16th to 24th Streets along the East River and therefore would seem to fall inside the 96th-to-14th-Streets area of denial.

But then we are told by city officials to look closer at the council’s implementing legislation. River Walk will be built mostly on a concrete platform, supported by pilings, that will extend 500 feet into the river. And the river, if you read carefully, qualifies for 421-a goodies.

Some very clever Koch administration types inserted language that defined the limits of the ban as “the bulkhead line” on both the Hudson River and the East River. And “the bulkhead line” means the water’s edge. So anything built over the water becomes automatically eligible for 421-a.

Nothing was said publicly at the time about this loophole. There was no open discussion. The 421-a critics simply weren’t aware of it, and many of them — like me — have just learned about it.

What it comes down to is that at the very moment when the mayor was conceding that real estate tax inducements could no longer be justified in a large portion of Manhattan because it had become so desirable, he was, virtually by subterfuge, keeping the tax gifts alive for the most desirable tracts inside that portion: the waterfront.

River Walk is the first over-the-water project to benefit from this ruse. But the Koch administration has given a high priority to waterfront development, so more these tax gifts are certain to follow.

River Walk, for reasons beyond the tax abatement, is vigorously opposed by the residents of the neighborhoods around it, who say it is too huge and will overwhelm the moderate-income, low-rise community. They are asking that it be drastically reduced and reshaped.

The project consists of six acres on land and 24 acres to be constructed over water. Its structures will include five residential towers — ranging from 25 to 45 stories — with 1,888 apartments, all of them to be sold or rented at luxury rates. Also in the plans are a 245-room hotel, 2,075 parking places, and office building, retail space and two marinas.

Officials at the city’s Public Development Corp., which late last year took over responsibility for waterfront development from the Department of Ports and Terminals, say the 421-a “bulkhead” language was written before their time by they insist there will be no windfall for the builders of River Walk or any other over-the-water projects.

These officials say they will closely scrutinize the project’s financial plan before setting the final annual rent of the developer’s land-lease with the city.

What they’re suggesting is that if the 421-a tax gift raises the developer’s profits to excessive levels, they’ll raise his rent. We look forward to reading the fine print.

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Strictly Beau Monde

By Sydney H. Schanberg

Originally published in the New York Times, December 18, 1982

The state’s highest court scolded the city government this week for having denied a tax abatement to the glass and steel creation of Donald Trump, master builder — the structure that he calls, interchangeably, the Trump Tower or ”the world’s most talked about address.”

The Court of Appeals ruled unanimously that the city had gone beyond the law and used arbitrary reasons in deciding that young Trump’s 68-story edifice at Fifth Avenue and 56th Street did not qualify for having $20 million written off its tax bill. The seven judges told the Koch administration to go back and think it over and do the right thing for ”the world’s most talked about address.”

Sad to report, however, the city is behaving mean-spiritedly and is now looking for new ways to thwart the great builder and hold on to the tax money for the support of patently less important addresses — such as the Men’s Shelter and Bellevue Hospital.

Don’t the Koch people have any sense of gratitude for the uplift this visionary is giving our town? Don’t they realize that we will all be basking in the renascent glow from the shiny people who are buying the 263 condominiums in the Trump Tower at prices ranging from an embarrassing $500,000 for the economy one-bedroom unit up to $10 million for the premiere penthouse triplex in the stars?

I think it’s best to let the building’s prospectus and purring brochures speak for themselves: ”Imagine a tall bronze tower of glass. Imagine life within such a tower. Elegant. Sophisticated. Strictly beau monde. ”It’s been fifty years at least since people could actually live at this address. They were Astors. And the Whitneys lived just around the corner. And the Vanderbilts across the street.

”You approach the residential entrance — an entrance totally inaccessible to the public — and your staff awaits your arrival. Your concierge gives you your messages. And you pass through the lobby.

”Quickly, quietly, the elevator takes you to your floor and your elevator man sees you home. ”You turn the key and wait a moment before clicking on the light. ”A quiet moment to take in the view – wall-to-wall, floor-toceiling – New York at dusk. The sky is pink and gray. Thousands of tiny lights are snaking their way through Central Park. Bridges are becoming jeweled necklaces. ”Your diamond in the sky. It seems a fantasy. And you are home.

”Maid service, valet, laundering and dry cleaning, stenographers, interpreters, multilingual secretaries, Telex and other communications equipment, hairdressers, masseuses, limousines, helicopters, conference rooms — all at your service with a phone call to your concierge.

”If you can think of any amenity, any extravagance or nicety of life, any service we haven’t mentioned, then it probably hasn’t been invented yet.”

And can you believe it? The Mayor is trying to make life difficult for these people. Trying to cast a pall over their amenities. Trying to take away $20 million of their extravagances.

What kind of grinch would want to hassle that anonymous wage-earner who has purchased Triplex N for $10 million? Perched on the top three floors, Triplex N has (and this is but a partial list): ”five bedrooms, seven bathrooms, skylit garden/playroom, roof terrace, (interior) elevator serving all floors of the unit … unlike anything you’ve ever seen … wraparound views of Manhattan … sculptured staircases … sumptuous tubs … his and her bathing suites … worthy only of the world’s most talked about address.”

City Hall is trying to argue that the 1971 state law authorizing tax abatements for new residential construction was designed to stimulate the creation of low- and middle-income housing, not units that are ”unlike anything you’ve ever seen.” (The median rent in other buildings currently receiving such write-offs from the city is $465 a month. The ”carrying charge” alone on Triplex N is about $3,400 a month.) The court said there was nothing in the statute’s language that makes such a distinction.

The court is right — if we start discriminating against the rich, then who’ll be next? Donald Trump couldn’t agree more. He took all the risks, after all. He raised the $200 million to build the tower. Is he now to be penalized because the condominiums on the top 38 floors — which are in such sumptuous demand that he’s raised the prices four times since the sales office opened a year ago — will bring him $300 million (not to mention the revenue from the 18 retail and commercial floors)? What’s wrong with a reasonable profit?

What would the city do with young Trump’s $20 million, anyway? They’d just spend it on more cops and sanitation workers and subway repairmen. Who’s going to need cops and street sweepers and subway mechanics if young Trump keeps getting tax abatements and keeps building these swell apartments? Pretty soon, there’ll be so much housing that we’ll all be able to live strictly beau monde.

Now do you realize how important this issue is? Don’t drag your feet any longer — write to the Mayor immediately and tell him to lay off Donald Trump.

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This Little Piggy Went Nyah-Nyah to the Moron

By Sydney H. Schanberg

First published in Newsday, Jun 2, 1987

Just when it looked as though the garbage-without-a-country was going to be the only story to keep the press alive during the summer doldrums, along came The Mayor and The Mogul to deliver their gift to the hungry hyenas of the Fourth Estate. They gave us the multiple, continuous, floating mega-tantrum.

The Mogul, whose parents had named him Donald Trump, was rechristened by The Mayor as “Piggy, Piggy, Piggy.”  It’s not clear whether this came before or after The Mogul called The Mayor, who used to go by the moniker of Edward Koch, a “Moron.”

What a boon for the headline writers — “Mayor Moron Blasts Mogul Piggy.” It’s almost enough to restore one’s faith in the high-mindedness of our celebrities and in their selfless commitment to keeping us entertained.

We’ve seen hair-pulling by inflated personalities before, but this one is special — a pluperfect specimen. After all, it’s not often that two of the biggest hustlers, con men and self- promoters in town turn on each other in their sandbox and throw a conniption fit.

This town isn’t big enough for both of us, nyuh-nyahed Piggy the Mogul. “Koch is a disaster. He should resign from office. He can’t hack it anymore.”

Mayor Moron snarled back that if The Mogul “is squealing like a stuck pig, I must have done something right.” And then, to make sure everyone got his meaning about the swine epithet, he jeered: “Greedy, greedy, greedy.”

You’ve got to admit, this is mud-slinging at its best. I can’t wait for the next installment.

And there’s bound to be more. Because this particular chapter in the saga of The Mayor and The Mogul is not only about towering egos but towering bucks as well.

The Mogul, you see, wants to build a mini-city on 100 acres he owns along the Hudson River and the poor thing wants The Mayor to give him all sorts of subsidies to lure the National Broadcasting Co. to the site as the prime tenant, occupying nine of the 100 acres. NBC, it seems, looking ahead to when its leases expire at Rockefeller Center in the 1990s, is considering a move to New Jersey, where taxes and other costs are lower.

The Mayor said he will give tax abatements and other incentives to NBC to keep the communications giant in New York City, but he will not give these goodies to Piggy’s whole 100-acre project to help him amass a windfall profit. Piggy wants this handout, The Mayor says, because he is, well, greedy.

“Common sense,” said The Mayor, citing a trait rarely demonstrated before in his dealings with real estate developers, “does not allow me to give away the city’s treasure to Donald Trump.” This is what probably drove Donald to call him a Moron: for forgetting that he has been giving away the city’s treasury to builders for the past 10 years.

Mayor Moron didn’t stop at smearing The Mogul. He had an insult left over for New Jersey as well, as he explained why NBC should understand that being in Gotham, center of the entire world, was a premium all by itself. “People want Manhattan,” he said. “This is bedrock country. This is not mudflats.”

And besides, you don’t get spitting matches like this in New Jersey. 

While it’s true that The Moron was forgetful about his giveaway policy to developers — it seems to be the style of the ’80s to have memory losses about important things, as with the president’s arms sales and secret bank accounts for rebel armies — Piggy also seems to deliver a self-serving version of history when he listed The Mayor’s failures and said that he should therefore spare us further fiascos and fade into retirement.

For example, Piggy noted — shedding crocodile tears — that, under Koch, “the homeless are unnecessarily wandering the streets.” This is true — as far as it goes. But it fails to mention that the only thing that Piggy has done for the homeless, as their numbers have swelled, is to build more and more super-luxury apartments.

In one instance, when Piggy wanted to empty a building so he could convert it from middle class to regal class, he offered to house a few of the homeless temporarily in the building’s vacant apartments so as to scare out all the other tenants.

Trump and Koch have feuded before, but never as Piggy and Moron. Usually it’s been over who gets the credit for something and who gets to stand in front when the cameras start taking pictures. This time, it’s no different, except that it involves more money as well as a valid policy issue about how large the concessions to entrepreneurs should be to spur the city’s economy.

The problem, though, is that the behavior is that of little boys throwing tantrums because they can’t get everything their own way. It’s my bat and ball, so we’re playing by my rules. Who sez? I sez, what are you going to do about it? You’re a piggy. Yeah, well you’re a Moron.

No, they don’t get this kind of big-time entertainment in the mudflats on New Jersey. Think how dull their newspapers must be.

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Trump the Money Man Is Just No Fun

By Sydney H. Schanberg

First published in Newsday, May 25, 1990

When is Donald Trump going to realize that money isn’t everything? Money’s not why we love him. Why is he going around now saying that when he grows up he wants to be the “King of Cash”?

I liked him better when he wanted to be in charge of nuclear arms negotiations for the United States and said it would take him no more than “an hour and a half” to master the subject. That’s the Donald who wormed himself into our hearts.

He just doesn’t understand. We loved him for his adorable self. That goes for all of us, from Marla to Leona to Ivana. Everybody loves a lover. A moneybags, on the other hand, commands only fear and awe and envy.

Donald, boychik, your mind has become clouded. I know things aren’t going so well, and you’re mortgaged to the hilt and you need some pocket money. But, remember, you’re our national soap opera, and in the soaps, when things are looking bleakest — when your wife, Rona, comes back from the doctor to tell you she has only six months to live, when your old flame Meredith shows up right then with a cripple teenager she says is yours, and the phone rings and it’s your lawyer saying you’re being indicted for tax fraud and you’re facing six years in the slammer — that’s when the violins build and the sun breaks through the clouds, and you realize that money isn’t everything and that only character will see you through.

So why then, Donald, are you running around protesting that you’re worth billions when the truth is closer to $400 million or $500 million? Yes, Forbes magazine and Business Week annoyed you by saying your assets were overvalued and your father had cut back on your weekly allowances, but that’s no reason to throw a tantrum and get Janney Montgomery Scott Inc. to fire the securities analyst who studied your books and reported that your empire was a bit rocky, founded as it is on junk bonds that are growing junkier.

And then you threatened a libel suit against a Wall Street Journal reporter if he even hinted in his story that you’re suffering from cash-flow blues.

Cripes, Donald, if you need a few bucks to tide you over, just ask around. But don’t get yourself into an uproar. You’re beginning to sound like your late friend, Roy Cohn, who was the world’s highest-living deadbeat. Anytime a store or a limousine garage tried to collect the money Cohn owed them, he sued them for harassment and defamation of the Jews.

Now, Donald, you’re refusing to pay your bill, and your story is that it’s the other guy’s fault. Take the contractors who built your Taj Mahal casino. You owe them $30 million and you choose to call it a billing dispute. Is that any way to treat the guys who made you the kind of the principality of High Tack?

And what about the stretch limousine manufacturers, Executive Coachbuilders, who made 35 custom vehicles for the Taj? You accused them of making four of them too short, by two to four inches, and you’ve refused to pay for them or even return them. That’s no way for a really big fella to behave, Donald. A big fella would bend a little and then I’m sure he would shoe-horn himself into those cabin cruisers.

People are not unsympathetic about your being a little tapped out. It’s not as if we haven’t been there ourselves a time or two. And we know why you’d rather hush it up. The sharks out there, if they smell blood, aren’t going to pay top dollar for the trinkets you’re trying to sell off for cash. But why fight it, Donald? It’s kind of obvious that a guy’s flat when he’s trying to sell an airline less than a year after he bought it and painted his name all over the planes.

The thing that bothers me most is the prospect of losing you. If you go down the tubes and become just another parvenu has-been, columnists like me are going to have one less tush to kick around. By being so outrageous and behaving like a world-class horse’s patootie for a decade, you’ve provided instant fodder for us. To be honest, I probably owe you maybe 2 percent of my salary for all the columns you’ve unselfishly served up to me over the years. Don’t try to collect, though. I’ll countersue and call it a billing dispute.

What got me worrying about losing you as a meal ticket were the gossip items about you souring on New York and moving your hustle to Los Angeles. Cindy and Liz say you’re going to buy yourself a movie studio with a stable of starlets.

Say it isn’t so, Donald. They’ll never love you in La-La-Land the way we do. Here, you’re an exotic species; out there you’ll be just another paper moon in a Barnum and Bailey world. 

Out there, you won’t get any headlines when you raze a building and destroy a valued bas-relief that you had promised to an art museum. No one will even notice when you throw widows out on the street in order to build yet another tower of glitz. It’s Hollywood and they’ve seen movie sets before.

In California, you’ll never find a mayor who’ll call you “Piggy, Piggy, Piggy”; they’re too laid back. And when you offer them the exclusive on your latest messy divorce, they will yawn — for messy divorces are a dime a dozen on Malibu Beach. 

Out there, Donald, you’ll be just another pretty face. Stay home where you belong. After all, who loves ya, baby?

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