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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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Tracking Donald’s Raging Hormones

Donald Trump and Miss Universe 2013 Gabrielle Isler of Venezuela - Vanity Fair via Atticmag

Donald Trump and Miss Universe 2013 Gabrielle Isler of Venezuela. Photo: Vanity Fair

By Sydney H. Schanberg

First published in New York Newsday, July 2, 1991

The sound to be heard these days from the Trump wallow is — not surprisingly — oink. Donald Trump has finally removed the last shred of his disguise and revealed a creature who talks publicly of his women companions in language no sailor would dream of using about those who have shown kindness to him.

I mean no disrespect to our snouted barnyard friends when I say that Donald has descended into public swinishness. First he dumped his wife, flaunting his new friend in her face on the ski slopes. Now he dumps the friend, but lets her find out from the newspapers. Then he laughs and jokes about her front-page humiliation chortling over how naive she was to believe his pledge that the diamond ring was an engagement bond, when all he was doing was throwing some business to his friends at Tiffany’s.

It is one thing to observe that the age of chivalry seems to be in decline and quite another to believe that therefore it is now acceptable to engage in caddishness so snickeringly brutish as to suggest the unraveling of a mind.

Of maybe what it suggests is a form of hormonal imbalance yet to be studied by medical science. Could Donald be suffering from all those characteristics that men have cited over the generations as peculiar only to women, citations designed to keep men in their privileged, ruling place and to keep women in indentured thrall? Has he not become a classic exhibit of shrillness, cattiness, shrewishness?

Does this not add up to a clinical case of emotional instability? Are we supposed to excuse his conduct by saying, delicately, that this vulgarian is experiencing a change of life?

No, Donald hasn’t changed. He has always been a vulgarian. but before any of you nod and smile in smug superiority, let us remember how many among us contributed to the creation of this negative cultural totem.

Way back at his beginnings, when he was razing the Bonwit Teller building to make way for Trump Tower and decided to demolish the valued Art Deco friezes that graced the Bonwit facade, how loudly did we hiss and boo that he had broken his word to save the stone carvings and give them to the Metropolitan Museum? No, this is New York, where macho and bravado are honored and celebrated, so we privately envied his raw, nose-thumbing posture — and the fact that he got away with it. And what did he say when some criticized him for reneging? He of the hormonal imbalance said, with a sneer: “Who cares?”

And what of all the lawyers and money men who strut around pretending to be the brilliant collossi of this town? What did they do when this carnival barker came to them for hundreds of millions of dollars to build his house of cards? Why, the gave it to him, and then they turned to us and told us how smart a deal it was because this shallow boaster was going to to wondrous things for New York and its economy. Now of course, as the Trump empire tumbles, these inspired financiers at Citicorp, Chase et al are panicking.

And then, alas, there’s the press. Donald could never have risen so quickly without the huzzahs of the star-struck media. Magazine cover stories, admiring newspaper profiles and air-headed television puff pieces all fed his hubris and grandiosity. Reporters clamored for invitations to his yacht and to his casinos. Not a word in print about his raging hormones. No hint of his testosterone attacks.

The conviction that money makes its own rules holds too strong a grip on the power mythology of New York. The so-called shakers and movers who should have clung to at least a shred of their critical judgment were instead awed and transfixed, even when this con man announced that he was a P.T. Barnum resurrected. He was hollow but somehow he was what the big boys wanted to be when they grew up.

Donald imagined himself Robert Redford, the dream of every woman. No matter that he looked like Chubby the Chipmunk and was said to have had himself redone by liposuction and hair transplants. The makeover didn’t help much, but that didn’t slow his self-admiration. His mirror still told him he was the fairest of them all.

“You know,” he said to a magazine reporter, “it really doesn’t matter what they write as long as you’ve got a young and beautiful piece of ass.” The reporter put it in his notebook. Donald wanted him to print it. The true cad knows no self-consciousness, only self-hypnosis.

The newspapers continue to record his every swinish act. They see no choice. They, like so many others, were in at the beginning, playing Dr. Frankenstein, stitching Donald together, bringing him to life with bolds of headline lightning. Thus they must follow him until the end. So still he stalks among us, giving the male species a name even worse than any we have legitimately earned.

It probably falls now upon medical science and psychoanalysis to fully explain the Donald phenomenon. Will his body offer up the revelation that hormonal imbalance is just as much a male thing as it is a female one? What role will the scientists find that the moon and the tides play?

Or in the end will they perhaps discover something entirely more pedestrian? Could it be that this is just a case of Trump the Tramp?

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The Self-Importance of Being Donald

btkf-trump-1986.com

Photo: cbsnews.com

By Sydney H. Schanberg

First published in New York Newsday, May 20, 1986

Donald Trump likes to get his way and when he doesn’t, he sues people. I don’t have a complete list, but recently he has sued New York State, he has sued real estate competitors and he has sued Chicago Tribune because the paper’s architecture writer said some unkind things about Donald’s taste in design.

When he loses a case—which he does with some frequency—he simply changes lawyers and tries again. One gets the feeling he doesn’t care much for lawyers.

In fact, his most recent court suit is against a law firm that had the effrontery to represent some tenants who Donald Trump was trying to evict.

He has accused this firm—Fischbein, Olivieri, Rozenholc & Badillo—of engaging in acts of wickedness, usually depicted only in headlines about the mob: harassment, coercion, attempted extortion and obstruction of justice “in furtherance of this illicit scheme of commercial blackmail.” And he is seeking $150 million in damages from them.

What the tenants’ lawyers actually did—one learns from the court history of the case—was get Donald angry by frustrating his desire to drive the tenants out of 100 Central Park South so he could tear down the 15-story building and put up another Trump tower or palace or hanging garden.

Donald wasn’t just angry, he was livid. The tenants had won; they were staying. He had lost and he still faces serious charges, now being heard both in court and before a state agency, of having abused and harassed the tenants.

Not one to stay on the defense, Donald went after the lawyers. His latest suit against them was filed last week in state Supreme Court. Donald tried out his act first in federal District Court some months ago; he got nowhere.

It was thrown out there with unusual celebrity by Judge Whitman Knapp, whose language was blunt. The federal Court of Appeals was equally curt, not only affirming the Knapp decision but sending it back to the lower court to consider whether Donald should pay damages for having brought a frivolous lawsuit.

The gist of Knapp’s decision was that the tenants’ lawyers had done nothing more than represent their clients in vigorous and effective fashion. Being a man of civility, the judge fell just short of laughing at the charges, which were brought under the federal law against racketeering, known as RICO. He did refer to them, however, as “ludicrous” and deserving of “short shift.”

Having failed in federal courtrooms, Donald changed lawyers and is now clogging the state calendar with this foolishness.

His old lawyer on the case was A. Richard Golub, whose failure in the racketeering field has nonetheless not disqualified him from other of Donald’s litigious activities; there is so much to sue about. Donald’s new representative on racketeering is the law firm of Finley, Kumble, Wagner, etc., whose reputation for serious endeavor seems jeopardized by the humorous papers the firm filed against the tenants’ law firm last week.

It’s not that anyone has to feel sorry for the tenants’ law firm or for the three partners who are names as individual defendants—Richard Fischbein, David Rozenholc, and Herman Badillo, the last being a former Bronx borough president, congressman and deputy mayor. They are not pussycats; they are tough, savvy, aggressive lawyers and can look after themselves.

But it’s a lousy precedent to fill up the court dockets with suits by losers against the lawyers who represented the winners. Just because Donald hates losing—and who doesn’t?—shouldn’t give him the right to misuse the justice system. Donald, however, sometimes behaves as if the normal rules that apply to others don’t apply to him.

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