Timothy L. O’Brien explains how Trump blew his biggest real estate deal ever.
Through Trumpâ€™s rise, fall and rebirth, there was one major real estate project that he tried to keep. The tale of what happened to that property should be of interest to anyone looking for insight into how Trump might perform as president. It was a deal of genuine magnitude and would have put him atop the New York real estate market. And he screwed it up.
The deal involved Manhattanâ€™s West Side Yards, a sprawling, 77-acre tract abutting the Hudson River between 59th and 72nd Streets and at the time the largest privately owned undeveloped stretch of land in New York City. The Yards were a vestige of the Penn Central Transportation Company, a failed railroad enterprise that, in 1970, filed what was then the biggest corporate bankruptcy in U.S. history. In the wake of that collapse, Trump leveraged his fatherâ€™s ties to New Yorkâ€™s Democratic machine and local bankers to acquire pieces of Penn Centralâ€™s holdings, including the Yards, in the mid-1970s.
Unable to reach agreements with the city and community groups on how to develop the site, Trump let his option lapse in 1979. His Yards saga began in earnest in 1985, when he bought back the property from another developer for $115 million.
Trumpâ€™s plans for the property included office and residential space; a new broadcasting headquarters for NBC; a rocket-ship-shaped skyscraper that would have been the worldâ€™s tallest building and cast shadows across the Hudson River into New Jersey; and a $700 million property tax abatement from the city as an incentive to build it. The $4.5 billion project — which Trump called Television City — would have been New Yorkâ€™s biggest development since Rockefeller Center.
Like Londonâ€™s Canary Wharf, begun a few years later, Television City promised to reshape a significant portion of a major urban center. â€œItâ€™s an opportunity to build a city within the greatest city, and I donâ€™t think anybodyâ€™s ever had that opportunity,â€ Trump said in an interview at the time.
With the property, financing and plans in place, a large part of what Trump needed to do to make Television City a reality was to bring together different stakeholders: locals (like the late actor Paul Newman) who wanted parks and a less imposing development, and a mayor, Ed Koch, who had his own outsize personality and who was trying to balance the cityâ€™s redevelopment with the needs of the areaâ€™s longtime residents.
Had Trump appeased these interests, he might have made the project a reality. Instead, the author of â€œThe Art of the Dealâ€ quickly became entangled in an epic, only-in-New-York round of public fisticuffs with Koch in the spring and summer of 1987. The brawl devolved into name-calling — and ultimately helped doom a deal that could have had vastly different results if Trump chose different tactics.
After learning that Koch was going to turn down his request for the $700 million abatement for Television City, Trump dashed off a letter to the mayor.
â€œFor you to be playing â€˜Russian Rouletteâ€™ with perhaps the most important corporation in New York over the relatively small amounts of money involved because you and your staff are afraid that Donald Trump may actually make more than a dollar of profit, is both ludicrous and disgraceful,â€ he wrote to Koch.
Koch wrote back to Trump, warning him to â€œrefrain from further attempts to influence the process through intimidation.â€ Koch then held a press conference, during which he released the letters and said he wasnâ€™t going to give Trump the abatement.
Trump doubled down, holding his own press conference and calling on Koch to resign. The battle played out in a carnivalesque stream on TV and on the front pages and gossip columns of newspapers.
Koch said Trump was â€œsquealing like a stuck pig.â€ Trump said Kochâ€™s New York had become a â€œcesspool of corruption and incompetence.â€ Koch said Trump was a â€œpiggy, piggy, piggy.â€
Trump said the mayor had â€œno talent and only moderate intelligenceâ€ and should be impeached. â€œEd Koch would do everybody a huge favor if he would get out of office and they started all over again,â€ he noted. â€œItâ€™s bedlam in the city.â€