The second thing I told Victor was how incredibly hard it was going to be politically to get zoning approvals for such a big piece of undeveloped land. I pointed out that the community board would fight any development, and that the process of going before the City Planning Commission and the Board of Estimate would be endless.
The third thing I did, and probably the most important, was to sell myself to Victor and his people. I couldn’t sell him on my experience or my accomplishment, so instead I sold him on my energy and my enthusiasm.
Victor banks on people and he decided to take a shot on me. He ended up suggesting that I develop not only the 60th Street yards but also the yards on West 34th Street. In truth, I probably oversold myself to him. I had no other choice. I was twenty-seven years old at the time, and I had never built anything in Manhattan, nor had my father. Much as Victor liked me, I don’t think he could have justified going with me if he hadn’t believed our company was big and powerful. We had no formal name for the company when I met Victor, so I began to call it the Trump Organization. Somehow the word “organization” made it sound much bigger. Few people knew that the Trump Organization operated out of a couple of tiny offices on Avenue Z in Brooklyn.
The other thing I promoted was our relationship with politicians, such as Abraham Beame, who was elected mayor of New York in November of 1973. My father did belong to the same Democratic club that Abe Beame came out of, and they did know each other. Like all developers, my father and I contributed money to Beame, and to other politicians. The simple fact is that contributing money to politicians is very standard and accepted for a New York City developer. We didn’t give any more to Beame than a lot of other developers did. In fact, it often seemed to me that, perhaps because we knew Beame personally, he almost went out of his way to avoid any appearance that he was doing us any special favors.
Instead I spent most of the four years when Beame was mayor trying to promote the West 34th Street site for a convention center. It was by far the best site on the merits, and we eventually got nearly every big-name New York City businessman behind us. Still, Beame never came out in support of the site until a few weeks before he left office. Nor did he ever give it his official approval. It was Ed Koch, newly elected in 1978, who finally chose our site for the convention center. No one, so far as I know, has ever suggested that Donald Trump and Ed Koch are close personal friends. But that’s getting well ahead of the story.
By building a close relationship with Victor from the start, I was able, in effect, to work for him, rather than to be just another buyer. That was terrific for me. For example, we drew up agreements giving me an exclusive option to purchase the 60th Street and 30th Street yards—but subject to zoning, subject to approval by the court handling the Perm Central bankruptcy, subject to everything except my having to put up any money. The Penn Central even agreed to pay my development costs. It was remarkable in a way: the seller paying for the costs of the potential buyer. Still, you have to put it into perspective. What sounds like a stupid deal today was very different at a time when no one wanted to build anything, and the city was dying.
Palmieri, in turn, helped give me credibility with the press. When he was asked by a reporter from Barrons why he chose Trump over others, he said, “Those properties were nothing but a black hole of undefinable risk. We interviewed all kinds of people who were interested in them, none of whom had what seemed like the kind of drive, backing, and imagination that would be necessary. Until this young guy Trump came along. He’s almost a throwback to the nineteenth century as a promoter. He’s larger than life.”
At one point, when I was hyping my plans to the press but in reality getting nowhere, a big New York real estate guy told one of my close friends, “Trump has a great line of shit, but where are the bricks and mortar?”
I remember being outraged when I heard that, and I didn’t speak to this guy for more than a year. But looking back, I can see he was right. It could all have gone up in smoke. If I hadn’t managed to make one of those first projects happen, if I hadn’t finally convinced the city to choose my West 34th Street site for its convention center and then gone on to develop the Grand Hyatt, I’d probably be back in Brooklyn today, collecting rents. I had a lot riding on those first projects.
On July 29, 1974, we announced that the Trump Organization had secured options to purchase the two waterfront sites from the Penn Central—West 59th Street to West 72nd Street, and West 34th Street to West 39th Street—at a cost of $62 million. With no money down. The story made the front page of the New York Times.
My original idea was to build middle-income housing on the sites at rents that seem ridiculously cheap today—$110 to $125 a room—but were considered moderately high at the time. I planned to seek financing from the Mitchell-Lama program, through which the city provided low-interest long-term mortgages and tax abatements to builders. The program had been initiated to encourage middle-income housing.
The month before our announcement, Victor and I and some of his people met with Abe Beame to sound him out about our development plans. Although he was encouraging, from the moment we went public he refused to take any position until our plan had been considered by city agencies, including the City Planning Commission, the Board of Estimate, and the local community boards. He was a politician, and he wanted to see which way the winds were blowing before he took a stand.
No sooner had I announced my plans publicly than other bidders for the railyards suddenly came out of the woodwork. Starrett Housing, for example, a company we were partners with on the Starrett City housing project in Brooklyn, made a bid of $150 million, contingent on financing and city approvals and all the rest. On the face of it, their bid was a lot higher than mine.
I’m the first to admit that I am very competitive and that I’ll do nearly anything within legal bounds to win. Sometimes, part of making a deal is denigrating your competition. In this case, I happened to genuinely believe that the Starrett bid wasn’t legitimate, that the company would never close the deal and would not be able to successfully develop the site even if the deal did go through. The fact is that anyone can bid anything, particularly when there are all sorts of contingencies. The same thing could be said about my bid, except that by then I’d put in enough time and effort to have convinced Palmieri’s people that I was very serious and very committed.
In the end, I managed to convince Palmieri that it made more sense to stick with my $62 million bid than to take a flier on Starrett.
The irony is that less than a year after I announced my plans for the site—and beat my competition—the economic situation in New York City turned from bad to much worse.
In February 1975, the Urban Development Corporation, the state agency that sold bonds to finance public housing, defaulted on more than $100 million of repayment on its bonds.
In September 1975, Beame announced that because of the fiscal crisis, the city was suspending its own plans to finance the construction of virtually all new housing.
In November 1975, the state announced that it, too, was suspending any financing of lower- and middle-income housing for the next five years—including a huge number of city projects that had already received preliminary approval.
You couldn’t get up in the morning without running across some new headline about the city’s fiscal crisis. I can’t say that any of this made me truly fearful about the city’s future. Still, when it became clear that I wasn’t going to get any subsidies to build housing, I decided to try a new tack.
I’d always thought that the West 34th Street site would be perfect for a new convention center. The problem was that nearly everyone else had other ideas. For starters, the city—with the support of many prominent local businessmen—had already spent more than three years studying and trying to develop another site by the Hudson River, at 44th Street. In the planning process alone, the city acknowledged, $13 million had been spent, but people I knew told me that the number was actually closer to $30 million.
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Then, just weeks after the city said it wouldn’t finance any new housing, Beame announced that the city was also freezing further spending on development of the 44th Street location. I immediately hired Samuel H. Lindenbaum, a talented attorney who specialized in zoning, and who had been working until then on the 44th Street site.
The other person I hired to help with the convention center was a highly dedicated woman named Louise Sunshine, who had extraordinary political connections. Louise had been the finance director for Hugh Carey when he ran for governor in 1974. She was also treasurer of the state Democratic party. At first, she worked for me for practically no pay. Later, she became an executive in our company.
But even as I was assembling a team to promote my site, the city and state were hatching their own alternative: to put the convention center in Battery Park City, opposite the World Trade Center in southern Manhattan. In my opinion, both sites—West 44th Street and Battery Park—were terrible choices. Malting my case was another matter. I wanted to wage the battle in public, but I was an unknown. If I was going to attract attention for my site and win support for it, I had to raise my profile.
I decided to call my first news conference. Louise and Howard Rubenstein, a major New York public relations executive, helped attract support from several powerful people, including Manfred Ohrenstein, majority leader of the state senate, and Theodore Kheel, the labor negotiator, who was very powerful in New York politics. Kheel delivered a classic line at the press conference. “Placing the new convention center in Battery Park,” he said, “is like putting a nightclub in a graveyard.” For our part, we put up a huge banner that said, “Miracle on 34th Street,” and I announced, before a ton of reporters, that I could build my convention center for $110 million—or at least $150 million less than the city had estimated it would cost to build at West 44th Street.
Not surprisingly, that raised some eyebrows and even got us some attention in the press. But there was scarcely an approving peep from the politicians. I discovered, for the first time but not the last, that politicians don’t care too much what things cost. It’s not their money.
In promoting my site, the first thing I pointed out wherever I went was how important it was to build a convention center. A lot of people were saying that the best solution, in light of the city’s fiscal crisis, was to scrap the idea altogether.
To me, that was classic shortsightedness. For example, in the face of a sales drop, most companies cut back on their advertising budgets. But in fact, you need advertising the most when people aren’t buying. Essentially, that’s what I said about a convention center. Building one, I argued, was critical to reviving the city’s image and, ultimately, to putting its economy back on track.
I also told anyone who would listen how great my site was, and how horrible the alternatives were. I pointed out that at 44th Street the convention center would have to be built on platforms over the water, which would be more costly, more problematic, and ultimately more time-consuming. I said that the 44th Street site was too small, that there was no room to expand it, and that because it was on the water, you’d have to cross under the crumbling West Side Highway to get to it. Finally, I made a big deal out of the fact that you needed something called a nonnavigable permit to build on the 44th Street site. A nonnavigable permit, which I became an expert about very quickly, is the federal approval required to build on certain waterways, and getting it requires an act of Congress.
I was just as rough on the Battery Park site, which was an even more ridiculous location at the absolute southern tip of the city. I pointed out how remote it was from midtown, how far from hotels and entertainment, and how inconvenient to public transportation. I also circulated a state study which concluded that building a convention center at Battery Park would require major reconstruction of the West Side Highway leading to it, as well as the addition of at least 2,000 new hotel rooms.
Most of all, I talked about what a wonderful location I had on West 34th Street. It was on the right side of the highway—the eastern side—which meant it was easily accessible. It was closer to subways and buses than the alternative sites. I continued to make the case that the center could be built more cheaply on my site, without dispossessing any tenants. Also, because my site was so big, there was plenty of room for expansion in the future. When a group of graduate students in a class taught by City Councilman Robert Wagner did a little study that rated our site the best, I managed to get hold of it and immediately christened it the Wagner Report. Its namesake wasn’t thrilled.
Before long, I had everything going for me except the support of a few absolutely key people. Abe Beame was at the top of the list. Once he gave up on West 44th Street, Beame got behind Battery Park, and no matter how many great arguments I came up with for my site, he wouldn’t budge. Another major opponent was John Zuccotti, a deputy mayor under Beame. He began going around town bad-mouthing my site. The reason, I’m convinced, was that he didn’t want to admit that he’d wasted several years of his life and millions of dollars of public money on a location that never made sense in the first place. And that’s exactly what I said publicly. I accused him of being self-serving and petty and a half-dozen other things. He got pretty riled up. The battle received a lot of media attention, and ultimately, I think, it was good for my site. It became just another way to promote my site’s many advantages.
In the end, we won by wearing everyone else down. We never gave up, and the opposition slowly began to melt away. In 1977 Beame appointed yet another committee to study the alternative sites, and it concluded that we did have the best site. On that basis, Beame finally gave us his support—although not his signature—just before leaving office at the end of the year.
In January of 1978, Ed Koch took over as mayor and decided to do his own study. I figured we were back to square one. But things moved fast and once again our site came out ahead. Finally, in April 1978, the city and state announced that they had decided to purchase the 34th Street site and build the convention center there. It was a victory for me, but more symbolically than financially. For all the time I’d invested, I earned much less than I deserved—and nowhere near enough to justify the effort financially.
As my deal with the Penn Central was structured, I was paid total compensation of about $833,000 based on the $12 million price for the site that the city negotiated with Penn Central. In the end I offered to forgo my fee altogether, if the city would agree to name the convention center after my family. I’ve been criticized for trying to make that trade, but I have no apologies. There wouldn’t be a new convention center in New York today if it hadn’t been for the Trumps.
More important, the city would have saved a fortune by letting me build the center, which I very much wanted to do. Instead, Ed Koch decided, by some logic I could never understand, that because I’d helped arrange the sale of the property, it was a conflict for me to be the builder as well. Eventually, I offered the city a deal that, frankly, was ridiculous for me. I said I would bring the entire job in for less than $200 million, and that if there were any overruns, I’d pay for them myself. You won’t find many builders willing to put themselves on the line that way.
Instead, the city and state decided to oversee the job—and the result was perhaps the most horrendous construction delays and cost overruns in the history of the building business. A man named Richard Kahan was put in charge of the Urban Development Corporation, and ultimately it was his job to oversee the convention center project. Richard Kahan is a nice man, but he had visions of being the next Robert Moses. It wasn’t clear that he had the experience or the talent.
One of the first things Kahan did was to hire I. M. Pei as his architect. I. M. Pei is a man with a terrific reputation, but in my view he often chooses the most expensive solution to a problem—and is virtually uncontrollable. Immediately, Pei decided to design a space frame for the center—a structural system that any professional builder will tell you is one of the most difficult to build and is esp
ecially vulnerable to cost overruns. This is particularly true when you’re dealing with the sort of huge space frame they needed for a convention center.
From the very start, I told Kahan and his people that it was critical to build a parking garage simultaneously. How can you have a convention center without parking? They told me that a garage would hold up the city’s environmental-impact approval. “Look,” I said to them, “those approvals are only going to be tougher to get later, and at the very least you should begin a separate filing for the garage now, so you can at least start the process.” They ignored me, and now they have no parking, and no prospect of building any in the near future.
The choice of where to put the entrance was equally ill-considered. If you put the entrance at the west, the whole center faces the Hudson River, which is a beautiful view. Instead, they built the entrance on the eastern side of the building—facing the traffic on Eleventh Avenue.
As I watched all these mistakes being made, I became very angry and frustrated. In 1983, when it was clear the construction of the convention center was already a disaster of delays and overruns, I wrote a letter to William Stern, who by then had replaced Richard Kahan as president of the Urban Development Corporation. For a second time I offered, this time for no fee at all, to oversee the project and to assure that it would get completed quickly and without further cost overruns.
My offer was refused—and a disaster eventually turned into a catastrophe. By the time the convention center was finally finished last year, it was four years behind schedule—and at least $250 million over budget. When you add interest—the carrying costs for all those years of construction—the total cost was probably $1 billion, or $700 million over budget.
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