Towering Presence in New York : Donald Trump Stirs Controversy With Grandiose Structures

Times Staff Writer

It was an uneasy crowd that gathered one January evening in an uptown Manhattan YMCA to meet Donald Trump, the developer of grandiose apartment towers who had become their new neighbor by purchasing a huge parcel of prime land overlooking the Hudson River.

Trump has a reputation for getting his own way, overcoming skepticism and opposition to erect 50- and 60-story condominium buildings that make a distinctive statement largely by overwhelming their surroundings.

To these neighbors, concerned about the impact of 15,000 people swarming from a new Trump complex onto their overused subway platforms and calling for help from their single police precinct house, the proper disposition of Trump's 100-acre acquisition would be parkland, not 60-story luxury condominium towers.

Trump started graciously, extracting applause with the remark, "One of the reasons I am here tonight is not to tell you what I want to build, but to ask you people what you want." But he left scarce doubt about whose decision would be final, and on what terms. "I know what in my opinion the community needs," he said. And the final design for the parcel would be based on "economics."

If the neighbors had any notions that they might dissuade him from erecting a complex that might turn their neighborhood from one of quiet brownstone streets into a busy adjunct to a Trump project, they were melting away.

"I don't see you as building villages, Mr. Trump," one woman said. "You build signature buildings. Geoffrey Beene, Gucci, Donald Trump."

Indeed, over the last five years, Donald Trump's signature has appeared over New York like the label on a pair of designer jeans. The prices of units in his best-known buildings are pitched so high that their buyers are often corporations rather than individuals, the epitome of a real-estate market that promotes increasing economic disparity in the central city, where the very poor and the very wealthy coexist, the middle class having been elbowed off a Manhattan that increasingly resembles an island boutique geographically centered at the bronze-glazed, 50-story Trump Tower on 5th Avenue, next door to Tiffany & Co.

Since 1980, Trump has built three major Manhattan buildings--the Grand Hyatt Hotel, Trump Plaza and Trump Tower--and an Atlantic City casino. In August, 1983, the New York Times photographed him sitting on a bronze T in the marbled foyer of Trump Tower and ordained him a "brash Adonis." New York magazine categorized his exploits, business and social, as "Trumping the Town." And he has gained renown outside of New York with his ownership of the New Jersey Generals of the United States Football League, for whom he signed Doug Flutie, the exciting Boston College quarterback, promptly upon Flutie's graduation.

As New York's most visible developer, Trump commands the allegiance of its most influential financial institutions. His partner in building Trump Tower, Equitable Life Assurance Society of the United States, recognized his uniquely personal contribution to the project with a policy on Trump's life, payable to the partnership, for $20 million. Prudential Life Insurance Co., eager to develop a Madison Avenue site for condominiums, gave Trump a 49% interest in the project with no requirement that he put up any money.

Unusual Credit Line

By 1981, when only the Grand Hyatt was open and the other buildings were in early stages, Trump had a personal credit line from Chase Manhattan Bank, unsecured, subject to no written agreement and payable at the prime rate, of $35 million--a "flexible sum," Chase bankers told the New Jersey Division of Gaming Enforcement. In July, 1981, when New Jersey authorities checked, Trump's "regular" cash checking account at Chase had an average monthly balance of $384,000.

The "relatively unusual" credit line still exists, a Chase source says. "He's good for it; he has a lot of relationships with the bank."

And on August 31, 1982, according to New Jersey records, Trump--whose wife, Ivana, is a former model and former member of the Czech Olympic ski team and oversees the interior design of Trump projects--had a personal net worth of $321 million. It had not changed "significantly" by April, 1984, a Trump lieutenant testified later.

Trump's penchant for grandiose promotion is exemplified by Trump Tower, a John Hancock among signature buildings, marketed with unrestrained appeal to self-indulgence. As the narrator says on a film strip produced to promote the place (Frank Sinatra crooning "New York, New York" in the background), in Manhattan "any wish, no matter how opulent or unusual, can be satisfied."

Trump intended Trump Tower to have the same impact for Manhattan that he envisaged his casino having for Atlantic City. Applying for a casino license in Atlantic City in 1982, Trump told the New Jersey Casino Control Commission that his building would be "a big step for Atlantic City" because the burgeoning gambling island "needs some pizazz."

Need Is for Shelter

But New York is not exactly crying out for pizazz, particularly at the corner of 5th and Tiffany's. While New York's need is for shelter for the millions of workers who flow into and out of Manhattan each day, not for million-dollar pied-a-terres, Trump Tower was erected with the aid of a $70-million city tax abatement obtained through a program designed to redevelop "underused" real estate.

Going to court to wrest the abatement from a reluctant city administration, Trump argued that his half-block on one of the richest retail shopping strips in the land was underused with its occupation by a Bonwit Teller department store. He now contends that the city promised him the abatement for erecting housing on the unlikely site of the world's most famous shopping district but withdrew it after a public uproar. "They were lying bastards," he says of the city administration. One result of the melee: the city cancelled the abatement program.

Trump's reputation for inattention to the more basic civic needs wasn't dispelled when his crews jackhammered a pair of stone bas-reliefs on the Bonwit facade to smithereens after he had agreed to donate them to the Metropolitan Museum of Art.

"It was easier for me 10 years ago," Trump reflected during a recent interview in his Trump Tower office. "Nobody knew who I was and nobody cared. Then, I wasn't the guy everyone was trying to stop."

Uncomfortable With Image

He says his image as the panderer of overpriced living space for the plutocracy makes him uncomfortable. "I've built some beautiful subsidized housing for the elderly in East Orange, N.J. I mention that and nobody cares. They want to write about Trump Tower."

He is dismayed by the clamorousness of many articles written about him. "They're too loud," he said. "I hope that's not my attitude, because I hate it." Last spring he gave a writer from Gentleman's Quarterly a lift in his limousine, only to discover that his casual remarks about its wet bar and radio were quoted sarcastically. "I don't even know where the radio is, for Christ's sake," he says. (He liked the cover, however, a photograph that highlighted his blond hair and blue eyes next to the legend, "Success/How Sweet It Is/Men Who Take Risks and Make Millions.")

Trump's claim for Trump Tower as an unparalleled success inevitably draws challenges. Of the condo tower's 263 units, according to a survey of city records by the Corcoran Group, a real estate brokerage, about 48 had been bought by Trump himself as of the end of last year. Whether Trump intends to profit from any further appreciation or to preserve the illusion that Tower sales are hot is "a matter of speculation," says Barbara Corcoran, the head of the brokerage.

Trump says he intends to hold 5% of the units off the market while they appreciate. "Manhattan real estate has just gone through the roof," he says. One Tower apartment is renting, unfurnished, for $25,000 a month. "It's ridiculous. I've never seen anything in terms of this fever."

Furnishings Derided

While a distinctive structure, the Tower's apartment furnishings have been widely derided. Of expensive condominium buildings, Trump Tower has "the worst furnishings in Manhattan," one broker says. "Hollow doors, cheap cabinets. They say they expect buyers to redecorate, but of course many don't."

The Tower's distinctive indoor retail "atrium," a six-story, salmon-marbled mall that resembles a swath of Rodeo Drive upended, its shops stacked vertically, has also drawn criticism from retail professionals as better theater than selling space, particularly for the rarefied merchants of jewelry and European clothing who occupy it. The Atrium functions poorly as dual tourist attraction and high-priced shopping mall, the brokers say.

"If I'm buying a $2,500 suede outfit I don't want to be surrounded by 25% of the adult population of Boise, Idaho," one broker says. Trump, for his part, says the atrium has "worked out better than I anticipated."

Still, the project is New York's most attention-grabbing building. "Before he had produced anything to sell, we were getting inquiries about Trump Tower," Corcoran says. Tower condominiums have been selling for an average of about $800 a square foot--the highest price by a nearly $200 margin of any new condo building in New York and one that places the average price of a unit at $1.1 million. An unusually high percentage of buyers--74%, according to the Corcoran survey--are corporate purchasers and non-resident investors. That is well beyond the 43.5% average for top-priced Manhattan condo buildings, and suggests that Trump Tower is an "oddball" market unto itself, Corcoran says.

Blanched at Cost

That might explain why Prudential blanched at the projected cost of Trump Castle, the glass-turreted and moated condominium tower that it was planning with Trump for a year before it gave up in 1984 and sold off its site.

"We didn't want to do a deal that depended on selling apartments for $1.5 million each to break even," says one executive close to the project.

Trump Castle, a model of which still occupies a windowsill in Trump's office, is not the only post-Tower project that has run into problems generated by Trump's expectations and renown.

Take the waterfall of adverse publicity over his plans to redevelop an old hotel and adjoining apartment building that he bought in 1981 on Central Park South, one of the city's most desirable streets. Trump embarked on a campaign to clear the apartment house of its more than 100 tenants, many of whom had below-market rents protected by the city's strict rent-control laws.

City and state officials and the tenants allege that this campaign has involved his filing nuisance lawsuits as well as eliminating heat and hot water and reducing security to the point that the number of burglaries after 18 months of Trump ownership surpassed the accumulated total of the previous 41 years.

But Trump steadfastly maintains that the building is occupied by "millionaires who send their limousines to pick up their lawyers." (In fact, many of the tenants testified during state proceedings that they are elderly and others said they are members of middle-class families who have passed the units down, like heirlooms, for a couple of generations.) Their intention, he complains, is to hector him into buying out their leases at six-figure prices. Responds David Rozenholc , the tenants' attorney: "I don't believe there's a number he could name that would get the tenants out now."

Could Be Blocked

If the state finds after hearings now under way that he harassed residents, Trump can be prevented from ever converting the building for his own planned use. His current plan is to redevelop the hotel alone. "I don't need them," he said of the tenants.

And there is wide conjecture over his plans for Lincoln West, the huge parcel that was the subject of that uptown community meeting. Trump faces a community uproar if he tries to outdo the previous owners' proposal, which called for four 60-story towers on the river. Trump envisions the tract, which he bought for $95 million, as the site of a $3.5-billion luxury development.

How well will it fit in with the adjoining neighborhood of brownstones and 15-story apartment houses? Trump's final design isn't public, but he provided a clue when he recently ridiculed the previous owners' design for having "no sense of the monumental." And he has told community leaders that he contemplates not 4,300 units but 6,300, arranged in eight towers--a plan so vast that it may become a political issue in this mayoral election year.

Donald Trump's name may not have glittered with today's incandescence when he started out in the mid-1970s, but that is not to say that he emerged from nowhere.

His father, Fred C. Trump, had been a successful developer in Brooklyn and Queens, and when Donald graduated from the Wharton School of Finance in 1968 he went into the family business. His first deal, he says, involved property in Forest Hills, later to become known as the home neighborhood of Geraldine Ferraro.

Promoted Rail Yard

The public first took notice in 1974, when he optioned an old rail yard from the bankrupt Penn Central Railroad and promoted it aggressively as a suitable site for the city's planned new Convention Center--although the city was already working on another site uptown.

Ultimately, the city saw it his way. "He was right," says City Parks Commissioner Henry Stern, then a city councilman. Says Trump: "The convention center was a victory against the Establishment that nobody thought I was going to win."

But he really made his name with the next deal, the renovation of the decrepit Commodore Hotel, another Penn Central property located next to fabled Grand Central Terminal. Even Trump detractors agree that buying the hotel was a risky proposition, for the entire neighborhood was a virtual slum. The neighboring Chrysler building, a landmark, was in receivership and the rest of the area seemed to have few prospects.

In 1978, Trump paid $10 million for the Commodore. Before rebuilding, he insisted on and got a 40-year city tax abatement worth nearly $60 million. The entire deal was enveloped in the aura of political influence, generated chiefly by the family's connections to the Brooklyn political machine that had produced then-Gov. Hugh L. Carey, one of whose trusted fund-raisers was on Trump's payroll as a lobbyist.

Sheathed in green glass and renamed the Grand Hyatt, the Commodore reopened two years later, the centerpiece of a resurgent neighborhood. "In a way, Donald Trump's best ally has been the business cycle," Stern observed. "He came into his own as an operator just at a time when the market was at bottom, and he built into a period of prosperity." Others believe that the revitalization of the neighborhood was awaiting the risky renovation of the hotel. "A lot of people were sitting there with billions to invest, waiting to see what would happen with the Commodore," says Richard Kahan, a prominent New York developer and former president of the state Urban Development Corp.

In 1978, with the Hyatt under way, Trump began moving in on Atlantic City, lured by the tremendous profits of the first few casinos. He applied for and received a casino license before starting his building, an unusual step ensuring that construction would be unencumbered by the costly last-minute interference by New Jersey casino authorities. The Trump Plaza casino-hotel would be completed for between $200 million and $220 million, virtually on the mark of its budgeted cost. By comparison, the nearby Tropicana came in at $340 million, about $250 million over budget.

Trump began construction without a financial partner; ultimately he would put slightly less than $50 million in capital into the project, much of which he got back in 1982 when Holiday Inns Inc. bought a 50% equity interest in the project for its Harrah's subsidiary. In other words, Harrah's covered virtually all Trump's costs, leaving him with a 50% interest.

"So Harrah's put up all the cash," observed Daniel Lee, a gambling industry analyst for Drexel Burnham Lambert Inc. "He got it because he had the guts to start the casino without a partner."

Of course, the Trump capital was not necessarily Trump cash. According to state records, between May, 1980, and June, 1981, Trump drew $8.9 million from his Chase Manhattan personal credit line for the casino project. Some of that was repaid with the proceeds from a $7.5-million loan that Trump got from his father.

Leased the Land

And not all the decisions that Trump made on the Atlantic City project were right. The decision to lease much of the land beneath the building, rather than buy it, had an impeccable financial rationale: Buying the land would require a huge cash investment that would have to be financed at high interest rates.

"If I was to spend $25 million to purchase the (land) as opposed to paying $1.8 million or $1.9 million a year in rent, which is the equivalent of going to a bank at 7% or 8% interest, the cost of the job would have just become prohibitive," he told the Casino Control Commission. "I would spend the money on brick and mortar, on architects, on furnishings, on the right-looking facilities, rather than spending $25 million to unnecessarily purchase the land."

That created problems when it emerged that one of the lessors was Daniel J. Sullivan, a Teamsters Union functionary who had met occasionally with Jimmy Hoffa and who had a string of convictions on weapons charges and other misdemeanors. It was unlikely Sullivan would pass the commission's scrutiny.

Trump overcame that obstacle by buying the Sullivan partnership's parcel for $8 million, according to records of casino regulators. Later, Trump arranged for Sullivan to be hired as a labor negotiator at the Grand Hyatt project, which had been having bargaining problems with the hotel and restaurant workers union.

Trump also introduced Sullivan to his own banker at Chase, although he declined to guarantee a Chase loan to Sullivan.

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