When Leticia James takes over Trump Tower, what happens next?
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[i][b]Photo above [/b]- NYCHA (New York City Housing Authority) - which manages this lovely building - may soon take over Trump Towers.[/i]
Two-fer today! There are 2 links at the bottom, even though I know most people don't like to read them. In any case, Trump may lose his iconic flagship property – the 58 story Trump Tower skyscraper. This will be a crisis for him, no?
Um . . . maybe. Let's think this through. Leticia, are you paying attention? School is about to start.
Let's NOT quibble over the guilty verdict for Trump's overstated real estate values. It's impossible for anyone who is not both a tax expert and accountant to even guess what these things are worth. The guilty verdict is what is. But let's perform a thought experiment. Attorney General Leticia James takes possession. Now what?
Well, Leticia certainly won't be appointed trustee. She'll have to hand operations over to . . . who? Some NYC government agency? An REIT (real estate investment trust)? Some well-connected cronies of New York's political elites, who receive hefty fees for managing it? These are all plausible. And they might make things worse for NY.
Which government agency could run Trump Towers effectively? Collect the rents on time? (NYC public housing has years of unpaid back rent they already can't collect). Perform maintenance and repairs. Fend off tenant lawsuits, and demands to renegotiate rents?
Don't scoff at the last one. Since 2020, a BUNCH of Trump Tower tenants have demanded rent cuts. And got them. Why? Covid 19 shutdown vacancies. Corporate flight to lower tax locations. Work from home. Streetside dystopia. The Trump organization rightly figured half a loaf was better than none. Will tenants be MORE confident when Mayor Adams and his agencies? Or will some of them skip the negotiating table and head straight for the exits?
By the way, this business about corporate flight, covid shutdowns, and NYC drug and homeless dystopia - that's the fly in the ointment when setting real estate values in the first place. Last years assessed value might be higher than this year's. What's the vacancy rate? What's the cash flow?
Um . . . cash flow. The magic word. Apparently (according to Forbes) NY keeps changing the tax rules, and jacking up the tax owners must pay. It turns out (in 2020, at least) that Trump Tower taxes were about equal to the building's entire cash flow after expenses. Are we beginning to see why Donald might actually be okay with Leticia winning this one? Can NYC even collect property taxes on a building it now legally owns, or will it be exempt, like city hall, Gracie Mansion, and the subway stations?
Turning Trump Tower over to a REIT or some campaign contributors to city council to run is simply going to cost MORE money than it takes today to keep the lights on. Those guys will insist on a piece of the action, but probably not add any value. Interim administrators are not going to be the final owners. Why would they lift a finger beyond the bare minimum to keep the Tower alive? This is the same equation that's at work with government subsidized public superchargers. Once you get your government subsidy, the only question is how little you can spend afterwards and not get sued.
Trump Tower is now almost 50 years old. It replaced the Bonwit Teller building, which was built in 1929, and also lasted about 50 years. At the end of its life, Bonwit was outdated, outclassed, and unloved. So maybe Trump Tower is nearing the end of its useful life? Yankee Stadium lasted 70 years. The Giants Stadium only 35. Shea Stadium less than 50. That's just the way buildings are.
If you want to see what happens when the government tries to balance its budget against its overtaxed residents, look no further than the George Washington Bridge. It costs $23 (on way) to cross during surge pricing. You pray you make it alive, and the delay won't be more than 30 minutes. (New York residents, please chime in here for authenticity).
Leticia James is about to take another $12 million off the NYC tax rolls. And sign up for who knows how much in management fees, repairs and maintenance. Mayor Adams is holding emergency closed door meetings with corporations who want assurances that Leticia isn't coming for them next, with hundreds of millions in fines.
In the meantime, Trump will retreat to Mar a Largo. Where he enjoys a respite from New York State AND New York City taxes. And he can stop worrying about whether another round of rent cuts at Trump Tower will result in immediate bankruptcy. It will all be somebody else's problem.
without Trump family maintaining it, it will lose it's 5 star rating, and likely most of it's high paying customers (like foreign dignitaries paying 10k+ a night).
under democrat control, it will probably be turned into a slum building that'll cost the city a lot more than the bond amount in the long run
not the mention the high likelihood of driving away any future developers (ones that actually prosper and boost trade/commerce)
NYC is well on it's way to becoming the next Detroit...
Trump Tower does have a particular (though not exclusive) place in the heart of the Russian "Businessmen" of New york in that it is a massive centre of Money laundering with the Russian owner condos within.. I wont rehash how the process works, having explained it many times.. However, it is one building that may attract the Russians to buy it outright at well above the market rate, simply to continue the laundering operation on a larger scale, without Trump taking a cut..A group of Russian banks coule easily find a US Puppet to front the operation.😷
The state won't hold any of the properties. They will take possession of them and hire a trustee to immediately sell them. The only reason they would hang onto them is if the existing liens and unpaid property tax exceeds the property's value. It's possible as the commercial real estate sector is probably the weakest area of the economy. But assuming there is some value left in them, the new owner will take over the property tax payments.
The government holds property when the owner doesn't pay property taxes for years, a lien is filed, and a sale is forced. Once everyone is paid off, the government is stuck with it. This is the source of all those empty houses that people suggest housing the homeless in. Trump Tower, Trump National Golf Club, and the Seven Springs estate don't fall into this category.
I would imagine that she will contract the professional services of reputable property agents to maintain the building and manage tenant relations, just as the Trump organisation presumably did in the past. The challenges you describe are similar to those faced by all owners of commercial buildings over the past five years. If the building fabric is halfway decent it should be possible to refurbish and refit as premium office space (some of the most 'modern' and sought after offices in my city are over 200 years old).
Perhaps it was the age of the building that resulted in DT's 'miscalculation' 😅
If other corporations operating in NYC are as brazenly corrupt as the Trump family, then yes they should be worried . .
@LeopoldBloom i'm just guessing here - but my theory is that having mortgage and commercial loan rates (approximately) triple after the Federal Reserve rate hikes . . . that might cause some delays and cancellations.
do rents on new apartments go up if the government raises interest rates at the moment construction begins?
@LeopoldBloom your mentioning something i've most omitted from my columns.
Algorithms - both the new AI ones and their "quant" predecessors - have functioned as a form of defacto price fixing. Whether its rents, gasoline futures, airfares, wheat futures . . .
and then there is simple human greed. like when Ford and GM - in the depths of pandemic business malaise - concluded the path forward was battery EVs which cost about double what regular cars cost. I would have loved to be a fly on the wall during strategy meetings when they came to THAT conclusion.
of course, these are the same strategists who decided that they would build only gas guzzling trucks, and almost no cars. And that all pickup trucks would be "full sized" with giant V8's and the ability to tow a boat or travel trailer.
Then they reversed course. The ranger and colorado pickups came to market. they're about the same size as "normal" pickups from about 25 years ago, though.
the car enthusiast magazines are partially to blame. they spend almost their entire reviews obsessing over horsepower, torque, bed load, towing load, and zero-to-60 times.
the average pickup buyer doesn't have a boat or a travel trailer. he uses it to go to home depot and get 10 bags of mulch in the spring.
@SusanInFlorida When the State takes over the orange traitor's properties it will simply sell them to the highest bidder and the orange traitor will be liable for any shortfall.
@Diotrephes do you have a link to substantiate this? who will want to buy them after years of neglect? this is a 50 year old building that's already part vacant, with tenants fleeing.
@SusanInFlorida [quote]do you have a link to substantiate this? who will want to buy them after years of neglect? this is a 50 year old building that's already part vacant, with tenants fleeing.[/quote]
The building might be junk but the land is valuable. So, if someone bought it for $1,000,000 the orange traitor would still be on the hook for the the balance of the judgment.
She will hire bureacrats to run it. It will be grossly mismanged just like nyc. If you put democrats in charge of sand the sahara would be empty in two years
@Patriot96 [quote]She will hire bureacrats to run it. It will be grossly mismanged just like nyc. If you put democrats in charge of sand the sahara would be empty in two years[/quote] The properties will be sold to the hghest bdder and the orange traitor will still have to make up the difference.
@SusanInFlorida When the government or IRS seizes your bank account, they don't ask if you earned the money legally or not, you owe them and they take it. Trump owes 464 million, and refuses to pay it, so any assets he has should be on the table.
If she gets her hands on it, which won't be as easy as she thinks, she will make a total mess out of it, just like she has done with everything else she has touched.
@SusanInFlorida I'm not sure she is but you're right about her handing it to a fall guy. That place is one hot potato. It's going to me a total mess for whoever ends up with it.
If she takes the property over she should be aware of the The tick tocker allegedly an Illegal from Venezuela who will possibly broadcast and announce the fact and perhaps the squatters will get into the properties she takes from Trump. In NYC if the property is not occupied for thirty days squatters can occupy the property. A strange law for the city, but hey, it’s NYC.
@SusanInFlorida I was being facetious about the Trump properties as I seriously doubt , despite James’s disdain for Trump; if she got his property that she would let squatters occupy them. But in NYC squatters rights, if not mistaken say if a house is unoccupied for 30 days and squatters occupy it, they are protected. I think the state says 10 years. Though technically it is breaking and entering. I suggest you look it up and see for yourself. There are two notable recent instances in NYC one where a legal owner was arrested. Another more tragic where squatters murdered the legitimate owner.
@jehova i remember my dad showing me a headline from the NY times when i was a kid: "President Ford to NYC - drop dead". New York is always in crisis, and seeking a bailout. they're getting it with Biden.
@Patriot96 that's theme i explored in the top post.
my mom lives in a university town in another state. there are no property taxes payable by
- university buildings - postal centers - public schools - police buildings - firehouses - non profit hospitals - public green space - the courtrooms - city hall - the department of public works - the roads department - the Amtrak station
in fact, more than half of the buildings in town are tax exempt. and property taxes are skyrocketing on everyone else.
@BizSuitStacy thats a worst case scenario. i see it sold for far less than it's assessed value, leading trump to sue for a tax refund (over taxed) and letitia saying "i told you so"
