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.
@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.
