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Trump: Redeveloper-in-Chief

By Barry Hersh

Even if some are saying "speculating about the Trump presidency is a fool's errand," in terms of where President-elect Trump will come out on redevelopment, we should know a little more soon.

Trump's first Manhattan project, at age 29, was the rehabilitation of the former Commodore Hotel next to Grand Central into a modern Grand Hyatt; Trump sold his interest to partner Hyatt shortly after completion in 1976. Riverside South was a former rail yard on Manhattan's West Side that Trump co-developed. Trump Golf Links at Ferry Point near the Bronx-Whitestone Bridge in the South Bronx opened in 2015.

Image courtesy of Flickr

The history is relevant: Rudy Giuliani on his last day as mayor of New York City, signed a deal to convert this former landfill into a golf course. The first developer failed at a cost said by the New York Daily News to be $230-million, and completed the remediation and redevelopment (not Trump as claimed during campaign). The Bloomberg administration in 2012 signed a concession agreement with Trump, which requires a still-to-be-constructed clubhouse. Both projects reflect two themes: Highly visible locations and even higher prices.


Mr. Trump used a wide variety of city, state and federal incentives, often including tax abatements, at many projects. A favorite technique was to ask for greater height and density than existing zoning allowed; for example Trump Parc in Stamford (a name licensing deal actually built by two other developers) broke a long-standing height limitation.

The 50-story Trump Bay Street developed in Jersey City by Trump's son-in-law and adviser Jared Kushner is said to have attracted Chinese investors using EB-5 visa financing. President-elect Trump will have a lot to say about the future of the EB-5 program, which after extensions was set to expire December 9.

Quite possible it will be extended again and be part of budget negotiations in 2017. There has been considerable support for EB-5, but raising the investment requirements has been suggested, even from some developers.

The tax returns sent to the New York Times during the campaign made it clear Trump makes extensive use of real estate tax depreciation, little likelihood those provisions will change soon. Both Clinton and Trump expressed concern about carried interest, which now allows hedge fund managers as well as real estate developers to classify earnings as capital gains rather than ordinary income.

This may be a significant part of any tax agreement, though it might be crafted to protect real estate developers. Trump categorizes his projects "the best" but Trump Tower's EneryStar rating, mandated by NYC, is average, so while market reaction does matter, ratings such as LEED are not seen as relevant.

Image courtesy of Flickr

Many of Trump's projects were redevelopments in prime urban locations and not former factories nor neighborhood-based brownfields projects. Trump often speaks of revitalizing cities, with little reference to the many successful community revitalization efforts throughout the United States.

Of course, Trump himself is not expected to focus on brownfield redevelopment, and given his proposed EPA administrator, expectations for that agency are not good. However, the EPA brownfields program created in 1995 during the Clinton administration in one of its best environmental moments, has supported over 24,000 environmental assessments and nearly 62,000 acres reused, and claims to have leveraged $1.2 billion in redevelopment and 61,000 jobs. The Brownfields program has unusual EPA bipartisan support especially from mayors, and will likely fare better.

So perhaps we know a little more about where things might go in this arena, as compared to many other policy issues.

Barry F. Hersh is clinical associate professor at the NYU Schack Institute of Real Estate, a division of the NYU School of Continuing and Professional Studies.

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