The once grand but aging Commodore was in danger of becoming blighted. Baron-Trump described the dingy lobby as belonging to a "welfare hotel". But he saw the thousands of commuters going in an out of Grand Central each day and thought the location excellent for a revitalized hotel. 'Baron' only had his father's money to play with and some bank loans, but he was determined to break into the Manhattan real estate game, something his father Fred never achieved. Fred was content to build houses in the outer boroughs with the help of the FHA and amass a great fortune. Trump's clever plan was to buy the hotel cheap from the bankrupt railroad which was in the process of selling off some of its unprofitable assets. He would then transfer the hotel to the Urban Development Commission for a nominal consideration. However, he needed to convince the city to give the project fifty years of tax abatements to make it a profitable deal. His father's connections to city and state leaders, notably Mayor Abe Beame, and Gov. Hugh Carey, developed over the years would prove very useful in this regard. He would convince the Hyatt corporation, which did not own any Manhattan hotels at the time--to actually run the business. Trump knew very little about running a large hotel. He did not even own the site or have an option to buy when he began negotiating with the Mayor's office.
His renovation would be superficial and intended to cost no more than $100 million. He would clad the building in modern reflective glass and create an overhanging atrium, but skimp on the inside. Early 20th century rooms were still small. Although each had the then novel luxury of an en suite bath, the plumbing remained unchanged, the aging elevators slow, and the heating still centralized. New York Review of Books commented, "Trump had produced the kind of shiny artifact that tourists like, though at the same time he had damaged forever the texture of East 42nd Street." The American Institute of Architects’ guide to New York buildings referred to the glass façade as an “utter and inexcusable outrage.”
Trump utilized fear tactics against "Fear City"to bully his deal through. He told city officials that unless they approved his deal, the seedy hotel with a dirty brick exterior would close down, lie vacant, and pay no taxes. The hotel was already in arrears some $15 million in taxes. In his deal, the state's Urban Development Corp. would own the building thereby facilitating eminent domain evictions. Trump would leaseback the building and pay rent to the city. Urban blight was anathema to the city's economic advisors. “A closed Commodore would have a very serious blighting influence on the east midtown area,” said Alfred Eisenpreis, New York’s Economic Development Administrator of the time. As an added effect, Trump convinced hotel managers to close the hotel two days before his tax abatement request was put to a vote before the city Board of Estimate. Trump was still without formal ownership of the Commodore, or an option at that time despite telling the Board he did. A copy of an option in the city's possession was signed, bu only by Trump; no one asked questions of the politically connected young developer*. The sale of the hotel to Trump by Penn Central was not completed until 1978 at a 1975 price ($9.5 million), With few alternatives and the city facing bankruptcy, the Board voted to give him almost what he wanted: forty-two years instead of fifty years of no or reduced taxes. Over the first 36 years of the tax abatement, the hotel would have paid about $360 million in taxes; instead, the owners paid only $202 million in rent and fees. The "new" Commodore, renamed Grand Hyatt, would go on to rent rooms for as much as $1000 a night.
Changes in transportation modes eventually made the hotel less profitable. A current developer, TF Conerstone, announced in 2019 that it would tear down the Grand Hyatt and replace it with a 1600 foot tower complex if the city approves. Trump-Barron's early success story--"part shill game, part intrigue"--would be no more. So what is the lasting legacy of the Commodore Hotel, named after 19th century rail tycoon 'Commodore' Cornelius Vanderbilt? Why the tax abatements, of course! As Wayne Barrett, writer for the Village Voice put it, the abatements were the " largest symbol of the new state and city resolve to “stimulate economic development” by giving away the future....These abatement programs are the moral-obligation bonds of a future city collapse." Segue to the future now where Barron's company, Trump Org, is on trial for evading close to a million dollar in taxes. New York's early largesse towards the boy wonder seems to be paying negative dividends! Perhaps it is not too late to settle the score.
*A Penn Central witness in a Philadelphia bankruptcy case testified “The [bankruptcy] estate was putting its property in the hands of a developer. It was uppermost in our minds that…the developer…be very high in his political position. Trump is doing what, in our judgment, if anyone can do, he can do....[zoning] is highly political activity in the City of New York,” Fred Trump and Abe Beame went back thirty years as Madison Club friends and members of the same Brooklyn political machine. The son contributed heavily to Brooklynite Hugh Carey's, political campaigns. Trump employed a Carey fundraiser as his director for "special projects" who registered as an Albany lobbyist. During the three years that Louise Sunshine worked for Trump, she also served as Hugh Carey's campaign finance director. When Fred Trump's east side Trump Village housing project came under state scrutiny, the investigating committee noted his “talent for getting every ounce of profit out of his housing project.” Fred ingrained this talent in his son who is still charging the taxpayer for Secret Service stays at his hotels.
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| art of the deal, 'John Baron' style |