This month in real estate history

1965: Customs books largest World Trade lease yet

The U.S. Bureau of Customs said it would take 763,500 square feet within the 16-acre World Trade Center development site 49 years ago this month, the largest lease announced to that point.

The pledge was a boost for the controversial office development project in Lower Manhattan led by the Port of New York Authority, as it was then known. Some of Manhattan’s leading landlords, such as Lawrence Wien and Seymour Durst, opposed the project.

In 1970, the federal government solidified the pledge, and signed a 20-year lease paying $3 million a year for space in the planned 6 World Trade Center.

The Customs Service moved into the $38 million, 8-story building, also known as the United States Custom House, at the northwest corner of the Trade Center site in October 1973. The building was destroyed on Sept. 11, 2001.

1930: N.Y. Central proposes huge freight terminal

The St. John’s Terminal Building

The New York Central Railroad proposed building the third huge rail freight terminal targeted for Manhattan’s West Side 84 years ago this month.

The N.Y. Central announced plans for the New St. John’s Park Terminal, a massive building that it said would be up to 12 stories tall and cost as much as $15 million.

The proposed building was the third large rail terminal slated for the area. Combined, they had a total projected investment of $45 million as the nation slid into the Great Depression.

The other two were the Port Authority of New York Building, now known as 111 Eighth Avenue, stretching the entire city block between 15th and 16th streets and Eighth and Ninth avenues; and the Starrett-Lehigh Building, at 601 West 26th Street, between 11th and 12th avenues.

The 19-story Starrett-Lehigh opened in 1931, and the 18-story Port Authority building in 1932, but the St. John’s plan struggled. In 1932, the owners scaled back to a more modest three stories, with a price tag of just $2.5 million. The building, between West and Washington streets and Clarkson and Spring streets, opened in June 1934. Another floor was added three decades later.

Long-time owner Eugene Grant sold what is now known as St. John’s Terminal Building in late 2012 to investors including Fortress Investment Group, Atlas Capital Group and Westbrook Partners for $541 million.

1906: Historic mortgage-recording tax takes effect

Andrew Carnegie

A fundamental change in the way that real estate loans were taxed in New York state took effect 108 years ago this month, as a new law imposed a one-time mortgage-recording tax, replacing an annual tax on property debts.

The state law took effect July 1, 1906, and imposed a one-time recording fee of 0.5 percent of the loan, to be paid by either the borrower or the lender.

That was a major change from the unpopular and often evaded prior regulation, which levied an annual tax on personal property, including interest on real estate mortgages. At the time, most mortgages paid about 4 percent, and the tax bite was about half that.

In 1905, an interim piece of legislation was adopted that reduced the amount of the annual tax, but for the first time levied a recording tax. That was an unpopular compromise.

Industrialist Andrew Carnegie, in a letter to the New York Times in 1905, criticized mortgage taxes in general, calling them “double taxation.” Yet, he continued, “A [one-time] recording tax, however, might be accepted as a compromise.”

The fundamentals of the 1906 tax law are still in effect today, although the amount of the tax has increased, along with the taxing bodies taking a cut. Today, for a $100 million loan on a commercial property in Manhattan, the total tax levied by the state, the city, New York City Transit Authority and other entities, amounts to $2.8 million or 2.8 percent of the loan.