When Donald Trump became president in 2017, leaders of New York City’s big real estate firms and other businesses thought they could get him to do nice things for his hometown. He was one of them, after all.
Stephen Ross, the chairman of megadeveloper Related Companies, said that was why he hosted a Hamptons fundraiser for Trump last year. “I’ve gotten requests from the governor and people in different parts of the administration to help raise money for New York with the people that I know in Washington,” the developer told the New York Times.
Alas, Ross was wrong. They were all wrong.
Trump, locked in a post-election dogfight with Joe Biden for the White House, never sent New York the billions of dollars it wanted for infrastructure, such as the Gateway passenger rail project, the Second Avenue subway or New York City Housing Authority repairs.
Instead, he focused on a border wall and other ways to reduce immigration. Foreign arrivals immediately slowed and the city’s population growth unexpectedly went into reverse, subtly eroding property values and rents.
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When congressional Republicans capped state and local deductions in their 2017 tax overhaul, Trump made no effort to stop it — and, months after signing the bill, expressed surprise when told of the change, which singed the metro area’s residential market. And Trump’s trade war with China raised the cost of building materials and coincided with a pullback of Chinese real estate interests and luxury condo buyers from New York.
Make no mistake: Trump has given New York real estate interest plenty to cheer about — notably setting fire to regulations and enabling Congress to slash income and estate taxes, accelerate and expand depreciation, and create an expansive new tax shelter called Opportunity Zones.
But those were nationwide measures, not specific to New York. Although Trump counts Richard LeFrak and a few other New York real estate magnates as friends, his most prominent allocations to the city have been a floating hospital and an Army Corps of Engineers team to convert the Javits Convention Center into a Covid treatment center. (Both actions, requested by Gov. Andrew Cuomo, proved unnecessary.)
At one point Trump announced an “infrastructure week” and plans for a $1.5 trillion infrastructure program, which surely would have included a few billion dollars to build a new passenger rail tunnel for Amtrak and New Jersey Transit under the Hudson River and into Penn Station. Nothing materialized, despite repeated warnings from city business leaders that the two existing tunnels are in dire need of repair and could fail at any time, choking off a route that, pre-Covid, brought hundreds of thousands of daily commuters to their city jobs.
The value of New York property rests largely on the transportation systems that serve it — primarily its trains, but also its airports. The pandemic has crushed the Metropolitan Transportation Authority’s finances, leading the agency to request a $12 billion bailout that appears not even on Trump’s radar.
It seems likely that other real estate–enriching projects, such as the extension of the Second Avenue subway into East Harlem and the Two Trees Management-backed BQX streetcar, will be pushed back years if not canceled for lack of money. And the normally self-sufficient Port Authority of New York and New Jersey’s plea for $3 billion from Washington to patch its Covid hole has gone unanswered.
But those numbers are child’s play compared with what the pandemic-wracked city and state governments want from Washington to be made whole. Cuomo says Covid will cost the state $64 billion through 2024, and Mayor Bill de Blasio’s administration says $9 billion in city tax revenue will be erased over approximately 16 months.
Trump has promised another round of stimulus if he wins, but indicated he is not inclined to cut a check to cities and states that he considers poorly governed. Neither are Senate Republicans, who apparently retained control of their chamber Tuesday. That means Cuomo and de Blasio will have to cut services, raise taxes and perhaps borrow to balance their budgets as required by law.
More than half of the city’s tax revenue comes from real estate, mostly from property taxes, so the industry is likely to be hit by any tax increase. The state and MTA also get revenue from the industry, notably from transfer taxes. Those could be jacked up, as they were a year ago to fund transit projects, and new revenue-raisers such as a pied-à-terre or billionaires’ tax could be enacted.
Cuts in services that erode the quality of life in New York would likewise depress property values. The MTA has not only put expansion projects on hold but has laid out a plan to cut service by 40 percent.
Another agency desperate for cash, the Housing Authority, expected little from Trump and got exactly that. Trump appointee Lynne Patton did meet personally with the president about NYCHA, after which Trump proposed a $2.8 billion capital fund cut, which might have been more had that not been the entire budget line.
Patton did show up at a NYCHA development with suitcases, but they were filled with clothing, not money, for a roughly 20-night stay that critics derided as a stunt. The agency’s repair backlog now exceeds $40 billion.
If Biden ekes out a victory, there is no guarantee he would answer all of these calls. Money for Gateway is almost a sure bet, given that it was promised by the Obama-Biden administration, as is an aid package with billions for New York’s governments, the MTA and Port Authority, although less than they requested. NYCHA is most likely to get a bit more than it has been getting, but no windfall. And the BQX is probably dead.