How Rent-Stabilized Tenants Foiled Donald Trump

How Rent-Stabilized Tenants Foiled Donald Trump

Published: 
April 2016

Donald Trump thought he’d scored a windfall when he purchased two buildings on Sixth Avenue and Central Park South in 1981. The 38-story Barbizon Plaza, he told his ghostwriter, “was a somewhat run-down middle-priced hotel earning a minimal profit at best.” And 100 Central Park South, the 14-story building next door, “was filled with rent-controlled and rent-stabilized apartments,” which meant that it would bring in at best a modest profit.

“The way to derive the most value from the site, I thought, was to knock down both buildings and construct in their place one huge, beautiful, modern luxury condominium tower,” he said in his 1987 as-told-to book,  . But to do that, he’d have to drive the rent-regulated tenants out. 

Like multitudes of other New York landlords with similar ambitions, he tried. On Jan. 1, 1982, six tenants received notices that they had to restore their apartments to the original conditions within 10 days or be evicted. For James Galef, whose family had lived in the building for decades, that would have meant rebuilding a wall that had been torn down in 1955, a few years before he was born. Suzanne Blackmer, an elderly actress who’d returned to the building from her hometown in North Carolina after her husband died in 1973, got multiple eviction notices charging that the apartment was not her primary residence, although her North Carolina house had been ruined by a fire. When her water and gas was cut off, Trump blamed it on the renovations in other apartments. He filed bogus nonpayment charges against other tenants, one of which was dropped when the man brought his cancelled rent check into court.

Later in 1982, Trump told the city Human Resources Administration that he would house homeless people in the 10 vacant apartments for free. After HRA turned the offer down, saying “it did not seem appropriate to house clients in a building slated for demolition,” he boarded up the windows of the warehoused apartments so the building would look abandoned. 

Tenants filed multiple complaints with the state Division of Housing and Community Renewal alleging harassment, “drastic decreases in essential services,” and “persistent delay in repairing defective conditions with life-threatening potential.” Several went on a rent strike. James Galef, testifying at a DHCR hearing in 1985, said the elevators were faulty and showed a picture of mushrooms growing under a rug. 

Trump also staged a propaganda offensive calling the tenants “millionaires in mink coats, driving Rolls-Royces.” “With rent control and rent stabilization, these tenants were enjoying one of the great windfall subsidies in the free world: On the open market, their apartments would have rented for as much as ten times what they were paying,” he said in The Art of the Deal. “Rent control is a disaster for all but the privileged minority who are protected by it. As much as any other single factor, rent control is responsible for the desperate housing crisis that has plagued NYC for the past 20 years.”

In reality, Suzanne Blackmer, who was paying $204 for her rent-controlled apartment, was living on less than $10,000 a year from Social Security, occasional acting gigs, and a pension from the Actors’ Guild she’d earned by appearing in more than 60 movies. “He has such an ego,” she told a reporter in 1987. “He wants to be Jesus. He wants to be Hitler. He wants to be the most powerful thing in the world.”

The tenants hired a high-powered law firm, Fischbein Olivieri Rozenholc & Badillo, which featured former Congressmember Herman Badillo. They won an injunction barring evictions. Trump counterattacked by suing the firm for $205 million in federal court, charging that it was a racketeer-influenced and corrupt organization. He claimed that the lawyers had extorted him by filing complaints with the DHCR and by representing tenants in rent strikes and Housing Court attempts to improve services. He also accused them of offering to cut him in on real-estate deals and trying to bribe a key staffer for inside information. 

Judge Whitman Knapp threw Trump’s suit out in 1986, saying that continuing it “would merely waste the time and resources of the litigants.” Filing a lawsuit does not qualify as extortion, he wrote. And while he found Trump’s claims about the alleged real-estate offers “rather incredible,” it’s not extortion for lawyers to make offers to their adversary. “Indeed, if it were,” he wrote, “every lawyer who tries to settle a case might end up behind bars.”

The case was finally settled in 1998, when an appellate court ruled that Trump could turn the vacant apartments into condos and sell them, but the 51 remaining rent-regulated tenants could stay. They could either continue renting, with no major-capital-improvement increases allowed for eight years, or buy their apartments for one-third off. Only eight chose to buy.

Suzanne Blackmer stayed in her apartment until shortly before her death in 2004, with no further harassment from Trump; he even sent her flowers on her birthday.

Trump claimed he had made more than $100 million on the two buildings, renamed Trump Parc and Trump Parc East, by 1987. His company’s Website currently lists a one-bedroom condo for $1,550,000 and a studio for $1,100,000. Other real-estate sites, however, list a one-bedroom condo for $849,000. Another rented recently for $2,850 a month. A three-bedroom apartment sold in 2013 for just under $9 million.