Tag Archives: property law

Decay at Donald J. Trump State Park

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photo by Alan Kroeger

Yahoo News quoted me in New York’s Donald J. Trump State Park: A Story of Abandonment and Decay. It opens,

Donald J. Trump State Park is dilapidated and forgotten. No running path, no picnic table, no basketball hoop, no hiking trail, no ball field. It’s 436 acres of neglected land, overrun by weeds and brush. Most of the buildings that once stood on it have been demolished, and the few that remain are in utter disrepair: broken windows, rusted metal, corroded walls, missing or boarded-up doors and caved-in roofs.

That’s what became of the “gift” Donald Trump once gave to New York State.

Yahoo News sent several recent pictures of the park to Eric F. Trump, the president’s son and executive vice president of the Trump Organization, to see what he thinks of its current state. He responded that the state has failed to maintain the property and that he’s disappointed by what he saw in the photographs.

“It is very disappointing to see the recent pictures of the Donald J. Trump State Park. My father donated this incredible land to the State of New York so that a park could be created for the enjoyment of all New York State’s citizens,” Eric F. Trump told Yahoo News. “Despite the fact that the terms of his gift specifically required the State to maintain the Park, the State has done a poor job running and sustaining the property. While we are looking into various remedies, it is my sincere hope that going forward, the State will exercise greater responsibility and restore the land into the magnificent park it was, and should continue to be.”

In the ’90s, then businessman Trump purchased a large swath of open meadows and thick woods 45 miles north of midtown Manhattan for a reported two million dollars, with plans to build a private golf course. But Trump couldn’t get approval from the towns of Putnam Valley or Yorktown and wound up donating the land to New York State in 2006. He claimed to the media that this “gift” was worth $100 million (though this was likely his characteristic hyperbole), and received a substantial tax write-off.

On April 19, 2006, then Gov. George E. Pataki announced Trump’s “generous and meaningful gift” would become New York’s 174th state park. He said the park would protect open space, increase public access to scenic landscapes and provide recreational opportunities in the city’s far-northern suburbs.

“On behalf of the people of the Empire State, I express our gratitude to Donald Trump for his vision and commitment to preserve the natural resource of this property for the benefit of future generations,” Pataki said at the time.

Trump said, “I have always loved the city and state of New York, and this is my way of trying to give something back. I hope that these 436 acres of property will turn into one of the most beautiful parks anywhere in the world.”

The establishment of Donald J. Trump State Park combined two parcels of land: the 282-acre Indian Hill site, which straddles the border of Westchester and Putnam counties, and the 154-acre French Hill site in Westchester County. Pataki’s office touted the new park as an example of New York’s role as a national leader in stewarding the United States’ natural resources.

But the promised recreational facilities never were built. New York stopped maintaining Donald J. Trump State Park in 2010 because of budget cuts, even though its annual operation costs were only $2,500, and it was cared for by workers at nearby Franklin D. Roosevelt Park.

Randy Simons, a public information officer for the New York State Office of Parks, Recreation and Historic Preservation, told Yahoo News that the park is currently open and serves “as a passive park offering hiking, birdwatching and similar outdoor recreational activities.”

Simons explained that the office recently removed several vacant and shabby buildings to address potential public safety and environmental hazards. This consisted of demolishing a 3,700-square-foot house, four other structures and a swimming pool. They also conducted asbestos and lead paint abatement.

 “Trail planning is underway for a formalized hiking trail network and mountain bike trails. The first step is a natural resources review and state environmental quality review to ensure that sensitive wetlands and plant and animal habitats are protected,” Simons said. “The ultimate timeline will be determined by this review.”

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How much Trump benefited from donating the land is difficult to determine. Bridget J. Crawford, a professor at Pace University School of Law in nearby White Plains, N.Y., and a member at the American Law Institute, said it’s quite common for wealthy people to donate real property to a state or a local government for a park. The Rockefeller family, for instance, donated the Rockefeller State Park Preserve in Sleepy Hollow, N.Y., little by little starting in 1983.“

“There’s nothing unusual about the donation,” Crawford told Yahoo News. “The problem of course here is that the donation of land was made but there was no additional cash gift made in order to maintain or create the park. It seems the state and municipalities don’t have the money to do that. If these sort of deals ‘fail,’ it’s always because of lack of funding.”

Crawford’s scholarship focuses on wealth transfer taxation and property law. She said people who are serious about establishing open space parks that the public can use in meaningful ways often make substantial cash contributions as well to fund the park’s maintenance.

As for how much money Trump saved, it would depend on what valuation the IRS accepted for the land; the figure of $100 million was Trump’s unofficial estimate, for public consumption. Another variable is whether he personally owned the property or purchased it via a pass-through entity like an LLC. Crawford explained that if it were owned through an LLC that was ignored for income tax purposes, which is not unusual, a $100 million donation would have saved Trump about $35 million in taxes.

Nevertheless, it seems unlikely that the IRS would accept a $100 million appraisal of land that was sold for a few million dollars at fair market value in the 1990s.

David Reiss, a professor of law at Brooklyn Law School who focuses on real estate finance and community development, said he doesn’t doubt that Trump got an appraisal that “pushed the limits” to price it as high as possible, a move that is not uncommon. He said it’s possible that Trump got an appraisal that determined he would make more money by donating the land than he would by selling it. And it wouldn’t have to be as high as $100 million.

“If he claimed it was worth $10 million and he bought it for two or three million dollars, it’s conceivable that he came out ahead with this donation,” he said. “He actually could be better off financially. And this is not just for Donald Trump, but any donor in a comparable situation.”

GSE Nationalization and Necessity

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Nestor Davidson has posted Nationalization and Necessity: Takings and a Doctrine of Economic Emergency to SSRN. This essay will be of interest to those following the Fannie/Freddie shareholder litigation. The abstract reads,

Serious economic crises have recurred with regularity throughout our history. So too have government takeovers of failing private companies in response, and the downturn of the last decade was no exception. At the height of the crisis, the federal government nationalized several of the country’s largest private enterprises. Recently, shareholders in these firms have sued the federal government, arguing that the takeovers constituted a taking of their property without just compensation in violation of the Fifth Amendment. This Essay argues that for the owners of companies whose failure would raise acute economic spillovers, nationalization without the obligation to pay just compensation should be recognized as a natural extension of the doctrine of emergency in takings. Public officials must be able to respond quickly to serious economic threats, no less than when facing the kinds of imminent physical or public health crises — such as wildfires and contagion — that have been a staple of traditional takings jurisprudence. Far from an affront to the rule of law, this reflection of necessity through an extension of emergency doctrine would reaffirm the flexibility inherent in property law in times of crisis.

Davidson looks at the various companies that were nationalized during the financial crisis, including Fannie and Freddie, and concludes,

It does no violence to norms of ownership—or the rule of law—to acknowledge that overriding necessity in times of crisis can be as relevant to economic emergency as it has always been to more prosaic threats. The doctrine of economic emergency that this Essay has proposed accords with the deepest traditions of our system of property, and rightly should be so recognized. (215)

 

Davidson reaches a very different conclusion than does Richard Epstein, who argues that just compensation is warranted for shareholders in the two companies. I have no doubt that the judges deciding these cases will have to struggle with very same issues that Davidson sets forth in this article, so it is worth a read for those who are closely following these cases.