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Wollman Rink or Plaza Hotel?

By tom On Friday, March 10 th, 2017 · no Comments · In Blog Postings ,Writing

Presuming that at some point President Trump runs out of executive orders to issue – granted, that is an open question – he may get around to trying to fulfill some of his more concrete campaign promises.

Pun intended.

Atop that list is one thing where Trump and many Democrats and Republicans agree: the need for a comprehensive program to repair, restore and advance the nation’s infrastructure system.

If Trump was anything in his previous lives beyond a showman, there were occasions when he was a builder. That could bode well for him as he trumpets an infrastructure program that most Americans feel is desperately needed.

Thus comes the question: will Trump-frastructure be the next Wollman Park or Plaza Hotel?

Some explanation.

The first time I interviewed Donald Trump was 1999, and 13 years after what he told me that day was “the big proof” how he was “the best at private enterprise” and better than any politician and government bureaucracy.

His example was the Wollman skating rink in New York’s Central Park, beloved by New Yorkers since it opened in 1949 but sitting idle at the time for five years because of disrepair.

The city promised to reopen it by 1985. But, as the media noted then, incompetent city commissioners and contractors let the job run $12 million over its original $4.7 million budget. By 1986, the finish line was nowhere in sight.

Enter Trump. Fresh off developing Trump Tower – and thick into a name-calling feud with the city over tax abatements and zoning rules – Trump offered in June to have the rink open before Christmas if they him do it his way.

The city said yes, hoping Trump would fail and they would score a public relations victory. Trump had it reopened by November 1, giving him for the moment folk hero status in New York and a major talking point to boast of a can-do reputation.

His approach was refreshing – and if implemented for the infrastructure program could produce fascinating results. Trump asked himself who were best at repairing ice rinks and who knew the most about them.  His deduced Canadians since they had a “great love of hockey.” He then hired the Canadian firm that had built the most ice hockey rinks for the NHL and it worked.

Fixing the infrastructure would be a signature accomplishment for Trump. The elements seem ready. Democrats are likely to get on board, if the package is right – meaning, work in their home states and districts, Senate Democratic leader Charles Schumer of New York and House Democratic leader Nancy Pelosi said a “robust infrastructure jobs bill” could be Trump’s “common ground” with Democrats on the Hill.

There are catches.

Trump’s proposal for $1 trillion worth of new infrastructure construction relies entirely on private financing, which industry experts say is likely to fall far short of adequately funding improvements to roads, bridges and airports. The plan provides tax breaks to private-sector investors who back profitable construction projects. These projects (such as electrical grid modernization or energy pipeline expansion) might already be planned or even underway. There’s no requirement that the tax breaks be used for incremental or otherwise vital needs. And desperately needed infrastructure projects that are not attractive to private investors — municipal water-system overhauls, repairs of existing roads, replacement of bridges that do not charge tolls — get no help from Trump’s plan

If Trump follows his Wollman Park method, it may be a remarkable transformation of our decrepit infrastructure.  If he follows the Plaza Hotel route, we are in more trouble.

Trump was jonesing to buy the Plaza Hotel for years.  He was repeatedly rebuffed and when the opportunity finally arrived, Trump quickly agreed to a price of slightly more than $400 million, an unprecedented sum for a hotel at the time. Just a few years later, in 1992, the Plaza wound up in bankruptcy protection, part of a vast and humiliating restructuring of some $900 million of personal debt that Trump owed to a consortium of banks.

Quite simply, unlike Wollman, Trump did not think it through and make a sound business decision. He says otherwise. “To me the Plaza was like a great painting,” he said in an interview at the time of the bankruptcy. “It wasn’t purely about the bottom line. I have many assets like that and the end result is that they are always much more valuable than what you paid for them.”

House Transportation Committee Chairman Bill Shuster, R-Pa., says Congress will establish a priority list of infrastructure projects working the states to develop a list of projects of national and regional significance. He thinks the House could act in late spring or early summer – but it has to be driven by tax reform, which would pay for the work.

No one disputes the need, no one disputes the urgency.  What remains are the crucial details and, of course, congressional funding. This is not executive order-able.

Trump planned well for the rink and it worked magnificently. He did not for the Plaza and failed spectacularly. We shall wait for the first new road to learn which route he has chosen.

  • 10 March 2017