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TR U M P STR A TEGI ES FO R R E A L ESTA TE

Relying on this information, I told Arthur the condominium plan was
possible. I told my partner to draft the condominium documents. In
the middle of drafting them, he asked, “I have to prepare an estimate
of expenses that each unit owner will pay. What number should I use
for real estate taxes?” I didn’t have any idea of the thinking of the tax
assessor’s office as to allocation of the taxes on the land, so I paid
the tax assessor a visit to get the information. The tax assessor said,
“I don’t have the slightest idea since the question has never come up.
As of today, there are no mixed-use condominium buildings in the
city. Figure it out for yourself but my best guess would be that the
land taxes would be apportioned based on the ratio that the square
footage of the residential portion bears to the square footage of the
nonresidential portion.” If the assessor’s office took that approach,
the amount of land taxes the unit holders would bear for the very
valuable land on which the building stood would price the units out
of the market.
Now I had another obstacle to overcome. How could I reduce
the exposure of the unit owners for real estate taxes? The answer
was simple—eliminate their ownership of the land. But the attorney
general would not approve any condominium plan for a building that
does not have an ownership interest in the land on which it sits.
After much thought, an innovative and unusual solution came to
mind, I decided to deed to the unit holders as a group the land
under the 24 columns that supported the building. I prepared and
filed a deed for 24 pieces of land each being four square feet and
identified with a typical metes and bounds description. Except for
the 24 pieces, the unit owners had no rights to any of the land. The
rest of the land was owned by the owner of the unit that covered all
of the building below the residential units. My concept was ac-
cepted and the Olympic Tower was a huge success. After the
Olympic Tower was completed, legislation was passed governing
mixed-use condominiums and the allocation of real estate taxes.
Years later, when Donald Trump decided to build Trump Tower, we
drew on my Olympic Tower’s experience to creatively solve prob-
lems wherever it was feasible to do so.

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