On the financial disclosure forms that Donald J. Trump
has pointed to as proof of his tremendous success, no venture looks
more gold-plated than his golf resort in Doral, Fla., where he reported
revenues of $50 million in 2014. That figure accounted for the biggest
share of what he described as his income for the year.
But
this summer, a considerably different picture emerged in an austere
government hearing room in Miami, where Mr. Trump’s company was
challenging the resort’s property tax bill.
Mr.
Trump’s lawyer handed the magistrate an income and expense statement
showing that the gross revenue had indeed been $50 million. But after
paying operating costs, the resort had actually lost $2.4 million.
Mr. Trump has repeatedly held out his financial disclosures
as a justification for breaking with tradition and refusing to release
his personal tax returns. “You don’t learn that much from tax returns,”
he said in September during his first debate with Hillary Clinton. “You learn a lot from financial disclosure. And you should go down and take a look at that.”
But
an examination of his tax appeals on several properties, and other
documents obtained by The New York Times through Freedom of Information
requests, shows that what Mr. Trump has reported on those forms is
nowhere near a complete picture of his financial state.
The
records demonstrate that large portions of those numbers represent cash
coming into his businesses before covering costs like mortgage
payments, payroll and maintenance. After expenses, some of his
businesses make a small fraction of what he reported on his disclosure
forms, or actually lose money.
In fact, it is virtually impossible to determine from the forms just how much he is earning in any year.
Mr.
Trump appears to have used a provision in federal ethics laws that
allows business owners to list gross revenue, as opposed to net income
after expenses, on their disclosure forms. But he does not seem to have
completely acknowledged that choice. Rather, he has suggested that the
figures on the form represent money in his pocket.
In
news releases, the Trump campaign said that “Mr. Trump’s income” listed
in a disclosure form filed last year was $362 million, and was more
than $557 million in a form filed this year. During the debate with Mrs. Clinton in September, he mentioned an even larger figure.
“It
shows income … in fact, the income — I just looked today — the income
is filed at $694 million for this past year, $694 million,” Mr. Trump
said. “If you would have told me I was going to make that 15 or 20 years
ago, I would have been very surprised.”
A
spokeswoman for Mr. Trump, Hope Hicks, declined to answer questions
about how Mr. Trump had reported his income, saying only that his
disclosure form “speaks for itself.”
Another
seeming cash cow, at least as far as the forms portray it, is 40 Wall
Street, an Art Deco office building in Lower Manhattan that Mr. Trump
has spoken of as perhaps the greatest bargain he ever struck.
“I
make approximately $20 million a year in rentals from 40 Wall Street
and the building is now worth $500 million,” Mr. Trump wrote in “Trump
Never Give Up,” published in 2008. “So, aside from owning the most
beautiful building in Lower Manhattan, I have the added attraction of
making a profit.”
On
his financial disclosure forms, Mr. Trump listed the income he derived
from rents in the building in the highest category on the form — more
than $5 million. (The form requires listing monetary ranges for most
types of income, and precise dollar figures where the gross revenue of a
business is provided.)
But
the income and expense statement that he filed with the New York City
Tax Commission to appeal his property taxes shows that after mortgage
payments and other costs, the building produced a cash flow of about
$104,000 in 2014. Over the previous three years, it had generated a
negative cash flow of $5.5 million, as the fallout of the 2008 financial
crisis took a toll on downtown office buildings.
Last
year, the building rebounded and turned a significant profit: Occupancy
rose to 95 percent, according to securities filings. The building’s
cash flow after expenses was just under $3 million, still well below the
more than $5 million that Mr. Trump reported on his disclosure forms.
The building also paid the Trump
Organization $966,000 last year in
management fees.
Joel
Rosenfeld, a real estate accountant and New York University professor
who reviewed some of the filings at The Times’s request, said Mr.
Trump’s narrow margins at 40 Wall Street before last year raised
questions about the building’s long-term prospects. “He may have turned
the corner,” Mr. Rosenfeld said.
The
recent negative cash flow at two of Mr. Trump’s premier properties
raises possible motivations he may have for not releasing his tax
returns: They could show that his success is not as he has claimed, or
that he pays little or nothing in federal taxes. That could be a
continuation of a long trend. An article last month in The Times
revealed that Mr. Trump’s 1995 tax records showed a $916 million loss that could have allowed Mr. Trump to legally avoid paying federal income taxes for up to 18 years.
While
the property tax appeals are a useful reality check on individual
properties, they provide an imperfect window to Mr. Trump’s overall
income and wealth.
The
income and expense statements in such appeals are not available on
every Trump property for every year. Also, the performance of a few
properties cannot reflect the entirety of Mr. Trump’s endeavors, which
have included the successful “Apprentice” reality television series as
well as naming rights and management fees he earns from buildings in New
York and elsewhere. And the nine-figure numbers Mr. Trump presents as
his income do not include streams like royalties, investments and
capital gains.
But
the appeals do show a level of detail absent in other documents that
have become public. While appeals on residential properties are based on
appraisals that have a level of subjectivity, commercial appeals
typically start with the amount of income a business makes after
expenses.
The
appeals filed in New York include figures that were certified by a
public accountant and sworn to by Mr. Trump, under penalty of
prosecution if he intentionally misstated them. They were supported by
rent rolls and other documentation.
At
the Trump International Hotel and Tower, on Columbus Circle in
Manhattan, Mr. Trump owns a parking garage and the restaurant space
occupied by Jean Georges. On his disclosure forms, Mr. Trump listed his
income from the garage and the restaurant space as between $1 million
and $5 million.
On
the income and expense statements that he filed in a property tax
appeal for 2015, Mr. Trump showed gross income of $1.6 million on the
spaces. But after he paid operating expenses and mortgage payments, only
$43,000 was left for the year. His company did collect a $50,000
management fee on the two spaces.
At
some of Mr. Trump’s properties, the cash generated is closer to, or
matches, what showed up on his financial disclosure forms. For example,
at the first apartment building he developed in Manhattan, Trump Tower,
the 18 floors of office and retail spaces that a Trump entity owns
produced positive cash flow of $13 million in 2015, even after mortgage
payments. That would match the claim on his financial disclosure form of
making more than $5 million on the spaces.
But
time and again, what the form presented as income did not match what
was reported in other documents. Mr. Trump also runs several publicly
owned attractions — the carousel and ice rinks in Central Park and a
golf course in the Bronx — under agreements with New York City.
Mr.
Trump’s disclosure forms reported income from the Wollman and Lasker
ice rinks of just under $13 million last year, and $8.6 million the year
before. But accounting figures provided by his company to the city show
that those figures represent gross receipts. And city contract
documents show that out of that amount, he had to turn over to the city
28 percent of gross receipts and 56 percent of food sales, and cover
expenses like utility payments and salaries. Recent figures were not
available, but a 2011 city audit showed that for the previous three
years, an average of $25,340 a year for both rinks was left after
expenses.
On
the disclosure form he filed this year, which apparently covered 2015
and part of 2016, more than half of Mr. Trump’s claimed income was
generated by his golf resorts. As an industry, privately owned golf
resorts lost 2 cents for every dollar in revenue for the year that ended
in September, and that was the industry’s best year since the 2008
recession, according to Sageworks, a financial information company.
In
recent years, Mr. Trump has made major investments in golf resorts. He
bought the Doral golf resort near Miami in 2012 for $150 million, of
which $104 million represented the real estate for property tax
purposes.
After
the appeal of his property taxes was heard in June, the special
magistrate, Leonardo Delgado, lowered the resort’s property taxes by
$46,534.
At
one point during the hearing, Mr. Delgado stared at the income and
expense report showing that Doral had lost $2.4 million in 2014, a
number that did not even include millions of dollars in mortgage
payments. Mr. Delgado began to chuckle and turned to the county property
assessor, Murry Harris.
“So
he spent $104 million to lose two and a half million dollars a year,”
Mr. Delgado said. “I know how to lose that money without having to spend
$104 million. How ’bout you, Murry?”
Posts
No comments:
Post a Comment