
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SUNDAY, July 29, 1990                   TAG: 9007290011
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A12   EDITION: METRO 
SOURCE: Newsday
DATELINE: NEW YORK                                LENGTH: Medium

TRUMP WINS 10-YEAR FIGHT FOR NEW YORK TAX REFUND

Financially strapped Donald Trump should get a $6 million-plus tax refund from City Hall, a court has ruled.

In the latest of a series of defeats for the city in a decade-old dispute with Trump, the Appellate Division of the state Court of Appeals said this week that Trump must be paid additional refunds for overpaying taxes on the commercial space in his Fifth Avenue luxury skyscraper, Trump Tower.

After construction on the tower began in 1980, the battle over tax breaks helped fuel the personal and at times bitter feud between Trump and former Mayor Ed Koch.

Originally, the city challenged the building's right to any tax break under the so-called 421A real estate tax law, which was designed to promote development of underused sites. The city argued that the site of the luxury tower, where the old Bonwit Teller department store had stood, was not underused. The Court of Appeals rejected that argument in 1984 after years of legal wrangling.

Then the city argued that, unlike the residential space, the commercial space filling the lower 18 floors did not qualify for the exemption. The city lost that fight in 1988.

Then the city tried to apply a less generous formula to the commercial space. The latest decision says the city should have given all of the commercial space as much of a tax break as the residential units that fill the upper floors of the building.

That means the city owes Trump $6.2 million in tax refunds, including about $2.5 million that the city had already agreed to pay, plus as much as $3.5 million in interest on the overpayments, said Kevin L. Smith, a lawyer at Stroock & Stroock & Levan, who worked on the case for Trump.

He said the ruling might apply to some other mixed-use buildings as well.

"For 10 years the city has been trying to deny tax exemption benefits to Trump Tower," Smith said. "The city never felt the building should qualify in the first place. On at least five different occasions now courts have said that the city was wrong."

Edith I. Spivack, the city executive assistant corporation counsel who worked on the case, said she would have no comment until she studies the decision. She said she did not know whether the city will appeal.

by CNB