Trump Asks LeFrak, Roth to Monitor Infrastructure Plan's Costs -- Update
January 16 2017 - 3:43PM
Dow Jones News
By Peter Grant and Ted Mann
President-elect Donald Trump is planning to name real-estate
developers Richard LeFrak and Steven Roth to head up a new council
he is creating to monitor spending on his proposed $1 trillion plan
to improve the nation's roads, bridges and other public works.
Mr. Trump said in an interview Friday with Wall Street Journal
reporters and editors that he has asked the two New York-based
developers, whom he has known for decades, to oversee the council
of 15 to 20 builders and engineers. "They're pros," he said.
"That's what they do. All their lives, they build. They build
under-budget, ahead of schedule."
Mr. Trump said he had just met with Messrs. Roth and LeFrak.
"They've already agreed to do it," Mr. Trump said.
Mr. LeFrak, one of the country's wealthiest developers, is known
for sprawling master-planned projects such as Newport, a 400-acre
project on the New Jersey waterfront opposite Manhattan. His
current projects include a $4 billion mixed-use development in
North Miami that he's building with the Soffer family of Florida,
who have investments in such properties as the Fontainebleau Miami
Beach.
Like Mr. Trump, Mr. LeFrak also comes from one of New York's
real estate dynasties. The two are both in their early 70s and have
known each other from the early days of their careers.
Over the years, Mr. Trump clashed with Mr. LeFrak's late father,
Samuel LeFrak. But he and Richard LeFrak became close friends and
often go out socially. Mr. LeFrak attended the Republican
convention and watched the election returns from a special suite at
the New York Hilton set up for Mr. Trump's top supporters and
funders.
"Richard is truly outstanding," Mr. Trump wrote in his 1997
book, "The Art of the Comeback." "When I watch Richard in action,
it's hard to believe that Sam could have produced such a guy."
Mr. Roth is chairman and chief executive of Vornado Realty
Trust, a large real-estate investment trust that owns high profile
office and retail property in New York, Washington, D.C. and other
cities. Vornado controls two of Mr. Trump's most valuable assets:
30% stakes in office buildings at 1290 Sixth Avenue in Manhattan
and 555 California Street in San Francisco.
Mr. Trump's annual pretax income from the two assets comes to
roughly $22.7 million, according to a financial services firm's
analysis last year of Vornado filings with the Securities and
Exchange Commission.
Spokesmen for Messrs. LeFrak and Roth declined to comment.
Mr. Trump pledged during the campaign to embark on a roughly $1
trillion infrastructure program, saying the nation needs to rebuild
crumbling roads and bridges, expand telecommunications networks,
and repair aging water systems. The Trump campaign said investing
in infrastructure would help stimulate employment and economic
growth in the U.S.
Unlike previous stimulus efforts, however, Mr. Trump's
infrastructure program would rely primarily on private investors,
using new tax breaks to lure private capital for major construction
projects. Trump allies Peter Navarro, who will be involved in trade
issues in the new White House, and Wilbur Ross, who has been slated
to become Mr. Trump's Commerce Secretary, said financing $1
trillion in projects would require an equity investment of $167
billion, and proposed an 82% tax credit for investors who
participate in the program.
The private sector approach has been viewed skeptically by
Democrats. Members of the Senate Commerce Committee, who elicited a
pledge from Transportation Secretary designate Elaine Chao this
week that the Trump infrastructure plan would also include direct
federal spending.
Democrats argue direct spending is necessary to create jobs and
ensure that the program doesn't fund only projects attractive to
investors. Former advisers to President Barack Obama also noted
that without any plan to pay for the tax credits, they would add to
the deficit, while having a less effective stimulus effect on the
economy than direct appropriation by the government.
Mr. Trump also will have to square his campaign pledge to ensure
that infrastructure construction uses American steel and supplies
with resistance to such requirements among some conservatives and
Republicans in the Congress. Critics say "Buy American" provisions
in procurement contracts can drive up costs, but Mr. Trump has
insisted that his proposed spending plans will generate demand
domestically.
In his interview with The Wall Street Journal, Mr. Trump said
the council that Messrs. Roth and LeFrak will head will include the
country's top builders and engineers. "Some of the projects they'll
throw out. Some of the projects they'll expand. But all of the
projects, they'll make sure we get a tremendous bang for the buck,"
Mr. Trump said.
Mr. Trump was critical of past infrastructure efforts for
enriching contractors but not building anything. He said that
Messrs. Roth and LeFrak "have a great nose, not only for pricing,
but also for what you need and what you don't need."
--Peter Nicholas contributed to this article.
Write to Peter Grant at peter.grant@wsj.com and Ted Mann at
ted.mann@wsj.com
(END) Dow Jones Newswires
January 16, 2017 16:28 ET (21:28 GMT)
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