NOT NEWS – Cutting Bills

Tim Kaine, at a campaign stop yesterday, told the story of a woodworking contractor who completed a job at one of the Trump casinos and, when the job was completed and he delivered his invoice, was told that, if he wanted to be paid anything, he would have to accept a reduced amount in full satisfaction of the debt. Trump was cutting his bill. For Kaine, this was evidence of Trump’s congenital and continuous perfidy. I can only assume he’s not aware, as the woodworker surely was, of the ubiquity of the practice of bill cutting among NYC landlords and real estate operators. Back in my pre-lawyering days I worked as a managing agent for uber-landlord Sol Goldman (nobody in the business believes me but I managed 2,000 units in 40 different buildings) and bill-cutting was a way of life. 

If I had a job to give out, a roof to repaper or a boiler to replace, I’d contact a few contractors in the trade, negotiate the lowest number that I could and then go in to Mr. G to get the job approved. This is where the cutting began. “Please Mr. G,” I would plead, “it’s the best price by far.” “Take $2,000 off the contact. He won’t walk away.” (Understand that, in 1987, when he passed, Mr. G left what was at that time the largest estate in New York State history – he was not short on cash). So back I would go to the contractor with the bad news and, as predicted, he would stay with the job which, of course, made me look foolish since I obviously had not negotiated the best price possible. 

Once the work was completed, the contractor would come in with the bill and I would say “This is too high. I can’t go in to him with this. Believe me, if I bring him this number, he’s going to cut the crap out of it.” So the contractor would reduce the charge and I’d bring it into Mr. G for approval. And again I would advocate for the contractor. “Please Mr. G. Don’t cut it. I’ve already got him down. He’s only making pennies on the job.” And again, he would cut the price saying, “I could lose my shirt paying bills like that.” I would sheepishly return with the bad news and the contractor would whine and scream and cry and moan and eventually would say, “Do you have any other work to give out? You’ve got to give me the next job and give me a chance to make it up.” It was part ritual, part dance and all about the money. How do the landlords justify this behavior (and I assure you, they feel completely justified)?

First of all, the landlord assumes that the contractor anticipates being cut (which he has) and has built a sort of “cut cushion” into the price (which is also true) so, if you don’t cut out that cushion, you’re overpaying and being taken advantage of and nothing galls a real estate guy like being taken advantage of. Second, the landlord feels he’s due a discount to compensate him for flaws in the job. He may not be aware of any flaws but no work is ever done perfectly so the landlord needs to take consideration now for problems that will undoubtedly reveal themselves in time. Third is that the contractor almost always requests the chance to bid on new jobs. If he’s being chopped so badly, why does he keep coming back? That in itself is proof that the reduced payment contains enough profit to incentivise the contractor to keep the dance going (or, conversely, that the contractor was trying to screw him and it’s only through leveraging future work that the landlord was able to avoid being suckered). Now, Trump’s propensity for declaring bankruptcy, where contractors are crammed down by the secured creditors (the lenders) to levels they would never accept in a negotiation, is a special Trumpian twist that distinguishes him from the more run of the mill scumbag. Still, if Kaine wants evidence of exceptionally bad behavior by Trump, he’s going to have to up his game. 

2 Responses to “NOT NEWS – Cutting Bills”

  1. Bbh Says:

    This makes it right? A cockroach is a cockroach.

  2. newsornotnews Says:

    The HC/TK’s would just be better off focusing on the Trump-unique misbehaviors, of which there are many. Things he can’t say “everybody does it.”

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