by Daniel Geiger
Perhaps it was a function of how much popular political sentiment by then had begun to shift on the subject of government spending. But late last year when then governor-elect Andrew Cuomo was preparing to take office, Steve Spinola’s prescription for the state’s ailing finances seemed far from just a wish list for the real estate industry.
“I think the state is at a point in crisis that unless something is done we’re going to be in a similar condition as California,” Spinola said at the time, referring to California’s dire economic condition and calling for cuts to government spending and no new taxes.
Anticipating that Cuomo would need broad support to enact that kind of slate of long-overdue fiscal reform, Spinola, who is president of the city’s most powerful real estate association and lobbying group, the Real Estate Board of New York, partnered with the Committee to Save New York, a pro-business organization that was raising funds to combat the state’s municipal unions.
The aim was to give the private sector a way to counteract the actions of unions like 1199 SEIU, which had bludgeoned former governor David Paterson into submission with gratuitous television advertisements on the proposals he had made to cut contributions to Medicare.
The Committee to Save New York wanted to make sure the private sector would be armed with similar ammunition if the need should arise.
Only a little more than four months later, the state passed a budget on time for the first time in years and one that included about $10 billion in cuts. While Cuomo’s landslide victory at the polls had certainly empowered his reformist agenda, the coalition and its activities no doubt also sent a strong message to Albany.
The episode reflected one of Spinola’s great skills, his ability to deftly interweave the industry’s concerns into a broader context, build key allies and utilize just the right political pathways to advance the interests of his constituency. Perhaps another element to Spinola’s success though is that his advocacy of the real estate industry never seems to stray far from what he genuinely feels is right for the city and state. In the case of the budget, who after all couldn’t get behind his desire to see the public unions’ hold on Albany loosened and for the state to finally begin to get its financial house in order?
“If there’s one thing that all the chairmen of REBNY and the members of the organization’s executive committee have had in common through the years, it’s that they care so much about New York,” Spinola told Real Estate Weekly in a recent interview. “And if they’ve given me one direct order, it’s always to do what is best for the city and the state. I don’t think that’s something that a lot of people always understand about this industry. There are a lot of businesses that, if things get bad in New York, can pick up and leave. Landlords can’t and for them the health of the city is the most important element.”
“Lew Rudin always had a line that I remember, if it’s good for New York City, it’s good for the real estate industry. And I think that’s become not just my mantra but the mantra of so many members of REBNY.”
Ann Weisbrod, president of the Hudson Yards Development Corporation, a city organization that has oversees development on Manhattan’s far West Side, including the construction of the No. 7 Subway extension, remembered working with Spinola earlier in her career when she was at the Downtown Alliance. It was the mid-1990s and the city’s real estate market, like much of the rest of the nation’s was still suffering from the after effects of a recession at the start of the decade. In lower Manhattan, vacancy rates were well above 20 percent Weisbrod remembered, an almost unthinkable level compared to today. Even during the recent deep recession, vacancy downtown rose only into the mid-teens.
Spinola, Weisbrod said, helped brainstorm and then spearhead a plan with the city and state to create tax abatements through a program called 421G that would be eligible to developers who converted office buildings over to residential use. The effort spurred conversion projects, removing antiquated properties that had outlived their useful lives as commercial offices while lowering vacancy, which, along with a rebound in the economy and the dot-com boom of the late 1990s, improved the health of the downtown market.
The process of conversions gained momentum through the 2000s also helping to build a thriving residential population in lower Manhattan that has continued to bolster that area.
“He’s always on the cutting edge,” Weisbrod said. “He knows how to get things get done. He’s an advocate for the industry, but he’s also an advocate for the city too.”
“Steve has an encyclopedic knowledge of the real estate industry,” said Mary Ann Tighe, CEO of CB Richard Ellis’s New York area operations, who was elected REBNY’s first chairwoman last year.
Tighe said it was during the REBNY banquet in January 2010 that Dottie Herman, CEO of the residential brokerage Prudential Douglas Eliman, approached her to bemoan the fact that the trials for the accused conspirators behind the attacks of 9/11, were being planned for lower Manhattan. The trials, many feared, would paralyze the area due to the heavy security measures that would be implemented in the area by the NYPD. It was the first Tighe had really heard of the potential magnitude of the trial’s impact and she walked over to consult with Spinola. Public opposition to the trial hadn’t quite yet boiled over but she was impressed with the way Spinola readily listened to her and took her concerns seriously and also his subsequent responsiveness.
Spinola immediately went about utilizing the connections of his membership. Jeff Gural, a powerful landlord and one of the chief executives of the real estate services firm Newmark Knight Frank, is a Democratic supporter and, at the time, was hosting a dinner to be attended by David Axelrod, an advisor to President Barack Obama.
“Steve laid out what would happen if the trials were held here and all the concerns,” Tighe said. “He was pressing every correct button.”
The decision to bring the trials to the city was soon abandoned.
Many observers of Spinola’s tenure are impressed with his command over the broad span of issues buffeting the industry.
Last year for instance, when a proposal to increase the tax on carried interest, the profit that investment funds earn on the money they manage, Spinola spoke eloquently why real estate investment structures, some of which would have been impacted by the tax changes, should be exempted from proposed legislation.
More recently during the summer, Spinola spent time trying to negotiate a project labor agreement with the city’s construction unions that would save on the costs of building interior spaces for office tenants. Though labor contracts were renewed for many of those trades in June and July, several construction experts have said that the outcome of that process hasn’t made the unionized construction industry affordable enough for the continued economic problems. Many view Spinola’s efforts as a well-timed try to realize additional savings for a vital segment of the industry.
When residential rent regulations were renewed in recent months, Spinola was critical of the changes but pragmatic. New regulations have increased the minimum rental rate at which an apartment can be decontrolled from $2,000 to $2,500 per month and also have limited the amount of rental increases a landlord can charge in exchange for making capital improvements to an apartment. Speaking with Real Estate Weekly at the time, Spinola didn’t channel the outrage felt by many in the industry, perhaps because it could create backlash against an industry whose wealthy constituents are already prone to popular ire, especially in times of hardship. Instead, Spinola demonstrated his penchant for conveying a convincing logic not without its own popular appeal. Regulations, he said, miss an essential fact; that many of the people who occupy rent regulated apartments are in fact wealthy Manhattanites who could more than afford to pay market rate. The changes only preserved a system of unfair entitlement, while removing a popular incentive for landlords to make capital improvements on their properties.
“Steve has a way of getting everyone on board the issues,” said Burt Resnick, landlord to a large New York portfolio and a former REBNY chairman. “Steve doesn’t preach to the choir, he educates people who don’t believe what the choir is saying.”
“Steve is well respected, he’s honest and open and he’s straightforward,” said Mike Slattery, an executive at REBNY who has worked with Steve for years. “He’s the kind of guy who has the credibility that both membership and non-members respects.”
Spinola came to REBNY in the mid-1980s after working for Mayor Ed Koch’s administration as chief of the Economic Development Corporation, or what was then known as the Public Development Corporation. He was excited about the move but at the same time ready for the position to be a touch less exciting than his work for the city. During his tenure at the PDC, he had helped arrange the development of large scale projects including the MetroTech office complex in downtown Brooklyn and the redevelopment of the South Street Seaport. Spinola said the job quickly defied that expectation, thrusting him into the role of industry spokesman and an advocate for the myriad issues he continues to juggle to this day.
“In real estate, the members are so engaged and there really is such a sense of community in the industry in the city,” Spinola said. “When we need data, our members will dig it up and provide us with it. When we need support on an issue, the members are there. It’s inspiring.”