The Real Deal New York

Development big issue in mayor race

Bloomberg, Ferrer running amid booming market

October 01, 2005
By Jeremy Smerd

Build and they will come… to vote for you.

So goes the conventional wisdom on how to attract votes from the real estate industry. In New York that puts incumbent Mayor Michael Bloomberg on the clear path to victory, as his 60-plus percent approval rating indicates.

Brokers and developers see Bloomberg as a booster of development, even when his efforts fall short, as they did in his bid to build a New York Jets stadium on the far West Side and bring the Olympics to the city.

“I think this city needs a businessman,” came a typical response from a senior vice president at CB Richard Ellis, Brad Gerla. “New York is a business; of course, there are people living here and things like that, but the way to run the city’s bureaucracy is to run it as a business.”

One look at the annual Mayor’s Management Report and you don’t have to stretch your mind to understand why Bloomberg already has the support of every major building and trades union. In 2005, a record 110,058 building permits were issued by the city, a 26 percent increase since fiscal 2001, which ended before September 11, 2001.

Translation: jobs for builders, improved property values, and real estate transactions (and real estate transaction taxes that helped create an unexpected budget windfall last year.)

With mega-building projects on the way in downtown Manhattan and Brooklyn, and three possible stadium projects on the horizon (new Yankees and Mets stadiums and a Jets stadium in Queens), it is no surprise that one of Bloomberg’s first major endorsements came from the powerhouse union, the New York Building and Construction Trades Council, with 100,000 members, followed by the unions for carpenters, electricians, painters and others.

Given the symbiosis between construction jobs and a strong real estate market, the endorsements by trade unions carry the outwardly silent support of real estate developers and brokers as a whole.

“It’s not unusual for us to be in agreement with the construction trades. More often than not we’re in agreement,” said Steven Spinola, president of the Real Estate Board of New York. “But clearly the mayor has been able to get more non-construction trades as well.”

Perhaps most significant of those endorsements has been DC37, the 121,000-member union for city employees. Equally important is the host of Democratic political clubs that have come out in favor of the Republican mayor.

“Crime is down, real estate values are at an all-time high, infrastructure [issues are being addressed], and he took on the Board of Education,” Spinola said. “I’m not sure what you can be unhappy about. Mike Bloomberg has proven he is damn good at his job.”

Of course, nothing is for certain in this city, a maxim the mayor learned the hard way when state Assembly leader Sheldon Silver blocked the Jets deal earlier this summer, mortally wounding the city’s Olympic bid.

Holdouts from the real estate community include the large and influential group of property owners of rent-stabilized apartments totaling about 1 million units in the city who have not cashed in on the real estate boom and still smart at Bloomberg’s 18 percent increase in real estate property taxes in 2002.

They also likely smart over the city’s Rent Guidelines Board’s vote in June to approve increases of 2.75 percent for one-year leases and 5.5 percent for two-year leases in the city’s rent-stabilized apartments, the lowest increases since 2002. Members of the board are appointed by Bloomberg.

“People say, ‘What does it matter, your property value has doubled,’” the executive director of the Community Housing Improvement Program, Patrick Siconfli, said. “Well, we’re not flipping properties.”

Like other nonprofit real estate or building associations, CHIP, as it is known, is not allowed to make endorsements. Even if he could, Siconfli is reserving judgement.

Likewise, Joe Strasburg, president of the Rent Stabilization Association, said his members, who own, on average, 60-unit buildings that are rent-stabilized, are sharing in the $400 rebate the mayor gave back in the 2005 fiscal year.

Of his members, he said, “Right now, they’re ambivalent.”

He is willing, therefore, to let Democratic mayoral nominee Fernando Ferrer impress him, which may be unlikely. Ferrer, a former Bronx borough president, will have to resist calls by housing advocates to return the entire rent regulation system back under city control, instead of the state’s.

“That’s a non-negotiable,” Strasburg said. “If Freddy Ferrer mouths what his supporters say, then it will be an issue.”

Those ifs stand in contrast to Bloomberg, who has a track record that leaves, at the very least, less in doubt.

“It’s a choice between voting for someone you know to be a great mayor,” Spinola said, “versus voting for someone who might be a great mayor.”

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