Eliot Spitzer and Scott Stringer, the two Democratic candidates for City Comptroller, faced off in a debate today that focused on how to allocate capital to minority real estate developers and business owners.
The question of “access to capital” for minorities is a major concern of minority voters in this election, hosts of the event said today, and an audience comprised primarily of minority business owners gathered at Harlem Mist, a cultural center on West 116th Street, to hear the debate.
The event was hosted by the New York Real Estate Chamber, a group of residential and commercial developers, community development corporations, general contractors and property managers from minority communities in the city. Developer Don Peebles is a founding member of NYREC.
The specific issue of contention this morning: how to ensure that New York City’s biggest employee pension funds, like NYCERS (the New York City Employees’ Retirement System), distribute funds to African American, Hispanic and other minority entrepreneurs looking to build new development projects in Manhattan, particularly since many of them don’t have the lengthy track records of established city developers.
Stringer, the Manhattan Borough President and a former state Assembly member, advocated for establishing a new position within the comptroller’s office – a chief diversity officer – who would police its investment arm to ensure that funds were allocated fairly and to minority-owned companies where possible. But Spitzer, the former governor whose father is real estate tycoon Bernard Spitzer, said that would be an ineffective means of getting the best results.
“Having a chief diversity officer is great,” Spitzer told the crowd, “but the decision [on allocating funds] has to be made by a portfolio manager. I want to bring in house our decision maker. What I want is someone who’s going to be sitting there saying, ‘We’re going to do this as a matter of morals, ethics and as a matter of returns.'”
Indeed, Spitzer and Stringer agreed that investing city pension fund dollars with the Goldman Sachs’ and Lehmans of the world does not necessarily garner the best returns for retirees, who see their savings routinely tied up in projects by the same major players. But betting pension money on developers without established pedigrees remains problematic, unless they affiliate themselves with a reputable joint venture partner with a history of transacting.
“You can’t get access to the deals if you can’t show on a balance sheet that you have the capacity to build,” Spitzer said, “so we need to make sure that the biggest established players bring in people to partner with.”
In principal, aspiring to have big name developers partner with minority and women-owned businesses is a great idea, Stringer said, but, in practice, one finds that local development behemoths have no motivation to seek out minority-owned partners.
“We’ve got to get developers like Eliot to actually partner with people in the community,” Stringer rebuffed. “Talk is cheap.”
Indeed, Peebles said after the debate that getting access to capital is the “primary obstacle” for minority- and women-owned businesses.
“There are so many minority-led businesses with powerful ideas that just can’t get the capital necessary to put the deals together and bring those ideas to fruition,” he added. “These businesses face a Catch 22 where they are asked to demonstrate a positive track record to get capital, but need capital to build that track record.”
After the comptroller debate, a number of mayoral candidates took the stage, including Democrats Bill de Blasio, John Liu, Bill Thompson and Anthony Weiner.
Weiner also bemoaned the lack of a concerted effort to involve local minority-owned businesses in major construction projects.
“When Hudson Yards was being built, no one said, ‘Let’s bring in minority-owned businesses,'” he said. “They all said, ‘Let’s bring in Related, let’s bring in Durst.'”
Mayoral candidate Christine Quinn’s absence prompted a series of gags from the panel as well as from moderator Cornell Belcher, a Democratic pollster. Belcher joked that he might talk to her empty chair, much as film star Clint Eastwood did at the Republican National Convention last year, while Weiner quipped: “When the chair says something, you can believe it.”