The Twin Careers of Charles Urstadt
We had learned that our friend Allan Weedon had just returned from the U.S. National Swimming Championships in Indianapolis bearing a gold medal for the 100-meter backstroke. It was for his age group—85 to 89! “Now, that deserves some press” we said. “Oh no,” Allan demurred, “you should really be writing about Charles Urstadt. He not only got the gold for the fifty-meter breast stroke, but he also set the national record for his age group—80 to 84!” On top of that, the year before in Perth, Australia, Urstadt set a new world championship record for his age group as well.
As it turned out, Urstadt’s recent record-breaking performance is all the more noteworthy considering it was only ten years ago that he took up competitive swimming again after pressures of his business career forced him to abandon it forty-three years ago. It was at the urging of his son-in-law and business partner, also a dedicated swimmer who works out regularly in the YMCA’s new fifty-meter pool. Since then Urstadt has won a half-dozen national and world championships and set five national records for the breaststroke starting with the 70 to 74 age group. He allowed that he had to watch out for the “young” swimmers —younger, that is, than himself in his age group.
Charles Urstadt’s first taste of swimming started at City Island where his parents went for the summer. In high school he was a three-time New York City champion swimmer. After a tour of duty with the Navy he enrolled at Dartmouth College where he was captain of the swim team, All-American twice and a Junior National Champion. While studying for his MBA at the Amos Tuck School, he coached the freshman swim team before going on to Cornell to study real estate law. Urstadt owes his present aquatic success to a strict regimen of training in the Greenwich YMCA pool and at the Doral Arrowwood Hotel in Rye. Plus, he admits, “I get a kick out of winning.”
His focus on winning has been a mark of his exciting and successful commercial real estate career. He is the founder, chairman and CEO of Urstadt Biddle Properties, a real estate investment trust (REIT) with corporate offices on Railroad Avenue. The company owns and manages forty-four shopping centers and office buildings in the tristate area, including Ridgeway in Stamford, the Goodwives Shopping Center in Darien and Greens Farms Plaza in Westport. Though its class-A stock is traded on the New York Stock Exchange, this REIT is one of a very few that is closely controlled by a family. His son-in-law, Willing L. Biddle, is president and COO, and son Charles is a board member and president of the family’s privately held properties companies.
Urstadt is allergic to debt. Only 15 percent of the value of the company’s assets are mortgaged, and he is especially proud of this lack of leverage, rare among REITs. His dedication to conservative accounting methods has allowed his company’s annual report to boast “forty years of uninterrupted dividends and sixteen consecutive years of increased dividends.” On the cover of each year’s report Urstadt states, “Stock prices are only opinions, but dividends are facts.” Not surprisingly, the recent bursting of the real estate bubble has had a relatively modest and temporary effect on the price of his company’s stock.
The relationship of Charles Urstadt and his son-in-law is symbiotic. There is a heartwarming sense of mutual admiration and respect sometimes difficult to achieve in family firms, but crucial to their success. Urstadt appears to guide with a gentle hand, and his confidence in his son-in-law is palpable. Willing marvels at his father-in-law’s prodigious memory, saying he could recite “The Night Before Christmas” beginning to end at the drop of a hat. “In fact,” said Willing, “we have a little test: When he can no longer do that, we’ll know it’s time for him to step down.”
As the founder of his very successful company, Urstadt deserves prominent mention in the annals of commercial real estate. But he is more widely known —and will surely be recorded in the history books— as the Father of Battery Park City. Urstadt played the key role in the development of this city within a city built on ninety-two acres of landfill on the Hudson River at the tip of Manhattan. It is an epic saga of an enormously ambitious real estate development created in the face of seemingly insuperable odds.
Urstadt cut his teeth on real estate working for the legendary William Zeckendorf. Then in 1967 he was appointed by Governor Nelson Rockefeller as Commissioner of Housing and Community Renewal of New York State. At that time Rockefeller asked him to take charge of the Battery Park City Authority (BPCA) as chairman and CEO. The roots of the downtown urban renewal project were laid by David Rockefeller, chairman of Chase Manhattan Bank. In 1956 he had founded the Downtown Lower Manhattan Association to enlist the support of Wall Street’s banking fraternity in addressing the problem of the lack of housing for the 350,000 workers in the area.
Ten years of study, debate and competing plans for the renewal of the deteriorating financial district followed without any visible progress. Rockefeller conceived the the Battery Park City project as the answer to revitalizing Lower Manhattan. It would be an integrated community of apartment buildings, offices, schools and shopping facilities in the Wall Street area, where workers could be within walking distance of their jobs. Making that dream a reality consumed Charles Urstadt for the next dozen years.
Land in Lower Manhattan was expensive and none was available for a project of the magnitude to provide this much housing. However, Manhattan’s Hudson River waterfront, once a thriving seaport, was a scene of rotting piers since the ocean freight business migrated to the new containership cargo handling facilities in New Jersey. Shipping interests and the longshoremen, hoping for a revival of the port, naturally opposed the removal of the crumbling piers. Nevertheless, city planning and the maritime commission gave their approval for the Battery Park City plan to create a city on ninety-two acres of land mostly submerged under more than thirty feet of water. Only twenty acres were dry land created from material from the excavation for the World Trade Center, and they had to be contained by sand filled caissons sixteen feet in diameter. The entire site required a retaining dike over a mile long inside which five million cubic feet of sand were pumped. It was a monumental feat of landfill engineering.
The dream was for a landmark urban development community of 9,000 apartments to house 20,000 people, along with 10,000,000 square feet of office space, retail stores and schools, all in a park-like setting with walkways and views of the Hudson River and New York’s magnificent Upper Harbor.
If the engineering presented a major challenge, it was nothing compared with the human obstacles that had to be overcome. Just to create the land, says Urstadt, involved navigating through a maze of environmental, political and bureaucratic challenges, along with the nagging problem of financing this early stage. In his very readable book describing the creation of Battery Park City, Urstadt recounts how this mammoth undertaking was constantly faced with “an undercurrent of petty political machinations involving torturous turf battles, the chancy proposition of private enterprise and government working effectively together, labor-management conflict, social unrest and personality clashes.”
One of the principal opponents of Battery Park City was Mayor John Lindsay, who had his own idea for a housing development site on the East River side of lower Manhattan. Urstadt won this running battle when Lindsay left office, but he was only one of a number of political figures who, pursuing their own agendas, threw roadblocks in the way. Hugh Carey succeeding Rockefeller as governor had no interest in glorifying his predecessor by supporting his favorite project. However, Urstadt was able to counter the political opposition by pointing to some 30,000 deposits on apartments already booked as evidence of strong demand. There were endless issues that had to be addressed, including ticklish jurisdictional disputes between city and state. There was the inevitable heated debate over design, with Ada Louise Huxtable, the architectural mandarin of the New York Times, fueling the flames. Nor did it help that famed architects Walter Johnson, appointed by Rockefeller, and Philip Johnson, favored by the city planners, vied bitterly for control.
Never far from the forefront was the problem of financing. From 1970 to 1978, at a critical time in the development of Battery Park City, the New York real estate market suffered one of its most severe recessions. Commercial office space was a glut in the market. Still, the Authority managed to sell $200 million in tax-exempt bonds. Meanwhile, FHA and HUD were dragging their feet issuing a commitment on mortgage insurance and Moody’s downgraded the Battery Park City bonds. By 1974 they were selling at fifty cents on the dollar. Against this bleak background Urstadt was able to convince bondholders to hang on until FHA and HUD delivered their commitments for the first buildings. On top of it all, the whole project was put in jeopardy by a plan to extend the Westway highway right through the middle of Battery Park City. The threat was dispelled when Urstadt usurped the initiative by quickly having pilings driven for BPC buildings in front of the proposed right-of-way.
Besides the nightmare of dealing with a multitude of federal, state and municipal agencies, Urstadt needed to find a reliable private developer experienced in building apartments to partner with. He turned to Sam LeFrak, developer of LeFrak City and other large housing projects. LeFrak was a difficult person to deal with. “He originally intended to be a dentist”, Urstadt recalls, “and was on the wrestling team at the University of Maryland. Dealing with Sam was like pulling teeth from someone who has you in a headlock!” And after signing a letter of intent for a joint venture, he realized it was going to be “the world’s longest and most complicated handshake.”
Originally the 9,000 apartments were to be a mixture of market rate and low-income housing. However, economics dictated luxury housing, and later there was an agreement with the city that Battery Park City rentals and fees would help finance affordable housing elsewhere in the city. This fund has since grown to $450 million, which Governor Paterson has recently tried to divert to plug the state budget gap, a diversion Urstadt strongly opposes as an abandonment of the affordable housing goal.
It is a fact of life, says Urstadt, that politicians have a short time horizon and their first priority is to make their constituents happy. Development, on the other hand, takes many years. In spite of a steep recession and political sniping, Battery Park City stands as an example of what public/private partnerships can achieve—in this case, a fully integrated mixed-use urban village created in one of the most densely developed areas of New York City—a village highly prized by its residents and recognized worldwide as a model of urban planning.
Today the ninety-two acres of landfill are fully built out. Complementing the 9,000 apartment units are over 10 million square feet of commercial space. There are fifty-two shops, twenty-two restaurants, two hotels, three schools, a multiscreen movie theater and a marina. But the beauty of Battery Park City is in the thirty-five acres of well-landscaped parks with statuary, playing fields and a 1.2-mile esplanade along the Hudson River.
The project is also an economic success and has been a boon to New York City. Land that cost $25 per square foot to create is worth $4,000 to $8,000 per square foot today. Urstadt estimates the total value of the land and buildings at $30 billion. Further, Battery Park City generates income of over $250 million a year from land and building rents paid into a lockbox controlled by the mayor, the city comptroller and the Battery Park City Authority.
New York City has an option to acquire Battery Park City from the authority for a mere $1.00. Urstadt firmly believes the city should exercise it. Though the city would have to assume the authority’s debt, there is more than enough cash flow to service it. It would be the best land deal, he claims, since Manhattan was bought from the Indians. However, he adds that there are entrenched political interests that stand in the way.
Having slain so many political dragons and dodged so many bullets while helping accomplish the near impossible, Charles Urstadt inevitably fell victim to politics. His remarkable tenure came to an end early this year when Governor Paterson appointed Bill Thompson, former Democratic mayoral candidate and city comptroller, to replace him. Urstadt was not only founding chairman and CEO during the city’s genesis, but a member of the board and a guiding light for the BPC Authority for twenty-four years. When he stepped down, his staff gave him a standing ovation. Those who had worked with him have testified that Battery Park City would never have happened had it not been for the persistence of Charles Urstadt in overcoming the many obstacles in those early years. Was the agony of giving birth to the city-within-a-city worth the candle? Urstadt admits he could have made a lot more money dedicating the years he spent developing Battery Park City to private real estate, but he would not have had the satisfaction of accomplishment and the honor of wearing the mantle of “Father of Battery Park City.”