Developer With Stealth Reputation Changes Tactics to Build
June 19, 2003
By Michael Brick, The New York Times
Big-time real estate developers tend to come in two basic packages. There
is the extroverted visionary who seduces the public with elaborate
renderings and boundless enthusiasm and who plays mayors and other
politicians against one another for tax breaks. Then there is the
clandestine operator who consorts with silent partners, buys up land in tiny
parcels and eventually maneuvers his project past environmentalists and
For most of his long and lucrative career, Robert J. Congel, the Syracuse
founder of Pyramid Management Group, has hewn to the stealthy stereotype. He
has built a small empire of more than two dozen shopping centers and malls
in the Northeast, including the 4.3-million-square-foot Palisades Center
Mall in West Nyack, N.Y., with its 220 tenants.
Risking his own capital to get his malls finished and to retain control,
Mr. Congel has kept a low profile, though he has left a trail of lawsuits
wherever he has gone.
The strategy has made Mr. Congel rich, with assets of $700 million,
according to an estimate last year by Forbes magazine, which ranks him among
the 400 wealthiest Americans.
Now, working on his grandest project ever, Mr. Congel, 67, has changed
tactics. He has thrust himself and his proposed supermall, called DestiNY
USA and planned for Syracuse, into the political spotlight on a statewide
Mr. Congel has asked Gov. George E. Pataki to embrace the project by
pushing through the Legislature a bill to guarantee certain tax breaks for
years ahead in a manner that could help Mr. Congel secure less costly
financing. According to some drafts of the bill, now before lawmakers in
Albany, the developer would be able to use as collateral the tax rebates
owed him by the state under the Empire Zone program, even if the state
decides to end the economic development program.
The request has generated political heat, as Democrats are beginning
inquiries into the lobbying efforts of well-paid political allies of Mr.
Pataki. Mr. Congel and his companies have spent more than $100,000 in the
past two years to hire lobbyists: Alfonse M. D'Amato, the former senator who
was Mr. Pataki's mentor; John O'Mara, a former judge who has been the
governor's special counsel in negotiations with Indian tribes; Kieran
Mahoney, Mr. Pataki's top political consultant; and Thomas Doherty, a former
Pataki appointments secretary, according to state lobbying commission
Some critics also note that Mr. Congel and his family have donated more
than $37,000 to Mr. Pataki's re-election campaign in the last two years.
At the same time, questions are being raised about the viability of
DestiNY USA and whether it truly is, as billed, a salve for some of upstate
New York's economic troubles.
''Why does he need public money?'' asked Matthew L. Ostrower, an analyst
at Morgan Stanley who covers retail-oriented real estate investment trusts.
''He's going to put it across as a benefit for a place that wouldn't
otherwise get it.''
Whether a megamall in Syracuse can generate enough traffic to sustain
itself is another matter.
''What he's probably not being as forthright about is that, certainly in
this location, in this market, it doesn't make economic sense,'' he said.
Mr. Congel began his development career in the late 1960's, when shopping
centers and office towers were financed by commercial banks and insurance
companies. Wall Street did not invest in real estate in any significant way,
and a developer was often described as either a hired manager or an
independently wealthy, self-proclaimed visionary. He was neither of those.
Instead, Mr. Congel gathered partners, including Michael Falcone, who has
gone on to become a prominent office developer, and he started with small
shopping centers. An early break, according to articles published in 1987 in
his hometown newspaper, The Post-Standard of Syracuse, came when the
partners began working with a former executive of J. C. Penney. That helped
Mr. Congel and Mr. Falcone secure the big department store tenants that are
crucial to obtaining financing for a shopping center. As Mr. Falcone turned
his attention to office development, Mr. Congel went on to build larger and
more expensive malls, often on unattractive lots.
''He looks for pieces of land that can get rezoned, and they usually have
environmental problems,'' said Lynne B. Sagalyn, director of the real estate
program at Columbia University's business school.
Instead of going public, as many of his contemporaries did, Mr. Congel
kept forming partnerships, pulling together private equity capital and
quiet, institutional financiers. For each of about two dozen mall projects,
there was a new general partnership. For each new general partnership, there
was a so-called sponsoring partner, a public face to handle publicity and
Along the way, he drew a scolding from a state ethics panel that
investigated his campaign contributions. The records also show a history of
lawsuits from environmentalists and from his own contractors, and a judge's
order to pay punitive damages to joint venture partners.
''He's going to get his way no matter what, through politics or his
connections or by being a 900-pound gorilla,'' said Steven G. DeRegis, a
member of the Syracuse Common Council, who has battled Mr. Congel over his
''If you sign a contract with him, you'd better read the fine print. If
you don't read the fine print, you're going to get dimes on the dollar on
what he owes you,'' Mr. DeRegis said.
Mr. Congel, through a spokesman, declined interview requests, and several
senior executives of his main company, Pyramid Management Group, did not
return phone calls.
Developers get sued, but some of Mr. Congel's companies' legal fights are
unusual even by the standards of big-city builders. Several project partners
accused him in an unresolved civil case in federal court in the Northern
District of New York of violating the Racketeer Influenced and Corrupt
Organizations Act and of draining funds owed to his co-investors to finance
new malls and expansions.
Mr. Congel came close to getting out of the business in 1998, hiring
Chase Manhattan to explore a sale of the equity in Pyramid, according to
Wall Street bankers and news reports at the time. Instead, he stayed in the
business and turned his attention to DestiNY USA.
Robust and active, he is said to enjoy hunting, skiing and tennis. But
his passion is said to be business, particularly negotiating, and the
DestiNY USA project apparently appealed to him on many levels. Besides its
ambition, it offers him, he has said, the opportunity to improve his
hometown for his children and grandchildren.
''This could be his legacy,'' said Richard W. Latella, a managing
director of the real estate services firm Cushman & Wakefield who has worked
on Mr. Congel's projects, often as an appraiser for his lenders.
Since the project was first floated in the summer of 2000, Mr. Congel has
variously said it will include hotels, a golf course, environmentally sound
construction methods, movie theaters, parks and concert halls. It is
estimated to cost $2.2 billion and would expand the 1.5-million-square-foot
Carousel Center mall in Syracuse by 3.2 million square feet.
Some critics said he has kept the actual shape of the project murky on
purpose. ''He's trying every angle he can to make himself eligible for these
tax credits,'' said Michael J. Wasylenko, a professor of economics at
Mr. Latella said that is understandable: ''If you're going to build it,
build it with other people's money, that's for sure.''