Lots of Contention
Fifteen years from now, part of downtown Miami could look like Times Square. At least that's what Jacob Sopher believes. And, right or wrong, what he thinks matters because he owns a big chunk of the empty lots in prime locations, including those near the American Airlines Arena and next to the site of the future Performing Arts Center. But for now Sopher, a 67-year-old New Yorker who goes by the name Hank, seems happy taking your ten- and twenty-dollar bills and as many parking operations as he can get his hands on.
For a while Sopher, the president of Quik Park, also seemed to be fine with keeping $600,000 of the city's money. In September officials learned he owed that much in unpaid parking surcharges.
Which was odd. It's not like he couldn't afford it. Just a month earlier Sopher had plunked down $4.7 million for three pieces of property on Northeast Seventh Street in downtown Miami. This is the man who over the past two years has paid nearly $50 million to own what amounts to an array of vacant lots, with the exception of an office building or two. The same man who this past July turned over $7.5 million for the parking garage at 100 United Nations Plaza in Manhattan, the latest addition to his portfolio of about 70 lots and garages in the Big Apple.
And he also had a good reason to behave. Quik Park was poised to make a bid for Miami's municipally run parking facilities, which Mayor Joe Carollo had long wanted to privatize. A referendum on abolishing the independent status of the city's Department of Offstreet Parking, which would open the way for privatization, was to be on the upcoming November ballot. Confident it would pass, the city manager's office had already sent out requests for letters of interest to about 50 companies, including Quik Park. Whoever won control of the city's lots and garages stood to make millions.
But now Sopher was in big trouble with the Miami city commission over a measly $600,000.
At their October 12 meeting, after the commissioners returned from lunch, one of the people they heard from was Fred Bredemeyer, the local manager of a private company called the Parking Network. For a year Bredemeyer's firm had been under contract with the city to collect twenty percent of the revenue that flows into every parking facility in town. The commission authorized the surcharge last year in order to replenish the city's depleted coffers. The city's budget depended on it. Bredemeyer confirmed for the commissioners what he had told a Miami Herald reporter several days earlier: Quik Park had stopped paying the surcharge in June. Since then he had sent letters and made phone calls to Quik Park's office in South Beach in an effort to collect but received no reply.
Everyone on the dais acted riled. First Commissioner Tomas Regalado wondered why he had to first learn of the problem by reading the Miami Herald. "It places an elected official in a very awkward situation," he complained. "Take the mayor. According to the press he didn't know. Had he known he wouldn't have taken 24 checks for his brother's campaign from these people. I mean it's very embarrassing for the mayor and for everybody." The mayor was not present but Regalado was referring to the $14,000 Sopher parked with Frank Carollo's state House campaign, flaunting Florida's $500-per-candidate limit. According to Frank's finance reports, 24 companies with the same address as Quik Park's Manhattan office (425 E. 61st St.) each sent a $500 check. Sopher; his wife, Jonee; and two other relatives also provided $500 apiece.
"We're going to deal with it," City Manager Carlos Gimenez promised Regalado. The manager already had scheduled a meeting for the next day with Quik Park representatives.
When it was Commissioner Johnny Winton's turn to speak, he had harsher words. "I think we ought to use every single resource at our disposal that's written into the law to hammer Quik Park," he said. "Everybody and their grandmother knows I opposed this stupid parking tax in the first place. However, it is in place and it's absolutely unfair for any single entity out there to take advantage of the system and not be paying. Get the tools out and use the tool box on whoever's coming to see you tomorrow."
"I plan to use them all," Gimenez pledged.
Even admirers of Sopher were critical. Commissioner Art Teele echoed Winton, eventually. "This is America," he began. "The whole concept of the rule of law implies that everyone is equal under the rule of law.... Now the problem that we have with Quik Park, in my judgment, is if we allow Quik Park to do this, this becomes carte blanche for everyone to do it." But then Teele seized the opportunity to go to bat for the parking mogul and air one of Sopher's grievances. Teele criticized tax-exempt Miami-Dade Community College for not paying the city a surcharge on the 1100 spaces it leases to the Miami Heat during basketball games. Coincidentally, just two weeks earlier one of Quik Park's attorneys, Santiago Echemendia, had sent a letter to MDCC threatening a lawsuit "to ensure the Heat's use of the parking garage is indeed subject to ad valorem taxation."
Teele later admitted, during an interview in his Dinner Key office, that he was a great admirer of Sopher, whom he first met about two years ago. But the surcharge fiasco had thrown him for a loop. "I'm just totally confounded," Teele said. Then he added: "I think that what he's done is lashed out out of frustration." In sum the surcharge maneuver was "a strategic mistake" that "cost him PR points," Teele surmised. "It has created the perception that he's looking for favors," Teele observed. "And he's going to have to work out of that." Then he added, "I think he's been getting some bad advice." From whom? He rolled his eyeballs in a glance to the ceiling. Translation: Joe Carollo.
Indeed that morning when a reporter stopped the mayor in the carpeted hallway alongside the commission chamber, Carollo did not dispel the notion that Sopher had erred. New Times was curious: Were Sopher's donations to brother Frank somehow related to the mayor's push for parking privatization? "One thing doesn't have anything to do with the other," Mayor Carollo responded sternly. "[Sopher]'s going to be one of 30 companies who are going to bid." But of course the surcharge matter would have to be "cleared up" first, he added. Then what did he think Sopher sought from all the contributions to Frank? The mercurial mayor took a step back. "You're going to write what you're going to write," he blurted angrily and began to walk away. Then he turned around and added: "By the way he's not Cuban, so you don't have to dump on him." And the elected leader of the Magic City strutted off.
Sopher still had the mayor on his side, but in the end the investment in Frank Carollo was not a good one. He lost his senate race by a wide margin. When a legal threat arose challenging the offstreet parking referendum, the administration canceled its request for letters of interest from parking companies. The city ordered Quik Park to pony up the $600,000 and a $200,000 fine. Then Mayor Carollo, after his wife filed for divorce, announced he would not run for re-election next year.
Apparently few knew it, but history was repeating itself. During his long career in New York, Sopher has left a trail of legal entanglements, especially involving tax disputes. But he's in good company. The parking industry, in New York at least, has a hard-earned reputation for not paying taxes. "You gotta remember that parking is about 80 percent cash," explained one Manhattan garage manager who has been in the parking business for 40 years. Which makes it easier to fudge on the accounting end. But he said state and city authorities have their hands full trying to nail bigger offenders: "They just don't go after the garages that hot and heavy."
Sopher may be learning things are a little different down here in the paved swamp. "It's characteristic of Hank to fight anything," said the Manhattan manager, who has known Sopher since the Sixties. "He would spend whatever the hell it costs just to make his point and if he loses at the end, he loses. He's always been like that."
Even his partners admit Sopher has a certain unpolished boldness about him. "He's rough around the corners a little bit, but he's smart as hell," said Steven Shepsman from his office in Melville, New York. The 48-year-old Shepsman is managing director of Reckson Strategic Venture Partners (RSVP), the main financial backer of Sopher's holdings in the Miami area. In sum he offered: "He's a New York real estate guy."
Hank Sopher clashed with other New Yorkers, especially government guys, long before Quik Park made it to the Dinner Key stage. In the Sixties in housing-hungry Manhattan, he set up a corporation named J.I. Sopher Realty, which included an outfit called High Rise Realty. As the demand for luxury apartments fed a construction boom in Manhattan and across the Hudson River in New Jersey, he made hefty profits. In addition to his brokerage fees for selling and renting units, he also earned money managing parking garages for owners of some of the high rises.
In 1975 the U.S. Attorney's Office in New York filed a civil suit against Sopher alleging his company had a policy under which his sales and rental agents were not to show apartments to prospective tenants who were black. The accusations centered on four high rises Sopher agents handled: the 178-unit Parc 23 on Park Avenue South, the similar-sized Parc 77 and Parc Coliseum on the Upper West Side, and the 1500-unit Normandie Court on the edge of East Harlem.
Sopher denied the allegations but signed a consent decree in which he pledged not to discriminate against minorities; it also required him to keep meticulous records so federal authorities could monitor his brokers' actions. But in 1982 and again in 1985 the U.S. Attorney's Office, then under the helm of New York City's current mayor Rudolph Giuliani, charged Sopher with violating the record-keeping stipulation. In 1987 a grand jury took testimony from several of Sopher's former agents who confirmed the discriminatory practices. But he has always disavowed the statements.
Other lawsuits arose out of creative financial arrangements. In 1988 Sopher was caught up in what lawyers call a "self-dealing transaction" involving a Manhattan parking garage he managed. The garage was in a midtown apartment building that a company named Conthur Development was converting into a co-op called Penny Lane. Years earlier Conthur had worked out a sweetheart lease arrangement for the garage space with another company. Conthur then sold the lease to Sopher for nearly a million dollars. When Conthur transferred ownership of the apartment building to the new co-op corporation, its members were stuck with a lease that let Sopher pay them far less than the market rate. The co-op sued to terminate it. In a deposition taken for the case, Sopher admitted the $25,000 annual rent he paid for the garage was ridiculously low. The U.S. district judge who heard the lawsuit upheld the co-op's right to terminate the lease.
Also in 1988, after a five-year investigation, the federal Securities Exchange Commission accused Sopher's uncle Victor Posner, a corporate takeover specialist with a Miami Beach office, of conspiring with junk-bond men Michael Milken and Ivan Boesky to illegally park, switch, and hide shares of Fischbach, a New York electrical and mechanical contractor. Sopher was a major shareholder in the company but was not charged in the case. In 1993 Posner and his son Steven were convicted of defrauding stockholders out of millions of dollars. A federal judge fined them four million dollars and barred them from serving as officers in publicly held companies.
Meanwhile Sopher had launched Quik Park in New York in 1989. A few years later he was again accused of refusing to pay somebody. This time some of his garage employees who were members of Teamsters Local 272 in Manhattan discovered Quik Park was not paying their health and welfare benefits. In 1992 the union sued Quik Park in federal court for withholding such benefits from about 150 of his 280 garage employees. According to the union's complaint, Quik Park had set up a dummy corporation for a non-existent garage and had a separate set of books. The 150 employees were listed in the phantom company, according to Teamsters representatives. Sopher and the union settled out of court earlier this year. Under the deal Quik Park agreed to pay $850,000 to the union for the unpaid benefits. "He's been paying monthly payments, which he'll be paying for one year," said Per Bernstein, a Teamsters spokesman in Washington, D.C.
Banks such as Chase Manhattan and other lenders also have sued him to get their money. In 1996 the federal Resolution Trust Corporation filed a lawsuit in U.S. district court in New York to recover part of a $4.2 million-dollar loan that Sopher owed to Old Stone Federal Savings Bank. The thrift had loaned the money to him in 1987; by 1994 the businessman was a year and a half behind on his monthly installments. Soon thereafter Old Stone failed and the federal government's Resolution Trust Corporation took it over. In March 1998 Sopher lost the lawsuit filed against him by the corporation, which wanted $1.8 million of the Old Stone loan.
On top of that, Sopher has a record in the Empire State of paying tens of thousands of dollars in taxes late -- or not at all. Throughout the Nineties he and the New York City Tax Commission engaged in suits and countersuits. His distaste for sending his money to governments seems to mesh with his contributions to anti-tax candidates. For example in 1995 he and his wife, Jonee, gave at least $2000 to Bob Dole's doomed presidential bid. Between 1995 and 1997 the couple sent personal checks worth $4000 to the campaign of New York Sen. Alfonse D'Amato, who lost to Democrat Charles Schumer in 1998. Sopher had given Schumer $500.
But Sopher's business associates are in awe of his savvy and persistence. "Developers are always calling Hank to get his gut [feeling] on how well something would rent," said Shepsman, the RSVP manager. "Hank works all night. The guy reads all night. He has more energy than people a fraction of his age."
Even a severe illness has barely slowed him down. In early 1997 doctors diagnosed him with bone-marrow cancer. Since then he has received two stem-cell transplants. He and his wife are helping raise ten million dollars for an expansion of the Arkansas Cancer Research Center in Little Rock, where he received the surgery. Among the improvements: a parking garage.
That same year he made a major business move. He sold a majority stake in J.I. Sopher Realty to another large residential brokerage firm, Douglas Elliman. And then he took Quik Park to Florida.
The Quik Park juggernaut actually began early in 1997 across the bay in Miami Beach. He took aim at his first foothold: a municipal parking facility. While he did so he captured some residential properties (a two-bedroom condo on Fisher Island for $550,000 and a Portofino Tower apartment on the southern tip of South Beach for $457,800.) The City of Miami Beach keeps tight control over its parking facilities, and most are city run. But somehow Quik Park worked its way in through the city's Redevelopment Agency (RDA). In 1997 Sergio Rodriguez, then executive director of the RDA, recommended Quik Park operate the city's newly completed Anchor Shops garage at Sixteenth Street and Collins Avenue, across from the huge Loews Hotel. Rodriguez cited Quik Park's experience managing hotel garages.
"The winters got a little too brutal for me," Sopher said during a brief telephone interview in mid-November. "And that's probably the main reason I'm down here. There's no secrets in my life." But the affably blunt businessman refused to grant New Times a full interview until December, citing scheduling concerns. "In the interim [write] anything you want to write as long as it's honest; I have no problem with that." Before hanging up he offered a suggestion. "The surcharge issue may be one percent of your story. Because we've been around awhile. We have an extensive operation both in Manhattan and now in Miami and we hope to launch it down here. And like I say, we're an open book."
So is the public record, of course, which reveals that Sopher began investing not only in Miami Beach real estate but also in the city's politicians. For example, he gave $1000 to Neisen Kasdin's successful mayoral campaign in the fall of 1997. "In the scheme of things in my campaign, that was a relatively insignificant amount," Kasdin recalls. "It's nothing that really registered then or now in terms of being of any particular significance." In last year's race for mayor, Sopher shifted his preference to losing candidate Martin Shapiro, who received a total of $3000 from Sopher entities (including checks from five of his New York City garage corporations registered with Quik Park's East 61st Street address). That time Kasdin garnered one $500 Quik Park check. He can only speculate about the shift: "Maybe they and some other people might know that you can't influence me with contributions."
Sopher also tossed funds at other Miami Beach politicians. Trying the approach he later would with Joe Carollo's brother Frank, Sopher's garages supplied $5750 to Joe Fontana's losing commission-seat race against Louis Garcia in the fall of last year. Checks for $500 came in from eight different garage companies with the East 61st Street address. Two of them (Irene Garage Corporation and Irvin Garage Corporation) contributed $1000 each, a violation of state election laws. Quik Park of South Florida also wrote two $500 checks. Records indicate that Fontana returned the illegal ones.
Just to keep things interesting, Garcia received a $500 check from Jonee Sopher. And Commissioner Matti Bower took in a $500 Quik Park check and $100 from Brian Tague, one of Quik Park's lawyers. "We have friends everywhere, thank God," said Rafael Llopiz, Quik Park's fast-talking 33-year-old executive vice president, as he rushed out of Miami Beach City Hall recently. Llopiz is Sopher's brother-in-law. "If I see a politician who's doing the right thing for the city, sure, I support them. As long as they're doing the right thing I'm all for it, because it's only going to help me."
But as would befall Sopher in Miami, a troublesome matter concerning Quik Park popped up at a Miami Beach city commission meeting this past July. The issue arose during what was to have been a routine discussion to renew Quik Park's contract for the Anchor Shops garage. But Commissioner Luis Garcia told his colleagues he had learned the city had been paying salaries to two Quik Park employees who actually didn't work at the garage. One was Harvey Figueroa, Quik Park of Florida's regional manager, whom the city was paying $36,000 to manage the garage. The other was Elizabeth Llopiz, Sopher's sister-in- law. Records showed she was working overtime, and Quik Park was billing the city for it.
Then Kasdin angrily raised his voice. "Quik Park has put on the payroll of the Anchor Shops garage individuals who don't work there or don't work there full time," he chided. "And those salaries are getting reimbursed from the city and the city is paying, for lack of a better way of putting it, phantom employees. I am concerned ... that we do not pay for phantom employees."
But another public servant rose to Quik Park's defense. It was Assistant City Manager Christina Cuervo. "Quik Park would like to speak to this," she began, "because they feel that they have been to a certain degree, for lack of a better word, defamed as it relates to this." Then Figueroa tried to assuage the mayor. He acknowledged that as regional manager responsible for 30 Quik Park locations, he did not work on site. Kasdin responded: "You're saying you billed us for your time, but in reality it's other people's time?" Figueroa concurred: "We thought this was the easiest, the [most] seamless, the fairest way to do it. Philosophically is it the correct way? I see not." An audit completed last week by the city's finance department figured Quik Park owed the city about $4500, owing to sloppy accounting. But City Manager Jorge Gonzalez had bad news for Sopher. The analysis, he said, found that the city could run the Anchor Garage itself for about $73,000 less than Quik Park has.
But back in Miami, for a while at least, Sopher's PR was looking pretty good. His incursion into downtown Miami started in 1998. It seemed to follow a pattern. Again he took care of some personal residential matters. (He sold his Portofino condo in 1998 for the same amount as his purchase price; he also sold two properties in Southampton, the tony Long Island seaside town, for almost five million dollars.) A few weeks later he purchased his current three-bedroom bay-view condo on Fisher Island for $1.8 million and a smaller one for $125,000.
Then came the commercial land binge that made him the most powerful vacant-lot holder in downtown Miami. In early 1999 Sopher bought one downtown parcel for about three million dollars. He grabbed another for almost two million dollars, one at 951 NW Second Ave. for $975,000, another at 700 Biscayne Blvd. for about $11 million, an office building at 550 Brickell Ave. for $9.75 million, and the Howard Johnson's Motor Inn at 1100 Biscayne Blvd. for $6.75 million. In February of this year Sopher grabbed the rest of a block, of which he already owned half, on Biscayne Boulevard at Ninth and Tenth streets for $6.2 million. That was about $165 per square foot, considered a record for the boulevard. The stakes were now extremely high. To make a profit Sopher needs major developers interested in building high-rise buildings in Miami's downtown wasteland to buy it from him.
In the meantime he received a steady infusion of cash from sports fans and members of the downtown work force who needed somewhere to park. "He saw this is as a good way to make a profit on real estate but in the end control parking," explained Shepsman, RSVP's managing director. (RSVP's parent company is Reckson Associates Realty, a firm that owns dozens of office buildings in the New York City area). "His endgame is to have the parking," Shepsman said. Sopher's strategy is to sell the lots to developers but keep control of the garage in whatever building goes up.
Sopher also wanted parking operations in buildings that are already standing. In 1998, after federal antitrust litigation forced several other parking companies to divest some operations, Quik Park won the garage lease in a downtown office building at 150 SE Second Ave. The property happened to be owned by Commissioner Winton's company, Wynco Realty Partners. Winton had a good impression of Sopher. The Quik Park president had sent him a $500 check to help in his 1998 bid to oust J.L. Plummer. Here was an extraordinary chance for Sopher's company to make a good impression, especially if parking privatization was down the road.
"Oh my God, has he been a terrible operator," Winton exploded during a recent interview. "I can't stand any of his people. They're just incompetent, that's all. They don't pay attention to any detail." The biggest problem was getting routine reports on revenues. "We couldn't get the reports from them, and then when we got the reports; we couldn't figure out what the hell was really going on with our garage from an economic standpoint. And [employee] turnover was high. So we finally had to clamp down." Winton claimed he demanded that Sopher hire two managers who had supervised the garage before Quik Park.
"You talk about a guy who's making a terrible error here," observes Winton. "I would think he'd be trying to make our garage work the best of any of his parking facilities.... That's good. That puts me in a real clear position to understand how he does his work. And it's pretty lousy.
"I could have been a big supporter of theirs, frankly.... But if they're doing a lousy job for me, well they're going to do a lousy job for the city. Pretty hard to support 'em then."
When the matter of the parking surcharge came up, others were disappointed too, including Bredemeyer, the Parking Network executive. "In an industry stigmatized by the reputation of an unscrupulous few, Quik Park's failure to comply with the surcharge makes headlines," he said. "Every other large parking operation was cooperating and compliant and deserves at least a footnote."
Bredemeyer has found Quik Park managers more responsive of late. He declined to discuss details but expected to issue a report on the company's surcharge payments in December.
Despite the surcharge fiasco, Commissioner Art Teele likes most of Sopher's machinations, especially the one about turning Miami's dismal downtown into a likeness of Times Square along Biscayne Boulevard. "We both want intelligent development," Teele proclaimed during a recent interview in his Dinner Key office. He said he met Sopher at a meeting in the offices of Tew Cardenas Rebak. (One of the firm's partners is Al Cardenas, the chairman of the Miami-Dade Republican Party.) "I was pushing very hard for aesthetic improvements on vacant land," Teele said, primarily in the Park West/Overtown area. "I have raised the bar, if you will, on the landscaping of parking lots," Teele boasted. When asked what Sopher is like, Teele responded: "Totally focused on the development of his properties and the future of his properties. And extremely visionary about how to go about doing it."
The commissioner notes he and Sopher have a "mutual friend" in Charlie Gargano, a commercial developer who worked with Teele at the U.S. Department of Transportation's mass transit agency during Reagan's first term as president. Gargano later became director of New York State's Urban Development Corporation (UDC), which presided over large-scale redevelopment projects in blighted segments of Manhattan, most notably the Times Square turnaround. To pull it off the UDC orchestrated the investment of $75 million in public money to help attract more than $1.8 billion in private capital. He also promoted the creation of a five-mile waterfront development taking shape from Battery Park City to 59th Street. He now is overseeing a major renovation of Penn Station. (Gargano's own company currently is under investigation by the Manhattan district attorney for possible violations of campaign-finance laws.)
Teele reported that whenever he meets with Sopher, the first thing the Quik Park president does is rail against the surcharge. "If you ask him what he thinks of the surcharge, he hates it," the commissioner reported. Teele admits he doesn't like it either. "The surcharge is what killed Cuomo in New York. It serves as a disincentive to investment." Teele offers another Sopher idea. The businessman would be more willing to pay the surcharge if it were designated to help finance the Performing Arts Center rather than to go into the city's general fund. "I think Sopher is a long-term player in the City of Miami who will bring a New York point of view," Teele predicted. And what does he mean by "New York"? "Big development," he replied.
New York City councilwoman Kathryn Freed has another definition. "He wants to maximize his profits," she asserted. Along with various civic groups, she has been challenging Sopher's efforts to change the zoning of two parcels of land he owns in SoHo so he can build a 160-room hotel. "He doesn't care about the neighborhood," Freed asserted. "They would be building the first small high-rise, very dense, very small unit building. There has never been any like that built in SoHo." The case is still in court. "He just didn't want to take no for an answer," Freed observed.
But Teele is optimistic. "I've been extremely impressed with what Hank Sopher has done for the City of Miami," he declared vaguely. When asked for clarification, Teele explained he was referring to the property-value inflation Sopher has caused with his speculative buys in the downtown area. "The Community Redevelopment Authority has one main goal and that is to increase property values," Teele said. Since Sopher's purchases, property assessments in the Park West area of Overtown have tripled from $25 per square foot or less to $70 per square foot, he adds. "Hank Sopher has been the General -- what's his name? -- Schwarzkopf of downtown redevelopment," raved Teele. "But that doesn't make him the president." Indeed, Echemendia, Sopher's lawyer, did entreat city manager Carlos Gimenez to grant the Quik Park president a kind of clemency during an October 13 meeting called to demand the surcharge payment. According to one participant at the meeting, Echemendia asked Gimenez to waive the penalties and interest. Gimenez refused.
While Sopher's endgame may be to control as much parking as possible, Winton, a wealthy real estate man himself, is concerned about the middle of the game. That is the period in which Sopher drives up property values and now arguably controls the future of downtown development in his extensive and expensive real estate holdings. "If he steps up and joint ventures with people to develop these sites, the city will be in good shape. If he holds off and just pushes values straight up as a speculator, that could really hurt us. And I have no idea what his ultimate game plan is. He already drove prices sky high." He's concerned Sopher's speculating could make development of badly needed middle-income residential buildings downtown impossible. To make a profit now, Winton concluded, Sopher will have to sell the parcels to developers interested in skyscrapers.
Not to worry, said Shepsman. He and Sopher have had "conversations" with national companies that do middle-income projects. "The profitability of middle-income development could still pencil," he noted. "If that's what the need is, the land pricing hasn't precluded that as a use." Shepsman assures that Quik Park is in it for the long haul. "At the end of the day we will probably own no real estate, and we will probably have a lot of parking. But that could be many days out." So people will continue supplying Sopher with those tens and twenties for outrageous parking fees. They don't have much choice, but they just might be helping Hank build a new downtown.
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