The Gazette: Talking With Steve Monroe: A Hall of Fame Career
May 06, 2011
There was Thomas S. Bozzuto, in larger-than-life images on the big video screens overlooking the ballroom, explaining to the large crowd how the Bozzuto Group of Greenbelt came to be so successful as a developer — and he became a Hall of Fame inductee.
"Early on I thought I wanted to correct all the ills of America's cities," Bozzuto said in his trademark deep voice, speaking of his years as a young man when he earned a master's in urban studies. "Then later I realized that developers were having all the fun."
Bozzuto explained in the videos, shown at the Maryland Chamber of Commerce Business Hall of Fame dinner Wednesday night at a hotel near Baltimore-Washington International Thurgood Marshall Airport, how he and partners John Slidell, Rick Mostyn and the late Bernie Lubcher started the Bozzuto Group in 1988.
"My two partners are the foundation, the core, the substance of our business," he said.
And Bozzuto, as chairman and CEO, has been the man out front leading the company to become an $800 million business involved in development, construction management of apartments and homes in the mid-Atlantic, including Montgomery, Prince George's, Frederick and Howard counties in Maryland and up and down the East Coast. In his career, he estimates he has been involved in the creation of more than 50,000 housing units worth a total of approximately $7 billion.
For his success in business, for helping nonprofits and for always being a force in the community, Bozzuto was inducted Wednesday into the chamber's Hall of Fame, along with R. Neal Black of JoS. A. Bank Clothiers of Hampstead and Maurice Tosé of Telecommunications Systems of Annapolis.
"This a great honor," Bozzuto, 64, said after the video was finished and he received his plaque and shook hands with new chamber Chairman William T. Riley Jr. of the Reznick Group. Bozzuto thanked his family, partners, employees and colleagues, summarizing his philosophy of always pushing for different, unique developments: "The fun is in doing new things."
Despite his success — or maybe because of it — Bozzuto is not hesitant to talk about issues and obstacles in his industry. In an interview Tuesday, Bozzuto, in a response to a question about regulatory issues in the state, said, "I don't spend all my time complaining about the regulations because it's not worth it. I just laugh when these guys say they are not anti-business. They are so anti-business they don't know it."
Asked about Prince George's County, for example, Bozzuto said, "When Wayne Curry was county executive it was a decent place to do business. Over the last eight years it has been very difficult to do anything here. Right now we are close to suing the county over a commitment made by [former County Executive] Jack Johnson that he didn't live up to. But we are trying to work something out because I don't want to sue [new County Executive] Rushern [L. Baker III], if I can avoid it ... because he is saying the right thing, putting the right people around him, people who are honest, first and foremost."
The Business Gazette talked to Bozzuto, who grew up in Waterbury, Conn., and originally came to this area to work for the Department of Housing and Urban Development in Baltimore, about his career and his company.
How has the Bozzuto Group managed through the recession?
We have really been blessed by the fact that we are a diversified company. And two, we are in the apartment business and the apartment business recovered from the recession better than any of the other income property segments.
How much of your business is apartments?
Right now about 85 percent. We have four principle businesses: We develop apartments, we build apartments, we manage apartments and then we are in the homebuilding business. The homebuilding business we have been in for 20 years and it has been a very good business for us until a few years ago when, like everybody else, we had difficulties. We have worked our way through most of those projects and actually have started a new [homebuilding] project this winter, in Towson, a 120-unit townhouse project. It's the first one we've started in a long while. It's right in the center of Towson, within walking distance of employment, right on public transportation lines ... priced in the $350,000 price range.
Where are your other homebuilding projects?
We have two projects in Howard County ... Maple Lawn, and a community called Shipley's Grant, where we are doing 390 homes and some retail. About 100 of the homes have been built, and it has been very successful; even in the worst of the recession it has been a very good seller. They are in the $400,000-to-$500,000 range.
What's hurt some in your industry has been the lack of financing. How have you done it? What about the National Harbor apartments [an $89 million development] you announced in December?
Well, that hasn't been financed yet, but on the apartment side we have a number of projects in our development pipeline that we will be starting over the next two years, including a project in Washington, D.C., and a project in the Crofton area ... and we have had strong interest from the banks.
Have you had one main partner for financing?
We have done a lot of banking with [Bank of America], M&T and PNC. Honestly, we have been blessed in our relationship with banks. We started a project that B of A provided the financing for us in Baltimore that started the week Lehman Brothers filed for bankruptcy. And if that doesn't show faith, I don't know what does. We started that project, it's been completed and now it is very successful. We just finished leasing that off.
Do you have any projects in Montgomery County right now?
We manage a lot of properties in Montgomery ... and we are going to be doing apartments. ... Well, I guess I shouldn't tell you the details on that yet, but let's say we have two big sites in Montgomery County, where the contracts are not completely executed, but we have agreements on and we will be moving forward.
And you plan to get back into more homebuilding?
I continue to believe there will be opportunities in the homebuilding business and we have a number of sites that we have tied up on which we would hope to start construction on in 2012 and 2013. The apartment business is terrific right now and with demographic forces will continue to be terrific for most of the next decade. But I don't believe that people have decided that they don't want to own homes just because the recession was a terribly painful one. I think the homebuilding business will come back.
I said we prospered because our business was diversified. In the early part of the decade we were investing in our apartment management business — we manage about 32,000 apartment units right now. We made lots of investments in that business and part of where we got the money to do that is the profits in our homebuilding business. So it is not unreasonable that when our homebuilding business took sour, we took some of the proceeds from our now-profitable management company.
And we do third-party construction as well. We build about $200 million of construction a year and about half of that we do for other people as a general contractor. We do a lot of construction for nonprofit organizations.
How did your headquarters come to be in Greenbelt?
Because this location is incredibly convenient. We develop in all of these jurisdictions and it's easier to get to every one of them from Prince George's than it is anyplace else. Second, we have people who live all over. And third, the work force in Prince George's County is a terrific work force.
With being involved in many states, you said that Maryland is more difficult than others to do business in?
I guess what I would tell you is we have a heavily regulated state and the residential development industry is probably next to health care and the utility industry as the most regulated. And I am of mixed minds about it. I welcome the regulations because it keeps the competition out. So if the goal of our public officials is to keep prices and rents as high as they possibly can, they are succeeding. The entire East Coast is pretty bad ... but Maryland is certainly worse than Virginia or Pennsylvania..
Because you have to pass on costs?
Absolutely that's what happens. The tougher it is, the longer it takes, the more expensive it is, and the higher the prices, the consumer ultimately pays.
Just because of red tape?
Just as far as red tape. And again I'm not complaining because that's how we differentiate ourselves from our competition who come in from Texas ... we know how to deal with the regulations, we work our way through the regulations, but it's painful to do business here.
What happened with the deal with Jack Johnson in Prince George's?
When Johnson first got elected he wanted these slum apartments torn down and was going to help redevelop, so we with a nonprofit made a plan to tear it down and rebuild a nice project. Johnson committed to helping with the project, but we built it, it was fully sold out and we did it with our own money. You ask them what happened and they say, ‘Well, you didn't fill out the paperwork right, etc.'
You said you actually wanted to be a writer at one time?
[Smiles.] You know at one time I thought I'd be a priest, another time I thought I'd be a dentist, another time I thought I'd be a lawyer. I guess I thought I'd be a priest until I discovered girls ... [laughs]...so there went that idea. Then I thought I wanted to be a writer, and then when I got drafted my job was as a war correspondent in Vietnam, and that was the one time in my life I did a fair amount of writing. I wrote for Stars and Stripes, I wrote for the division newspaper. I don't want to overstate that about being in Vietnam. I didn't see combat ... I escorted the press and wrote the stories, but never shot at anybody and nobody ever shot at me.
After that you finished graduate school?
Yes, and then worked for [Housing and Urban Development], and stayed there about two years, but I decided that public service was really not what I was cut out for. I was too anxious to get things done. It wasn't so much that I wanted to make money, but I wanted to have an impact, cause change.
So I went to work for the Rouse Co. in the mortgage business and even that I found frustrating because all I was doing was providing money for other people's ideas, so I did that for two years and then decided what I wanted to do was get into the development business on my own.
Sidebar: Thomas S. Bozzuto
-Position: Chairman and CEO, the Bozzuto Group of Greenbelt, which has offices in several states and 1,100 employees, and is involved in real estate services, including development, management, homebuilding, acquisitions and construction.
-Previous position: Mid-Atlantic regional partner at Oxford Development of Bethesda.
-Education: Bachelor's in English, Hobart College; master's in public administration, Syracuse (N.Y.) University.
-Awards: Maryland Chamber of Commerce Business Hall of Fame, 2011; Delta Associates' Private Sector TrendSetter of the Year, 2010; Urban Land Institute Washington's Lifetime Achievement Award, 2008.
-Organizations: Millennial Housing Commission; Maryland Housing Commission; vice chairman and board member of the National Multi Housing Council; Harvard Joint Center for Housing Policy Advisory Board and Executive Committee; Johns Hopkins Institute for Policy Studies National Advisory Board; Maryland Business for Responsive Government National Advisory Board; vice president, Walters Art Museum Board of Trustees; past chairman, Maryland Science Center; past chairman, National Association of Home Builders Multifamily Executive Leadership Board; Greater Baltimore Committee.
-Family: Wife, two children, five grandchildren.
-Residence: Baltimore County.
-Hobbies: Fly-fishing, reading.