April 16, 2015 by westsideneighborhoodalliance
ALBANY—Members of the Real Estate Board of New York and their firms gave $21.7 million in campaign contributions to state-level elections in the last cycle, accounting for more than 10 percent of the money that entered the campaign finance system.
This money, which represents only some of the political spending by New York’s real estate industry, crossed party lines and benefitted both the Republicans who control the State Senate and Governor Andrew Cuomo. According to Capital’s analysis of political giving, Cuomo and his allied committees received the majority of donations from members of the real estate magnate.
Cuomo has previously pledged to reduce the influence of money in politics, but in his latest round of reform negotiations, he said one measure pushed by good-government groups—closing a “loophole” whereby the Board of Elections treats limited liability companies as individuals—was too controversial for discussion. The Board of Elections will reconsider its interpretation at a Thursday meeting.
And major issues for REBNY are expected to loom large for lawmakers when they reconvene later this month. It has strong positions on several issues sunsetting in June, including the 421a and J-51 tax abatement programs as well as rent control in New York City, which developers oppose expanding.
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REBNY declined to comment for this article.
More than half of their money went to Cuomo, whose office reportedly halted an inquiry relating to REBNY’s campaign contributions by an anti-corruption commission. His campaign committee brought in $5.9 million from its members; Kathy Hochul, his running mate, reported $102,900. Additionally, the New York State Democratic Committee and its housekeeping account raised $5.2 million.
In recent years, both of these party committees have worked primarily to advance Cuomo’s electoral and policy goals: more than 86 percent of the party’s allocated expense were spent on the campaigns of either Cuomo or Hochul, and its housekeeping account spent millions of dollars purchasing ads that bolstered the governor’s agenda.
This aggregate $11.2 million Cuomo’s reelection efforts received from REBNY members was more than twice the total in contributions, excluding transfers, that the campaign committee for Cuomo’s 2014 opponent Rob Astorino received from all of his donors combined.
“Governor Cuomo succeeded in putting in place the strongest rent control laws in a generation,” said spokesman Richard Azzopardi after he was asked if these contributions might influence policy decisions. They “included the creation of a Tenant Protection Unit that protects rents from unscrupulous landlords and returned more than 37,000 unlawfully deregulated apartments to rent regulation. He fought hard for these unprecedented protections, just as he will fight hard when these regulations are up for renewal.”
Michael McKee, treasurer of Tenants PAC, said he was concerned that state leaders would be more likely to heed REBNY’s positions than his own as a result of the contribution levels. (Tenants PAC and McKee contributed $61,565 to 2014 candidates.)
“This is legalized bribery,” he said. “They’re quite used to buying what they want and getting it, and the legislature—both houses—has proven to be quite willing to give it to them.”
Capital analyzed donations made by REBNY’s member firms, their top executives, and other individual members of the trade association and the firms they represent. The analysis included contributions made to statewide candidates and party committees in the four years preceding December 2014 and donations to legislative and independent expenditure committees in the two years preceding that month.
The largest direct contributor among REBNY’s members—and of every donor in the state—was Leonard Litwin’s Glenwood Management, which spent $3.8 million on last year’s election. $3.6 million went directly to candidates and parties; L.L.C.s controlled by Glenwood also sent money to two independent expenditure committees. Litwin was recently identified as “Developer 1” in the federal charges against former Assembly Speaker Sheldon Silver.
Last November, the New York State Housing Finance Agency approved a “$260 million state-supported low-interest loan” to Glenwood. The agency was led by Bill Mulrow, who was placed there by the governor and has since become Cuomo’s top aide.
Of Glenwood’s contributions, $1.47 million, or 38 percent, went to either Cuomo, his running mate Kathy Hochul, or the Democratic Party.
Among other top REBNY donors, the amount going to these committees was even greater. Vornado Realty Trust, Rudin Management, Tishman Speyer Development, the Related Companies, and Brookfield Financial with their top executives contributed a combined $4.7 million in the last election cycle. $3.3 million, more than 71 percent of this money, went to the governor.
Three of the five developers who received “controversial” 421-a tax emptions in a 2013 bill gave more than $500,000 apiece. When their top executives are included, Fisher Brothers, Silverstein Properties, and Extell Development gave a combined $926,250 to Cuomo and $56,600 to Silver and the Democratic Assembly Campaign Committee. Silver was responsible for inserting the tax breaks into the legislation, and Cuomo signed the bill two days after receiving $100,000 from Extell, whose One57 was one of the locations receiving an abatement. This property has since become one of the world’s “premier destination[s] for wealthy foreigners with rubles, yuan, and dollars to hide,” largely due to the tax breaks it receives: the anonymous purchaser of a $100 million duplex in that building will need to pay a property tax bill with “an effective rate of 0.017 percent of its sales price.”
“That is a blatantly contemptible and absurd premise. We support candidates who are best suited to advance the causes of the city and state like any other taxpayer,” said George Arzt, spokesman for Extell Development Corp when asked if he thought its contributions helped get these abatements signed into law.
The Moreland Commission to Investigate Public Corruption had begun an investigation into tax breaks like these and their connections to campaign contributions, but canceled a planned subpoena of REBNY’s records after Cuomo’s top adviser called one of the commission’s chairs “in a fury,” according to the New York Times. Cuomo’s 2014 budget dissolved the commission.
Developers occasionally contributed through non-monetary means. Both RFR Holding and SL Green have let Cuomo use their airplanes, and the latter gifted the governor with $40,000 in reduced rent for his campaign office. REBNY president Steven Spinola created and directed the Committee to Save New York, which raised $17 million in 2011 to back Cuomo’s agenda.
These developers frequently gave through use of the “L.L.C. loophole,” which treats limited liability companies as individuals for the purpose of calculating contribution limits. Corporations are limited to giving $5,000 in aggregate direct contributions to all candidate, party, and political action committees in a calendar year; individuals were restricted only by the maximum amount they could give committees. This limit was $60,800 for statewide candidates in the last election cycle, meaning than an individual who controlled ten L.L.C.s could give write ten $60,800 checks to the same candidate.
State-level candidates and parties reported receiving $25.4 million from L.L.C.s in the last election cycle; 38.4 percent of this money came from REBNY members.
Following a request from the Brennan Center last week, the Board of Elections is scheduled to vote tomorrow on whether to rescind a 1996 opinion that first treated L.L.C.s as individuals.
As Casey Seiler of the Times Union has illustrated, some L.L.C.s that make contributions are unidentifiable. Large donations are frequently made by entities whose managers or addresses are not disclosed in any public records. Due to this, some of the contribution totals attributed to developers throughout this story are actually lower than these developers gave in reality.
REBNY has previously acknowledged that its “supportive relationship” with elected officials helps influence the passage of legislation in Albany.
“I can tell you that in private meetings with the speaker, the Senate majority leader and the governor, our past efforts to maintain a personal and supportive relationship was critical in shaping the outcome’ of legislation,” wrote Spinola, in a portion of a memo that was obtained by the New York Times. “Our future ability to adopt favorable legislation, stop terrible legislation or modify legislation to limit the pain to our industry is directly tied to our continued positive relationship.”
Real estate developers that are not members of REBNY have also contributed millions of dollars to campaigns. An exact total of this money is not immediately available, but dozens of companies and individuals focused on real estate gave contributions totaling tens or hundreds of thousands of dollars. This includes real estate investors such as Rosen Partners ($147,300 when including chief executive Jack Rosen) and out-of-state developers such as Connecticut-based The Richman Group ($365,000). Numerous upstate firms were also major donors. For example, developer and Buffalo school board member Carl Paladino gave $301,884 and Albany’s BBL and Columbia Development combined to donate $233,250.
Large recipients of REBNY’s money included the Senate Republican Campaign Committee, which received $1.7 million over the two years preceding December 2014. Jobs for New York, an independent expenditure committee that supported Senate Republicans, brought in $2.4 million. Attorney General Eric Schneiderman received $1.3 million in the four years preceding December 2014, and Comptroller Tom DiNapoli brought in $482,482.
Senators who received substantial amounts from REBNY donors include Tim Kennedy ($266,933), Jeff Klein ($196,900), Sue Serino ($117,200), and Dean Skelos ($93,750). Keith Wright, who sponsored the bill that gave developers such as Extell property tax abatements, received $43,100, more than any other member of the Assembly.
Developers and individuals with ties to REBNY members have proliferated in the Cuomo administration. M & T Bank, where Lieutenant Governor Kathy Hochul previously served as vice president of government relations, is one of REBNY’s 229 member firms. In January, Buffalo developer Howard Zemsky was put in charge of the state’s economic development efforts. William Mulrow, a senior executive at “the largest real estate private equity firm in the world” became the governor’s top aide. Former Thruway Authority chairman Howard Milstein is a member of REBNY’s executive committee.
And housing issues have dominated the career of Cuomo himself. His recent memoir described his “earliest civic education” as watching his father represent homeowners against “a government that at times showed itself to be wrongheaded and heavy-handed.”
He later worked to improve housing conditions for the homeless, served as Secretary of Housing and Urban Development, and worked at a real estate merchant bank.
CORRECTION: An earlier version of this story said that SL Green had loaned Cuomo its corporate jet. A spokesperson for SL Green said that the in-kind contributor of a plane trip (SLG Air L.L.C., which shares a mailing address with SL Green) is legally distinct from SL Green, and the plane was thus not SL Green’s corporate jet. SLG Air L.L.C. was controlled by SL Green founder and chairman of the board Stephen Green.