Can NY politicians fight Big Real Estate?
In the debate between Cynthia Nixon and Andrew Cuomo last month, the discussion briefly turned to the issue of homelessness. Cuomo touted his career-long dedication to housing, beginning with a nonprofit he founded in the 1980s. Meanwhile, Nixon blamed the state’s housing crisis, in part, on the governor’s close ties with the real estate industry.
“I don’t think it’s any coincidence that we have one of the largest housing crises that we’ve ever seen in this state when the number one contributor to Andrew Cuomo is the real estate industry and corporate developers,” Nixon said.
In the lead up to Thursday’s primary, candidates for two crucial state offices — governor and attorney general — have taken aim at the real estate industry’s role in politics. Campaign contributions from the industry have loomed large in both races. For instance, Attorney General candidate Zephyr Teachout has refused donations from corporate developers, and Letitia James refunded a $10,000 campaign contribution from a controversial landlord. In the governor’s race, Nixon has criticized Cuomo’s top donors — which included more than $700,000 from real estate in the first half of 2018 — and called for dramatic housing reform, including universal rent control.
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Money talks
The past three years have thrown the influence of real estate in politics into sharp relief with the conviction of two of the most powerful men in Albany. Earlier this year former State Assembly speaker Sheldon Silver and former Senate majority leader Dean Skelos were both re-convicted on corruption charges. Both cases involved leveraging relationships with landlords and developers who, at the time, were lobbying the officials on issues important to the real estate industry, like the 421a tax break.
John Kaehny, executive director and a founding board member of good-government group Reinvent Albany, said given that the real estate industry was at the center of both scandals, there should be even more interest in how donations from real estate impacts elections. He said state elections are especially vulnerable because limited liability companies are treated as individuals rather than corporations. Until rules are reformed, real estate will continue to wield considerable sway over statewide elections, he said.
“This is really a basic matter of money versus people,” he said. “The LLC loophole and the fact that it essentially allows unlimited contributions, allows real estate executives to flex their muscles in extraordinary ways.”
LLCs have become a preferred vehicle for bypassing state campaign contribution rules, especially for real estate companies which often create LLCs for each new development. Under state law, individuals can donate up to $44,000 to candidates running for statewide office, while corporations are capped at $5,000. The state legislature has tried on at least three occasions to hold LLCs to the same restrictions as corporations.
“We’ve passed it in the assembly several times, and then, it goes nowhere,” said state Assemblyman Tom Abinanti, who has endorsed Nixon for governor. “It dies because it fails in the senate.”
As previously reported by The Real Deal, real estate donated more than $733,000 to Cuomo’s re-election campaign in the first half of 2018. His top donor during this timeframe was the Durst Organization, with $75,000 across four LLCs and James L. Nederlander of the Nederlander Organization with $65,000. Cuomo’s favored attorney general candidate, Public Advocate Letitia James, has raised over $280,000 from 80 real estate donors. But she’s also returned donations from certain landlords, including $10,000 from Joel Landau, whose firm Allure Group was at the center of the Rivington House scandal. Congressman Sean Patrick Maloney raised at least $433,000 in real estate contributions through the end of August. Teachout has touted the fact that she doesn’t take money from corporate developers and on her campaign website calls for a ramp-up in investigations into illegal tenant harassment, tax fraud and money laundering. She has, however, received $21,000 from multifamily landlord Arthur Cornfeld and L+M Development Partners’ Ron Moelis.
“Why has New York City real estate been able to be so dirty and so cruel for so long? The answer is developer money,” Teachout said during a press conference last month, according to Politico.
Her stance did not go unnoticed by the industry. In late August, Related Companies paid $100,000 to a political action committee that quickly spent the funds on a digital campaign that targeted Teachout, according to a report by Politico.
“The real estate industry is not monolithic. Like journalism and politics, it is not all good, or all bad and not the source of all society’s ills, no matter who says so,” said the Durst Organization’s Jordan Barowitz. “Difficult problems are complicated to solve and require thoughtful collaboration, because of this, scapegoating inevitably solves nothing.”
All politics are local
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