"Moreland Monday" Analysis of REBNY Contributions Raises Serious Issues for Commission to Consider
A new "Moreland Monday" analysis released today by Common Cause/NY is raising serious questions about the potential influence of tens of millions of dollars in campaign contributions on public policy relating to real estate and development in New York City. Since 2005, REBNY (Real Estate Board of NY) and the 37 companies comprising its leadership have contributed $43.9 million to state and local candidates, committees, and PACs. REBNY's contributions have increased in recent election cycles, with $17.1 million given since 2011 alone.
The Fair Elections for New York campaign is calling on the newly created Moreland Commission to subpoena all relevant information related to contributions as part of their sweeping investigation of corruption in New York State.
Common Cause/NY's analysis reveals that the State Senate is the top target of REBNY money and that the overwhelming majority flows to lawmakers who represent districts outside of New York City: Since 2011, REBNY and its leadership have given $3.2 million to candidates and committees in the State Senate. Over 73% of contributions to candidates went to districts outside of New York City. Similarly, over $2.4 million (75%) went to Senate Republicans. By comparison, Senate Democrats received $500,000 while the four-member Independent Democratic Conference received $308,000.
In the longer term since 2005, REBNY and its leadership have given over $11.7 million to candidates and committees in the State Senate, overwhelmingly concentrated to Republicans. REBNY has given less to the State Assembly where party control is safe for the Democrats: $2.1 million in total, with 84% going to Assembly Democrats.
The return on REBNY's political investment in Albany is crystal clear: New York City rent regulations remain weak, while multi-billion dollar subsidies like the 421-a and J-51, continue to grow each year. These policies collectively affect the lives of millions of New Yorkers but also impact billions of dollars of potential profits for REBNY. The 421a property tax abatement for new residential construction was created in the early 1970?s to incentivize city development at a time when few wanted to build. Connections to affordable housing were added in the 1980's and expanded in 2007 but experts estimate that 421a provides less than 15 cents for affordable housing for every dollar of forgone taxes. Since 2002, the cost of 421a to New York City government has exploded from $130 million to nearly $1.1 BILLION in fiscal year 2013. This is an enormous sum in the context of a $70 billion city budget and it is more than double the entire annual budget of the City's Housing Preservation and Development agency.
The analysis also illustrates the way in which the real estate industry utilizes Limited Liability Corporations to blow past the already high New York State campaign contribution levels and circumvent New York City's campaign finance program altogether.
"Our analysis shows a skillful and calculated manipulation of all of the weaknesses in New York State's campaign finance laws by New York City's real estate industry, which uses every trick in the book to insure that the investment they make in plentiful campaign contributions garners an extraordinarily large return at the expense of New York City's tenants and taxpayers," said Susan Lerner, Executive Director of Common Cause/NY. "Legislators from outside New York City are thus encouraged to pass laws which burden New York City residents and have no impact on their own constituents but serve to maximize the campaign contributions they receive. We urge the Moreland Commission to use the full scope of their investigatory powers to fully examine this situation and recommend policies to end this exploitation."
"It's hard to imagine a more dramatic illustration of the havoc campaign contributions can play with lives and needs of ordinary New Yorkers and why New York State's campaign finance laws must be changed," said Jessica Wisneski, Legislative Director for Citizen Action of New York, on behalf of the Fair Elections for New York campaign. "The situation illustrated by this new analysis of REBNY campaign spending highlights the urgent need to pass Fair Elections. "
The LLC Loophole
REBNY takes advantage of the much abused LLC loophole to evade campaign contribution limits and help hide the full scale of their contributions from the public. Under New York State campaign finance law LLCs are treated as "individuals" subject to the $150,000 annual limit rather than the $5,000 annual limit for corporate donors. Additionally, the State Board of Elections also treats each subsidiary as a separate entity subject to its own limits, allowing each LLC to contribute up to the full $150,000.
REBNY's worst abusers of the LLC Loophole include:
The LLCs controlled by REBNY developers often contribute to the same candidate/committee, on the same date, in checks of the same amount. This coordination makes it very clear that these LLCs are not independent entities.
Jobs for NY PAC
Similarly, REBNY is using the LLC loophole to maximize its influence in city races through the "Jobs For New York" PAC by registering it at the state level. "Jobs For New York" allows REBNY to bypass the New York City campaign finance system's limits on campaign contributions that are intended to curb the influence of special interests. Just sixteen REBNY member companies contributed the entire $5.26 million raised by "Jobs For New York" in first half 2013 for an average of $328,750 each. This is only possible due to the LLC Loophole.
Sky-High Campaign Contribution Limits for Statewide Candidates
New York's sky-high campaign contributions for statewide candidates also empower special interests like REBNY. Since 2011, REBNY has given $1.99 million to Governor Cuomo, including 44 contributions of $25,000 or more. In contrast, due to the city's strict $4,950 limit on contributions to Mayoral candidates participating in the public matching funds system, it is not possible for REBNY to contribute on the same level in New York City. The top Mayoral recipient of REBNY money, Bill Thompson, has received $169,945, less than 10% of Governor Cuomo's haul.
New York's state-level party committees can accept unlimited sums of money, making them prime targets for REBNY contributions, including $1.6 million to the New York State Democratic Committee, $515,566 to the Independence Party (which was involved in funding campaigns on behalf of Senate Republicans in 2012), $170,000 to the New York Republican State Committee, and $164,500 to the Conservative Party.
Issues for Further Investigation by Moreland Commission
1. Examine the timing of the contributions made to the top legislative recipients in relation to the introduction or discussion of real estate related bills.
2. Examine the involvement of lobbyists and bundlers relating to the contributions to the top legislative recipients.
3. Examine the circumstances of, and any conversations which took place in relation to, the donations made to the Senate and Assembly campaign committees.
 Fourteen of the Jobs For New York donor companies are "officers" on the REBNY Board of Governors and are included in the overall dataset, the other two ( Silverstein Properties and Stellar Management) are REBNY members.
PDF Version of Release (with charts)