For Immediate Release:
September 17, 2013
Susan Lerner, Common Cause/NY, 212-691-6421;
Jesse Laymon, Citizen Action of NY, 646-530-0378
GROUPS CALL FOR MORELAND COMMISSION TO FULLY INVESTIGATE SECRET TAX BREAKS FOR REAL ESTATE DEVELOPERS
Public Advocate Candidate, Affordable Housing Advocates, and State Lawmakers join call. Dirty Deal Underscores Need for Public Financing of Elections to Ensure Tax Dollars Spent in the Public Interest
Public Advocate run-off candidate Tish James joined state lawmakers, good government and affordable housing advocates, and tenants in front of the luxury condominium development One57 to call for the Moreland Commission to fully investigate the dirty tax deal brokered by the Real Estate Board of New York (REBNY) and Albany lawmakers. The 421-a tax abatement is robbing NYC taxpayers of $1.1 billion in annual revenue, allowing real estate interests to sell $90M apartments tax-free. REBNY is lining the pockets of Albany lawmakers, but average people can't compete because of New York State's out-of-control campaign finance system. Given the affordable housing crisis in New York City, the group called on the Moreland Commission to depose Extell and every other beneficiary of the tax abatement to get to the bottom of this dirty deal.
The Moreland Commission will hold its first public hearing later today, and advocates urged it to recommend a public financing system of elections for all of New York State.
As the Daily News reported earlier this summer, lawmakers in Albany secretly inserted a tax break for five select developments, including Extell, which owns One57. The developments had been previously ineligible for the 421-a abatement, yet neither lawmakers nor developers have provided a public accounting for the sudden reversal.
As Common Cause/NY noted in a "Moreland Monday" analysis last month, REBNY (Real Estate Board of NY) and the 37 companies comprising its leadership -- which include Extell Development -- have contributed $43.9 million to New York state and local candidates, committees, and PACs since 2005, and $17.1 million since 2011 alone. The political spending by REBNY has been devoted to maintaining weak rent regulations in New York City and expanding multi-billion dollar subsidies like the 421-a and J-51 programs. The 421-a program, conceived in the 1970s to subsidize development, and only later tied to affordable housing, is both outdated in the current development environment and estimated by experts to provide less than 15 cents for affordable housing for every dollar of forgone taxes. The cost to New York City taxpayers exceeds one billion dollars.
In the case of One57, however, the development had already begun and was previously deemed ineligible for the 421-a tax break for not providing sufficient affordable housing.
"This sort of secret, backroom deal to line the pockets of billionaire developers should put Albany to shame. It's a reminder of why we need leaders who can stand up to powerful interests on behalf of everyday New Yorkers. At a time when high rents and flat wages are squeezing working people out of our city, we don't need millions in tax breaks for luxury condos like One57. The Moreland Commission should fully investigate how this obscene deal came to be and how our government can be reformed to work for everyone, not just the wealthy and the well-connected," said Public Advocate candidate Councilwoman Letitia "Tish" James.
"As someone who has participated in the city's campaign finance system -- and never taken contributions from corporations or PACs at the city or state level -- I have seen how important it is to implement public financing and fair elections statewide. Today, New Yorkers are too often forced to wonder who their government is working for -- tax carve-outs for a few luxury buildings slipped into an important housing bill are a symbol of a state system in deep need of reform," said State Senator Daniel Squadron.
"We have a record number of homeless New Yorkers and rents are less affordable than ever before. This isn't the time for Albany to give away millions of dollars to luxury condo developers with absolutely no benefit to the public. That is why tenants demand public financing of elections and the closure of the LLC loophole in New York State," said Jaron Benjamin, Executive Director of Met Council on Housing.
"REBNY knows exactly how to exploit the many weaknesses of the state campaign finance system, reaping huge rewards to the detriment to the City's tenants and taxpayers. Under the current campaign finance system, average New Yorkers can't compete against big dollar donors who strategically circumvent the law for maximum personal benefit. Common Cause/NY urges the Moreland Commission to use the full scope of its investigatory power to examine the industry's abuse of the campaign finance system and recommend the adoption of a small donor matching fund public financing system to refocus state election campaigns on ordinary New Yorkers not wealthy special interests seeking favors and give-aways," said Susan Lerner, Executive Director of Common Cause/NY.
"As I've said before, there's nothing dumber than a retroactive tax incentive. If the project got built, why legislate a special payday for developers after the fact? This and other nonsensical sweetheart deals are the reason we need a full investigation of how and why money changes hands in Albany, and why we need comprehensive campaign finance reform," said State Senator Liz Kreuger.
"This is just one example of the impact of our current campaign finance system. The Moreland Commission has a unique opportunity to put control of back in the hands of regular New Yorkers. We urge the Commission to put public financing of elections first on their list." said Karen Scharff, Executive Director of Citizen Action of New York.
"Giving taxpayer-funded subsidies to luxury developments and multi-million dollar apartments is more than bad public policy, it's a shameful symbol of the power special interest money wields in Albany. If we close the multiple LLC loophole, and enact a matching funds system for state elections, it will empower average New Yorkers to have their voice heard. Repealing these inappropriate subsides is critical to restoring New Yorkers' trust in government, and taxpayer money should be redirected to actual affordable housing for those who need it," said State Senator Adriano Espaillat.
Fair Elections for New York is a statewide campaign supporting comprehensive campaign finance reform with public funding of elections at its core. The campaign has over 100 endorsing groups, including: Common Cause, Citizen Action of New York, Communications Workers of America, United Auto Workers, Hotel Trades Council, United Federation of Teachers, 1199SEIU, SEIU32BJ, Met Council on Housing, and more.
Office: Common Cause New York
Common Cause is a nonpartisan grassroots organization dedicated to upholding the core values of American democracy. We work to create open, honest, and accountable government that serves the public interest; promote equal rights, opportunity, and representation for all; and empower all people to make their voices heard in the political process.