The Real Deal New York

REBNY’s influence over Cuomo laid bare

Industry sources say NYT investigation unlikely to change group's relationship to governor

July 24, 2014 03:51PM
By Hiten Samtani

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From left: Steven Spinola, Rob Speyer and Governor Andrew Cuomo (Credit: Steve Friedman)

From left: Steven Spinola, Rob Speyer and Governor Andrew Cuomo (Credit: Steve Friedman)

The Real Estate Board of New York’s power and influence over state government is, as a well-known Democratic operative put it, “about as new as hieroglyphics.” Albany politicians often transition into lucrative real estate careers, and Governor Andrew Cuomo is a tuxedo-clad fixture at REBNY’s annual gala. But an investigative story in the New York Times yesterday laid out the extent of the industry’s influence with Cuomo in the most explicit manner yet. The industry’s initial response to the story, however, suggests that it is unlikely to impact how REBNY does business.

The Times’ three-month investigation chronicles the tempestuous saga of the short-lived Moreland Commission, which was formed by Cuomo last July to crack down on public corruption. It details how Cuomo sought to block a subpoena that the commission intended to send to REBNY in order to investigate, among other things, the organization’s political donations, its materials related to the controversial 421-a abatement used by New York developers including Extell Development and Silverstein Properties, and its communications with public officials.

In the newspaper’s story, REBNY president Steven Spinola seems to make a direct connection between the financial support and the industry-favorable policy to which it gives rise.

In a memo to REBNY members seen by the newspaper, Spinola said that based on private meetings with Cuomo, the Senate majority leader [Dean Skelos or Jeffrey Klein] and Assembly Speaker Sheldon Silver, he had come to a clear conclusion: REBNY’s “past efforts to maintain a personal and supportive relationship was critical in shaping the outcome” of legislation.

“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,” Spinola continued in the memo.

REBNY declined to specify to TRD when the memo was sent, which members it was sent to, or what Spinola meant by a “continued positive relationship.” But in a statement, it said that it “cooperated with the Commission’s investigation at all times and responded to the Commission’s requests for information, as the New York Times reported.”

Those advocating for campaign finance reform, however, said the memo’s message was clear.

“It certainly makes very explicit what we believe was happening,” said Susan Lerner, director of Common Cause New York, a nonprofit that tracks connections between money and politics. Lerner was referring to an alleged pattern of campaign contributions in which lawmakers receive money from real estate interests shortly before a key policy decision impacting the industry is made.

Gary Barnett’s Extell, for example, made more than $300,000 in donations since May 2012, when Cuomo was weighing a 421-a tax abatement housing bill that would effectively save Extell $35 million over a decade at One57, according to news reports. The cash influx came after several years in which the developer made no donations to Cuomo.

“We see that from REBNY, we see that from the Rent Stabilization Association,” Lerner added. Spinola’s memo, she said, made it clear that “the campaign contributions are a way of influencing public policy.” Indeed, the real estate industry gave the state Senate GOP $4.53 million in the last election cycle, roughly the same amount as the next 14 industries combined, according to Citizen Action New York, a membership-based social advocacy group.

Still, for Spinola — long considered one of the smoothest political operatives in the state — being called out so publicly in a front-page national story could be an embarrassment, one source said. Another source, however, said that it might even work in Spinola’s favor.

“It [the story] was more like a validation of REBNY’s purpose,” the source said, as it illustrates its sway over the state’s most powerful politician. Lobbyist Joel Schnur said that though the Governor may put some distance between himself and REBNY in the short-term,  REBNY’s active solicitation of donations from its members was “as American as apple pie.”

Real estate lawyer Adam Leitman Bailey, who represents both landlords and tenants, said that the Times article “only validates and confirms the massive amount of power REBNY yields in influencing legislation.”

“REBNY does it smarter and better than any other real estate organization and therefore obtains the best results for its constituency,” he continued. “By choosing very few large scale issues that benefit real estate, REBNY walks the political tightrope without falling.”

REBNY-associated developers and landlords are among the governor’s biggest financial backers, as TRD and others have reported. This year so far, the top four donors to Cuomo’s re-election campaign are all in the real estate industry, according to state campaign filings. Leonard Litwin of Glenwood Management contributed more than $200,000, as did members of the Dolan family, which owns Madison Square Garden. Entities affiliated with the LeFrak Organization gave $125,000, as did entities associated with Stephen Ross’ the Related Companies.

Several sources told TRD that they didn’t expect the story to impact the way REBNY does business on the state level. “Anybody in New York who is successful in government has to have a relationship with the real estate industry,” one source said. Lerner said that REBNY wouldn’t need to change its ways unless there was campaign finance reform. “The more sunlight we shine on these situations, the more the onus is on the elected officials,” she said.

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