The Real Deal New York

Real estate takes center stage in City Council races

TRD's guide to the contests to watch this November

October 01, 2013
By Guelda Voien

From left:

From left: Jennifer Rajkumar, Margaret Chin, Helen Rosenthal, Mel Wymore and Carlos Menchaca

As the saying goes, all politics is local. And in New York City, local politics matters as much as it does anywhere else — especially when it comes to real estate.

Indeed, developers must often win approval for their projects from community boards, the borough president and, of course, the City Council.

Not only do council members vote on major development projects, they often hold sway over their colleagues when the project is in their own district.

City Council members have such influence over whether a development gets a green (or red) light that the city’s leading industry trade organization, the Real Estate Board of New York, poured more than $4 million into a political action committee called Jobs for New York to get its chosen candidates in office, as The Real Deal has reported.

And, according to a TRD analysis after last month’s primary election, 17 of the PAC’s 22 candidates claimed victory. (Four of the candidates were defeated and one is still facing a run-off election.)

Political consultant Hank Sheinkopf said the PAC was strategic about where it spent its money — and didn’t just target the obvious races where real estate issues were of top concern.

“[Jobs for New York] supported incumbents who would win … even when they were not in areas where real estate interests were important,” he said. The strategy was designed, he said, to accumulate as many allies as possible in the council.

The PAC’s victors must go on to win in next month’s general election, but in most cases the real battle was in the primary, and they’re expected to sweep into office.

Below is an in-depth look at six races where real estate is center stage.

Soho/Chinatown

This vast district — which covers Soho, Tribeca, the Financial District and Chinatown — is one of the most crucial in the city when it comes to real estate development. That’s because the area includes an array of projects from the Seward Park Urban Renewal Area to the World Trade Center towers to countless residential projects like the Elad Group’s 53-unit condo Franklin Place, and Bizzi & Partners’ 66-unit condo 101 Leonard Street.

And much to the real estate community’s delight, the voters reelected City Council Member Margaret Chin, who beat out fellow Democrat Jennifer Rajkumar, a civil rights attorney, in the primary.

Jobs for New York spent $230,968 on Chin, and another $50,736 to attack Rajkumar, according to TRD’s post-primary analysis. The PAC targeted Rajkumar with mailers alleging that she was a “fraud,” who ran a nonprofit that has “never done anything.”

“[Jobs For New York is] targeting me because Lower Manhattan is prime real estate. The current Council member, Margaret Chin, has been a great friend to the real estate developers,” Rajkumar told TRD shortly before the primary.

For her part, Chin was one of several winning candidates who gathered right after the primary to denounce the PAC’s outsized spending. However, a representative for Jobs for New York told the Villager newspaper that it supported Chin because of her “balanced” approaches to affordable housing and development.

Chin pushed for the Seward Park Urban Renewal Area — a six-acre vacant swath on the Lower East Side where the Bloomberg administration is spearheading a massive development that will include 1,000 apartments, office space, retail, and a museum — to include all affordable housing.

The city — which announced last month that L&M Development Partners, BFC Partners, Taconic Investment Partners and Grand Street Settlement will handle the long-contested development — ultimately settled on a ratio of half market rate and half affordable. (That still includes a higher percentage of affordable units than standard 80-20 developments do.)

With no Republican opponent, Chin should sail to a second term.

Upper West Side

In a closely followed race on the Upper West Side, Helen Rosenthal narrowly bested Community Board 7 member Mel Wymore — a transgender candidate who was endorsed by the New York Times — to win the Democratic nomination. Though Rosenthal must still beat Republican Harry DeMell and Green Party candidate Tom Siracuse in the general election, she is expected to handily take the seat in the heavily Democratic district and replace Gale Brewer, who is being termed out of office. (Brewer, for her part, nabbed the party’s nomination for Manhattan Borough President.)

Rosenthal — who worked in the city budget office under former mayors David Dinkins and Rudolph Giuliani, and now runs a nonprofit focused on job placement — has touted the fact that she is not cozy with the real estate industry.

On the campaign trail, Rosenthal sided against the real estate industry on several key issues and projects. For example, she has called for abolishing the 421a and J-51 tax abatement programs, arguing that the funds should be allocated towards affordable housing and rent subsidies instead. She has also voiced support for a moratorium on all rezonings and for down-zoning a swath south of 86th Street, a move that would scale back development.

Jobs for New York stayed out of the race, despite backing a number of other likely winners who were not viewed as highly pro-development. The PAC did not respond to a request for comment.

Jason Haber, head of Rubicon Properties and a resident of the Upper West Side, speculated that the PAC likely stayed out of the race because the area has such a well-oiled advocacy machine.

“[Their endorsement] would only have hurt their endorsed candidate,” he said.“[The area] has a legendary and well-organized network of people who oppose large-scale new developments.”

Haber said he expected Rosenthal to focus “more on affordable housing opportunities [than market-rate development]” and “be a bulwark against overdevelopment.”

Rosenthal insisted that she is not against new buildings, and just wants the community more engaged on land-use issues.

“I think we need more community participation in reviewing new residential and commercial buildings,” she said. “The community is … hungry for apartments, but they are looking for affordable apartments.”

Chelsea/Meatpacking

In the race to replace City Council Speaker Christine Quinn in Chelsea, Corey Johnson won the Democratic primary, and is one of the lucky candidates with an uncontested general election.

At first blush, Johnson — who worked as director of government relations and community affairs for Ace Hotel developer GFI Development from 2008 to 2010 — would appear to be a friend to the industry.

But Johnson ran on the strength of his personal narrative (he revealed before the primary that he is HIV positive) and downplayed his real estate connections while on the stump. The district is, of course, home to controversial real estate projects like the 200-unit condo dubbed Greenwich Lane that Rudin Management is building on the former site of St. Vincent’s Hospital, and the expansion of the Chelsea Market.

Johnson — who previously chaired Community Board 4 — has opposed developments in his district, but not nearly as vigorously as his opponent, Yetta Kurland, a civil rights lawyer who spoke out against Greenwich Lane.

According to published reports, Johnson voted against the Chelsea Market expansion when it came through the community board, but did not speak publicly against it until the final vote.

Johnson has said that his top priorities are to expand affordable housing and attract a new hospital. Meanwhile, at Hotel Chelsea he took a position against the industry, allying himself with tenants in their battle with former owners Joseph Chetrit and David Bistricer.

With developments sprouting up in the Meatpacking District and along the High Line, the real estate community wants an ally in the area. It’s unclear whether Johnson will be that person. He has previously said: “New York lacks general land-use policies that protect residents” (from over-development) and that “certain neighborhoods have fallen victim to the resulting unbalanced growth.”

Jobs for New York stayed out of the Chelsea race. Eastern Consolidated’s David Schechtman, who represents buildings in the area, said the industry is not deeply concerned about Johnson.

“De Blasio is more of a concern,” he said, noting that the mayoral candidate opposes the Midtown East rezoning among other industry-favored projects.

In a move suggesting that his distance from the industry is a positive with voters in his district, Johnson told Decide NYC, a nonprofit that tracks candidates’ campaign positions, that publicizing his connection to GFI was “political” on his opponent’s part.

At a debate in August, Johnson also said that he makes $52,000 a year, which would make him “the poorest real estate executive this side of the Mississippi.”

Neither Johnson’s campaign nor GFI responded to a request for comment.

Sunset Park/Red Hook

In Brooklyn’s 38th district — which covers Sunset Park, Windsor Terrace and Red Hook — Carlos Menchaca is poised to become the city’s first Mexican-American member of the City Council. And if that weren’t momentous enough, he was also the only candidate to oust an incumbent — in this case, Sara Gonzalez, who was backed by Jobs for New York.

Jobs for New York spent nearly $295,000 to boost Gonzalez and another $52,000 on negative literature against Menchaca, according to TRD’s analysis.

But the PAC couldn’t blunt Menchaca, a former staffer for failed mayoral hopeful Quinn who grew up in public housing.

“The strength and power of the coalition we built enabled us to defeat the real estate forces that spent heavily on my opponent,” Menchaca told TRD for an online story last month.

He also said the PAC’s negative campaigning “made people really sick to their stomachs.”

“They wanted a rubber stamp [candidate], and that wasn’t me,” he said.

So what does his presence in the council mean for the industry?

Greg Atkins, a project manager with hotel developer Second Development Services, said he expected Menchaca to take a measured approach to real estate, noting that the two worked together in Borough President Marty Markowitz’s office, where Menchaca focused on economic development issues.

“I assume he will be happy with sit down with the real estate community and figure out ways we can work together,” said Atkins, who was Markowitz’s former chief of staff.

Another source with knowledge of the race said the money Jobs for New York pumped toward Gonzalez’s campaign was likely a precaution to ensure that the 10-year-renovation of Industry City — the 6-million- square-foot commercial complex in Sunset Park — moves forward smoothly. One source said that Industry City’s owners will need the city’s Economic Development Corp. to make good on its pledge to invest in the surrounding area to ensure the complex’s success.

“The real estate community likes stability, likes to know who they are dealing with,” the source said.

The region is a burgeoning area for new development, especially when it comes to converting industrial sites into residential, which often requires a sign-off from the council. Menchaca supports expanding affordable housing programs, and has said he will fight proposals to allow more private interests in public settings — like the city’s recent proposal to lease land owned by the New York City Housing Authority to private developers.

Menchaca will run unopposed in the general election. His campaign did not respond to a request for comment.

Fort Greene

With the backing of REBNY’s PAC, Laurie Cumbo won the democratic nomination in the area that encompasses Fort Greene and Clinton Hill. She is running unopposed in the general election.

But Cumbo — the founder of the Museum of Contemporary African Diasporan Arts — asked the PAC to stop supporting her, telling the website DNAinfo during the race, “whatever they’re trying to buy, they’re not going to get from me.” (She made the statement however, after Jobs for New York had already spent more than $80,000 campaigning for her, according to records filed with the city’s Campaign Finance Board.)

A rep for Cumbo said the campaign had no contact with Jobs for New York and didn’t know why the PAC backed her.

The PAC also spent more than $13,000 opposing Cumbo’s main opponent: Ede Fox, a former staffer for Brooklyn City Council Member Jumaane Williams, who has worked for the mega-health-care workers union 1199 SEIU.

Cumbo likely appealed to the real estate community because she was a vocal supporter of small businesses in the area, said Brian Leary, co-founder of Brooklyn-based commercial brokerage CPEX.

“I would bet that she won because of her willingness to support small business,” he said. “I think there needs to be more financing for these types of folks.”

In addition, sources said, Cumbo’s opponent was more closely aligned with unions, which have sparred with real estate interests at projects like City Point in Downtown Brooklyn.

On her website, Cumbo said she hopes to strengthen rent regulation and push for more so-called 80/20 projects, which reserve 20 percent of a building for affordable housing.

“We also have to work to change the definitions of ‘affordable’ by [the] city’s standards,” she said.

She is also supportive of the Brooklyn Tech Triangle, an initiative by the Bloomberg administration to boost Brooklyn’s appeal to technology companies.

Whitestone/ Bayside

The Vallone political dynasty seems poised to continue in Queens.

Attorney Paul Vallone — the son of former Council Speaker Peter Vallone and the brother of outgoing Council Member Peter Vallone Jr. — is the favorite to take the council seat in this district.

He bested Austin Shafran, a former staffer to Governor Andrew Cuomo, in the Democratic primary, and is favored to beat Republican Dennis Saffran on November 5.

The generous swath of Queens — which is a few neighborhoods away from where his brother served — abuts the 23-acre Willets Point redevelopment, which is in its first phase and was spearheaded by the city’s EDC. It also includes a small part of Flushing, where residential sales have begun to boom lately. Perhaps more important than that, however, is the fact that Queens has historically been a political rainmaker in the City Council. Sheinkopf, the political strategist, explained that the county’s Democrat Party has maintained its power and “actually has some control over what their elected officials do.”

Indeed, the party machine has historically succeeded in getting its council members to cast their votes to elect a speaker for the body in one big bloc, Sheinkopf said.

That’s helped the caucus win and retain the chairmanship of the body’s powerful Land Use Committee for the last 16 years.

The committee’s current chairman, Leroy Comrie, faces term limits, and a new speaker will be elected to replace Quinn, so that position will be up for grabs again.

Jobs for New York poured about $325,000 towards Vallone’s win — the most the PAC gave to any candidate.

The PAC’s support in this race was more strategic than getting backing for any one project, Sheinkopf said. That’s especially true because of Queens’ history of keeping its council members in line behind its favored causes.

The PAC’s campaign spending is designed to send a message.

“You better conform,” Sheinkopf said.

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