William Lie Zeckendorf’s trip last month to Albany, where he and his lobbyist pushed back against the proposed pied-à-terre tax, illustrated a rare split in the real estate industry’s presence at the state capital. And it could portend more difficulties as the industry jumps into the next debate over rent regulations.
As the newly elected Democratic majority in Albany starts to roll out its agenda, insiders say the Real Estate Board of New York’s influence with lawmakers has diminished.
“I think they’re nervous that they’re toxic now,” one politico told The Real Deal.
REBNY is the industry’s primary lobbying group, so it was unusual when Zeckendorf went to Albany last month with his own lobbyist, Patrick Jenkins, a longtime friend of Assembly Speaker Carl Heastie, to rally against the proposed pied-à-terre tax.
One source familiar with the matter said Zeckendorf made the decision on his own after he felt REBNY wasn’t moving the needle. Representatives for Zeckendorf and REBNY did not respond to requests for comment.
Parties on both sides of the debate seem to agree that there were several challenges with the pied-à-terre tax – including, but not limited to, the mechanics of how the city would implement it – and that its replacement of a new transfer tax is an acceptable alternative.
State Senator Brad Hoylman, who first drafted the pied-à-terre legislation five years ago, said the new tax signifies a new paradigm shift in influence in Albany.
“The fact that there’s a new mansion tax and a transfer tax both indicate a new dawn on putting the public’s interest first over private interests,” he told TRD.
Of course, the fact that the industry was able to scuttle the pied-à-terre tax shows that it does still hold sway.
In addition to its own staff, REBNY has its own paid lobbyists. The industry group has a team at law firm Greenburg Traurig on retainer at a cost of $21,000 a month. REBNY also pays Brooklyn-based Jacqueline Williams’ 99 Solutions $10,000 a month (up from $8,000 per month last year) for services.
It’s not clear what exactly went into Zeckendorf’s decision to hire his own lobbyist, or how much he consulted with REBNY, though the two appear to be working on at least one level. REBNY circulated a fact sheet to lawmakers showing its estimates for how much revenue the tax would bring in: a bit more than $370 million a year, significantly less than the minimum of $650 million that New York City Comptroller Scott Stringer said the tax would reap annually.
REBNY’s fact sheet noted that its figures had been compiled by Gregory Heym, who is the chief economist at Zeckendorf’s Terra Holdings (and formerly worked at REBNY).
The Zeckendorfs gave $5,000 to the state Democratic Senate Campaign Committee in November through an LLC.
But even the days of real estate’s outsized influence through political donations may be coming to an end, as a number of campaign finance reforms are in the works.
“Hopefully, the closure of the LLC loophole and other things like the public financing of elections will lessen the stranglehold of not just the real estate lobby, but of all business interest in the capital that up until now has had an inordinate amount of influence over public policy decisions,” Hoylman said.
And it comes at a time when the industry is facing a barrage of unfriendly legislation, such as reforms to rent regulations and a proposed cap by New York City lawmakers on broker rental fees, to name a few.
At a real estate members luncheon in mid-March, REBNY president John Banks acknowledged how much the industry is taking on at one time.
“Obviously we would prefer not to have so many issues coming out of Albany and in the city council at one time,” he said. “But that’s out of my control, so we will deal with them as they come.”
State Assemblywoman Deborah Glick, who wrote the lower chamber’s version of the pied-à-terre tax bill, said lawmakers are already gearing up for the next policy debate. And she said her peers won’t be backing down.
“I certainly think that our focus is going to be on significant improvements in rent regulation, and it remains to be seen in those conversations who is more squeamish,” she said. “I’m certain it will not be the assembly.”