“The voters have spoken,” Republican Mike Martucci said, declaring victory in one of the New York state Senate races that real estate players are watching closely.
Martucci’s claim, like President Donald Trump’s last weekend, was premature. Although New York’s voters have spoken, we don’t yet know what many of them said.
While the nation was gripped by the counting of mail-in ballots that clinched the presidency Saturday for Joe Biden, more than 1 million sat untouched in New York. Tallying only began Monday and it could be weeks before some races, including Martucci’s in Sullivan County, are called.
The results will affect the landscape for the real estate industry, albeit more subtly than in 2018, when Republicans lost control of the Senate. Several Democratic senators could lose, which would affect key real estate issues, especially taxes and rent regulation.
The vote count from Election Day shows Democrats trailing in seven of their Senate seats but picking up three Republican seats — two in the Rochester area and one in Buffalo. That would leave them with a 36-27 advantage in the upper chamber.
But as the presidential election showed, Democrats have a huge advantage in mail-in ballots. They figure to catch up in at least two of the seven races that they are losing and quite possibly others. When the smoke clears, Democrats could have 38 to 40 seats and have an outside shot at one or two more.
That sounds like bad news for real estate. It might not be. Here’s why.
Even if Republicans win a few Senate seats, their chances of recapturing the chamber in 2022 remain slim. In that election and the four that follow, new district lines will give Democrats an even greater election advantage than they have now.
Today’s districts were drawn by the Republicans who controlled the Senate in 2011, yet the GOP still loses most of the races. New York is now so deeply blue that Democrats can overcome even extreme gerrymandering.
Under a reform passed a few years ago, the 2022 districts will be drawn by either a nonpartisan commission or by Democrats. Either result would cement a Democratic Senate majority in place, leaving Senate Republicans powerless to affect legislation.
That raises the crucial question of how hostile to real estate Senate Democrats will be. The industry’s worst-case scenario is a Democratic conference dominated by New York City members, who tend to favor tenants and taxing the rich and are afraid of losing their seats to far-left challengers, notably those backed by the Democratic Socialists of America.
It’s not paranoia. Progressive and socialist challengers have in the past two years unseated a slew of moderate, even liberal New York City Democrats, including Joe Lentol, Felix Ortiz, Walter Mosley, Aravella Simotas, Michael DenDekker, Mike Miller, Martin Dilan, Joe Crowley and Eliot Engel. Some had been in office for decades, a period during which legislators typically stayed in office until they retired, died or were convicted.
As a result, some Democratic office holders pacify the far left to avoid becoming targets, critics say. They point to Queens Sen. Mike Gianaris as a prime example. Real estate once counted him as a friend, but in recent years he has pushed bills that landlords hate and has opposed major developments, including Amazon’s HQ2.
When Simotas — whom Gianaris had hand-picked to succeed him in the Assembly years ago — was challenged this year by DSA-backed Zohran Mamdani, Gianaris stood by as she went down in flames.
“That tells you he’s scared,” one political strategist said, speaking anonymously to protect professional relationships. “Desperately and deeply scared.”
Gianaris has maintained he is doing what he believes is best for New York.
When Senate Democrats meet to shape their agenda, it helps real estate to have some moderate voices in the room. Democrats representing Long Island and upstate typically fit that bill. One Democratic consultant said that’s why it made little sense for police unions — upset about bail reform — to run attack ads against Nassau and Suffolk Democrats this year.
“If the PBA wins, all they did was take out the people they could actually talk to,” the consultant said, referring to the Patrolmen’s Benevolent Association.
The real estate industry understands that: It supports moderate Senate Democrats. But the PBA’s ads highlighted the danger for the majority conference when their suburban members are forced to take public positions on issues such as bail reform that challengers can use against them.
“A lot of the electioneering in these contested races, in the Hudson Valley and Long Island, centered on votes these candidates took that were seen as out of the mainstream for their districts,” noted one real estate industry source.
To protect those members, Sen. Majority Leader Andrea Stewart-Cousins might bottle up the “good cause eviction” bill, which would essentially impose rent control statewide.
“The thrashing that Democrats took on Long Island will mean there’s going to be a little more pressure on Andrea to hold the line on some stuff,” the strategist said. “There will be more pressure on Andrea to cater to the centrists.”
That will upset some city members of her conference, but as the strategist noted, “They’re probably not going to coup Andrea.” Stewart-Cousins shattered a glass ceiling as Albany’s first female, Black majority leader and has strong relationships with key members of her conference, the source explained.
On the Assembly side, newly elected socialists and progressives are expected to band together. “They’re going to form their own caucus and they’re going to wreak havoc,” the strategist predicted. “While they’ve struggled in the Senate, they’re going to be emergent in the Assembly in a big way.”
Having failed to cancel rent, their top goal will be to raise taxes to minimize service cuts. Although billions of dollars in federal aid for New York is seen as more likely with a Biden administration on the way, it is not expected to be nearly enough to balance the state’s budget.
Real estate is on high alert for taxes, such as a recurring levy on second homes. “The big discussion next year is going to be tax policy,” the real estate industry source said. “The Biden stimulus is not going to be a cure-all.”
One thing working in real estate’s favor — politically, at least — is the terrible state of the economy.
“Everyone’s going to have to find common ground with the real estate industry because it has the ability to create a lot of jobs,” said Greenberg Traurig’s Jonathan Bing, a lobbyist and former Assembly member from Manhattan.
He called Cuomo a firewall against bills that diminish that power. “We’re in a tremendous economic crisis right now,” Bing said. “The governor would be very concerned about legislation that would have a major effect on an industry in a crisis.”
Another observer agreed, adding that the governor is well positioned to stop such bills.
“Real estate is always going to have Andrew,” the strategist said. “Andrew has their back. And he has the highest approval rating he’s ever had.”