The Real Deal New York

REBNY's races: An inside look at industry-backed PAC's coming influence

By Hiten Samtani | September 01, 2013 07:00AM

rebnyIn May, the Real Estate Board of New York, the industry’s powerful lobbying group, announced that it was leading the creation of a political action committee that would spend up to $10 million to influence City Council races around the five boroughs.

The PAC, called Jobs for New York, represented the trade group’s first foray into independent expenditure in city races — money spent on a campaign without any involvement of the candidate. With voters going to the polls this month to cast their ballots in the primary races, it will soon become clear just how influential the PAC’s dollars are. But sources say if REBNY’s candidates prevail, the group could have influence over a slew of council members, who often have tremendous sway when it comes to development projects in their districts.

“Jobs for New York is an attempt to support the council members who are pro-development, pro-good jobs and pro-business,” REBNY president Steven Spinola told The Real Deal last month. “We hope that it will result in a council that is appreciative of the need for economic growth.”

Overall, the PAC had raked in $6.35 million as of Aug. 5, with large donations coming from heavy real estate hitters such as Brookfield Office Properties, the Durst Organization and Jack Resnick & Sons, according to New York State Board of Elections records. At that same time, it had spent $4.4 million, with about $4.2 million of that going to the influential Midtown-based lobbying and consulting firm Parkside Group.

But the PAC is just the latest initiative by REBNY to influence the political process. Since 2005, REBNY and the 37 companies represented on its powerful Board of Governors have contributed $43.9 million to state and local candidates, committees, and PACs, according to a July report from Common Cause New York, a nonprofit that tracks connections between money and politics. And the money spigot has opened even wider in recent years, with $17.1 million given since 2011 alone.

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.

Susan Lerner, director of Common Cause, attributed REBNY’s increased spending to the 2010 Supreme Court ruling on Citizens United, which lifted restrictions on political expenditures by corporations, associations and unions.

“The Citizens United decision was an invitation to special interests and wealthy individuals to spend unlimited amounts of money,” Lerner said. “Real estate, as it is wont to do, has jumped in with both feet and sacks of money.”

REBNY has traditionally focused its lobbying efforts — and dollars — on candidates for state office rather than in New York City, for two main reasons, Lerner said: First, the city’s relatively stringent campaign finance laws have historically made it harder for special interest groups to gain as much influence here; and second, although many key issues — such as 421a tax abatements — affect only New York City, they are decided at the state level.

But this election season — with Citizens United opening the floodgates and with 21 of the 51 council seats up for grabs — the REBNY-backed PAC is going all-in on council races. Another REBNY-backed PAC, Taxpayers for an Affordable New York, has sprinkled some dollars into the race for borough president, an office which has influence over the Uniform Land Use Review Procedure, or ULURP, which is crucial to many new development projects.

John Mollenkopf, director of the Center for Urban Research at the City University of New York, said REBNY is banking on the “investment theory” of political campaigning.

“I’m not sure they’re doing it to have an immediate demonstrated impact,” Mollenkopf said. “But if you put money into people who are elected, they feel obligated to help you even if there’s no quid pro quo.”

And while the PAC has largely stayed out of the mayoral race, many of REBNY’s key members, including entities affiliated with Silverstein Properties and Vornado Realty Trust, have donated directly to mayoral candidates.

Gaining goodwill

Jobs for New York has thrown its heaviest support behind frontrunner council candidates, including incumbent Democrat Sara Gonzalez, who is representing the rapidly-developing neighborhoods of Red Hook and Sunset Park, and Democrat Vanessa Gibson, who is running for a seat that includes the South and West Bronx.

As of the middle of last month, the PAC spent $167,341 during this campaign cycle on behalf of Gonzalez, about double the $83,589 her campaign has spent so far. It also spent $122,726 on behalf of Gibson, who has spent just $64,556 out of her own campaign war chest, as TRD reported.

Virtually all the money was spent on printed campaign literature, city campaign records show.

On the local level, “direct mail is the most efficient way to get the message across,” said Mollenkopf. “Even Democrats likely to vote tend to have only a hazy knowledge of who’s running,” and mail helps articulate a candidate’s message.

In some districts, mail from REBNY’s PAC is outnumbering mail directly from the candidate by four to one, according to Lerner, who expressed alarm about that fact.

“The vast amount of information about the REBNY-backed candidate is not coming from the candidate, but from REBNY,” she said. “We’re concerned that it obscures the actual voice of the candidate.”

If these candidates win, REBNY will likely gain considerable goodwill amongst those who make key development decisions, sources say.

“The real issue here is trying to put enough fear into candidates,” said Hank Sheinkopf, a longtime political consultant who has worked for the Building Trades Employers’ Association (the construction workers union), and for Eliot Spitzer in his successful 1998 bid for attorney general. “REBNY is attempting to prove it can tell council people what to do, and when to do what to do.”

To combat that influence, City Council Member Brad Lander proposed limiting REBNY’s influence on political campaigns by urging the council to close the so-called “LLC loophole” in state campaign finance law, Crain’s New York reported.

From left: Brad Lander and Steven Spinola

From left: Brad Lander and Steven Spinola

Spinola said despite the fact that Jobs for New York spends money on behalf of chosen candidates, REBNY itself does not officially make political endorsements. “Clearly I get calls [from REBNY members] about where a candidate’s position is on such and such, and get asked: ‘Should we be helpful?’ Spinola said. “I always give an honest appraisal of the candidate’s positions, or tell members to take a closer look at certain positions.”

When asked whether he fundraises for candidates, Spinola stressed that neither he nor REBNY bundle (the act of pooling donations from several individuals or companies) for candidates.

“I do not do bundling,” he said. “I’ve done so in the past, but many years ago.”

Hedging bets

So far in the mayoral race, REBNY has taken a less aggressive approach, likely holding off until after the primary when the field of candidates is narrowed and its PAC can have more influence.

Jaron Benjamin, the executive director of the Metropolitan Council on Housing, a New York City tenants’ rights organization, said it’s harder to make a dent in the mayoral race because there’s so much more money being spent: “In a City Council race you … blow the other candidate out of the water.”

Sheinkopf said that within REBNY’s ranks, “there is certainly an anxiety about what the future will look like after Michael Bloomberg.”

The Bloomberg administration and REBNY have historically seen eye-to-eye, and Bloomberg has been widely praised by its members.

Spinola, who has been at REBNY’s helm for 27 years, said most of the candidates have shown a “recognition of the need for investments around the five boroughs.”

He said REBNY was also paying attention to issues like crime, the budget, and “whether or not taxes [on properties] would be implemented in a fairer way.” He argued that taxes for owners of income-producing properties should be decreased.

“You cannot assume that people are going to put up buildings and pay 25 to 30 bucks per square foot [in taxes] on Day One when you could go to New Jersey and build for a total cost of 30 bucks per square foot,” he said, in making his case for lower taxes.

Real estate taxes generate about $18 billion a year for the city, Spinola said. He acknowledged that the industry would have to pull its weight, but said “the current process is broken.”

Industry insiders and observers have praised Spinola and REBNY for their effective lobbying. Massey Knakal Realty Services chairman Robert Knakal noted in a 2011 op-ed that Spinola has an “uncanny ability to shepherd industry leaders, with often pronounced egos and disparate perspectives, to emerge with a unified voice.”

In particular, Knakal praised Spinola’s “dexterity with respect to city and state legislative leaders.”

The Met Council’s Benjamin cited the controversy surrounding the 421a tax exemption as a prime example of REBNY’s influence.

The exemption “basically doesn’t exist anymore,” Benjamin said. But, he added, several top developers — including Extell Development and Silverstein Properties — “wound up getting a bill getting specifically written for them” which gives them tax breaks at their high-profile condos.

From left: Gary Barnett, a rendering of One57 and Gov. Andrew Cuomo

From left: Gary Barnett, a rendering of One57 and Gov. Andrew Cuomo

Indeed, according to the New York Daily News, Extell upped its donations to Governor Andrew Cuomo during the period that the governor was weighing the bill. The governor ultimately signed the bill into law. Spinola declined to comment on the issue.

An Extell spokesperson told the newspaper that the donations were made because Cuomo is a “terrific governor” and insisted that there has “never been any quid pro quo with our political donations.”

Cuomo aides declined to comment, but have previously insisted that there is no pay-for-play in donations. Silverstein and other developers that received the exemption have not commented.

While a darling of the real estate industry, Bloomberg, a billionaire, was widely considered immune to special interest groups because he self-financed his own campaigns and was not indebted to anyone.

This time around, the industry seems to be hedging its bets by spreading money around to multiple mayoral candidates, said Citizen Action’s Jesse Laymon.

For example, in March, SL Green Realty chairman Stephen Green and seven of his executives wrote checks totaling just under $19,000 to City Council Speaker Christine Quinn’s campaign for mayor. The same day, they donated $9,400 to former City Comptroller William Thompson’s campaign, according to an analysis of campaign finance reports by the New York Daily News. And Jay Kriegel, a senior adviser at the Related Companies, spread more than $80,000 in donations among the campaigns of Quinn, Thompson and Public Advocate Bill de Blasio, the Daily News also reported.

“That’s often what you see with the No. 1 donor [group],” Laymon said. “They try to buy influence with whoever wins.”