Real estate players open their wallets to state politicians

What do they get for their generous donations?

Oct.October 01, 2012 07:00 AM

The capitol building in Albany, the hub of political activity in the state

For more than a decade, Leonard Litwin, the nonagenarian CEO of Glenwood Management, has maintained a rarefied spot as New York State’s most prolific political donor.

Glenwood’s Leonard Litwin has donated $1.6 million to state politicians since the beginning of 2011.

In 2011 alone, Litwin and affiliates of his residential development and management company contributed almost $700,000 to state politicians, outspending the runner-up — the political action arm of New York State United Teachers — by about $70,000, according to an analysis from the New York Public Interest Research Group, a nonpartisan research organization.

As the Nov. 6 election gets closer, Litwin appears to have accelerated his giving, donating about $900,000 to state politicians and state political parties in the first six months of this year, NYPIRG found.

But Litwin is only the most deep-pocketed donor from an industry long seen as a reliable source of funds for New York State’s elected officials. For real estate professionals, state-level donations are seen as a way to gain the ear of lawmakers and advance a pro-business agenda.

Though this election season has been dominated by talk of eye-popping donations at the federal level, it is Albany’s political winners — not Washington’s — that will have the biggest effect on the day-to-day operations of New York City real estate professionals.

And of course, while New York City government also plays a major role, municipal elections don’t take place until 2013. The governor, attorney general and other statewide officials won’t be on the ballot until 2014.

Vornado’s Steven Roth donated $227,000 to state political candidates in 2011.

In the 2010 elections, state candidates and party committees raised $246 million overall, with $13.9 million, or 5.7 percent, coming from real estate and construction interests, making the industry the most generous contributor of any business sector, according to an NYPIRG report from January 2011.

This election, caps on campaign contributions — already among the highest in the country — have gone up. Donors can give up to $4,100 to New York State Assembly candidates and $10,300 to state Senate candidates.

On an annual basis, individuals can give a maximum of $150,000, and corporations can give $5,000.

Compared to U.S. Congressional races, where donations are limited to $2,500, “New York’s sky-high contribution limits [and] the state’s campaign finance system offers even greater opportunities to cultivate influence through the use of campaign contributions,” NYPIRG said in its report.

Plus, real estate companies are often structured to capitalize on a little-known feature of the state’s campaign finance law. Since the mid-1990s, limited liability corporations in New York State have been treated in the same manner as individuals for purposes of campaign fund-raising, meaning they are not subject to the stricter limits on corporate giving. For developers and landlords, who routinely set up each building they own as a separate LLC, this is a particular benefit, NYPIRG’s research coordinator, Bill Mahoney said.

In 2011, many of the biggest donors in the state were businesses that took advantage of this loophole, including those backed by several prominent real estate figures, according to NYPIRG.

Litwin, for example, used numerous LLCs to contribute $135,000 to the New York State Democratic Assembly Campaign Committee, $174,000 to Gov. Andrew Cuomo’s 2014 reelection campaign and $40,000 to Eric Ulrich, the Republican City Council member trying to unseat Sen. Joseph Addabbo in Queens, according to figures NYPIRG provided to The Real Deal. This year, Litwin also contributed $2,500 to Mitt Romney’s presidential bid, as TRD reported.

Steven Roth, chairman of Vornado Realty Trust, donated $227,000, making him the state’s 17th-largest donor. He was followed closely by commercial developer and landlord H.J. Kalikow & Co., which donated $222,000 to state candidates and parties.

Peter Kalikow

The firm’s president, Peter Kalikow, said that he never donates to a politician simply because that person’s policies will benefit him or the company. Asked why he structures the donations through LLCs, Kalikow said he leaves those details to his staff.

“We only choose to support the guys that we think are good for business in New York State,” Kalikow said. “If it’s good for business, it’s going to be good for Kalikow.”

Gary Jacob, Glenwood’s executive vice president, referred questions on donations to Litwin, who did not return a request for comment. Roth also did not respond to a request for comment.

While it’s tough to say exactly what real estate players get in exchange for their campaign contributions — and “buying” favorable legislation with donations is illegal — developers and landlords do benefit from their largesse, sources said.

For some real estate donors, the main goal of giving is to maintain the razor-thin Republican majority in the state Senate, which is seen as a more landlord-friendly counterweight to the Democrat-dominated Assembly, experts said.

In the last election, the real estate industry gave $3.2 million to Senate Republicans versus $2.7 million to Senate Democrats, NYPIRG said.

Indeed, a quarter of all city and state campaign contributions from New York City’s real estate “elite” went to state Senate races, compared to 6 percent that went to state Assembly races, according to Common Cause, a Washington, D.C.-based nonprofit public interest group. (To determine percentages, Common Cause totaled contributions in 2009 and 2010 from officers of the Real Estate Board of New York and members of the New York Observer’s “Power 100” ranking of the real estate industry’s movers and shakers.)

Common Cause found that the elite real estate donors it tracked spent almost $9.7 million on state and local campaigns in 2009 and 2010, almost twice as much as in 2007 and 2008, when the same donors gave a total of $5.4 million.

While some of this giving was no doubt related to the 2010 election — when the governorship and the attorney general’s office were up for grabs, as well as legislative seats — it also coincided with the period leading up to the review of both rent-stabilization rules and the 421a tax abatements on new rental and condominium developments, Common Cause noted.

Frank Ricci, the director of government affairs at the Rent Stabilization Association, a Manhattan-based property owner trade group, said that even though the RSA has donated to state Democrats, the organization tends to back Republicans facing tight Senate races.

“The Assembly’s philosophy when it comes to residential rental housing has been very anti-owner over the last 20 years,” Ricci noted.

In 2011, the group gave $168,800 to state politicians, including $100,000 to the New York State Senate Republican Campaign Committee, according to NYPIRG. “Our motivation is to get people in there who will listen to both sides of a story, not just be one-sided,” he said.

For recent donors, the hot-button issues fueling donations have been rent regulations and tax breaks for building owners, experts said.

“When upstate politicians get money from downstate developers and they’re trying to elect people in districts where they don’t do business, they’re talking about [these] big-ticket items,” said Mario Mazzoni, executive director of the Metropolitan Council on Housing, a tenants’ rights group based in New York City.

Along with influencing the makeup of the Senate, real estate players often donate to politicians simply to gain access to them — or, as NYPIRG’s Mahoney put it, for a “better chance to talk to them about the issues.”

For that reason, many real estate insiders give to both Democratic and Republican candidates, or to multiple candidates in a primary.

For example, Litwin donated $25,000 each to four of the six contenders for attorney general in 2010, including Republican candidate Dan Donovan and the eventual winner, Democrat Eric Schneiderman, WNYC reported.

“They have a better chance to show up and make their voices heard,” Mahoney said.

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