The 2012 presidential race has garnered so much attention that it’s easy to forget about the other state and federal candidates on the ballot this November. In addition to the face-off between Barack Obama and Mitt Romney, New Yorkers will have a chance to vote on about two dozen candidates for the U.S. House of Representatives, one U.S. Senator (Democratic incumbent Kirsten Gillibrand) and 213 members of the New York State legislature.
State executives, such as the governor and attorney general, are not up for reelection until 2014, and municipal races will take place in 2013.
This month, The Real Deal presents a ballot guide to the local races of particular importance to New York City real estate professionals. These are candidates who have courted big real estate money, could shift the balance of power in Albany or could affect the housing market on the national stage.
President: Barack Obama vs. Mitt Romney
For many real estate professionals, the contest between President Barack Obama and Republican challenger Mitt Romney is the main focus this election season, even though neither man will have a direct hand in New York City real estate policy.
However, the winner’s positions on unemployment, taxes and the role of government will no doubt affect the housing market and business growth nationally — and closer to home, experts said.
“If there are no jobs, there’s nobody to rent housing,” said Peter Kalikow, president of commercial developer and landlord H.J. Kalikow & Co. “If there’s nobody to rent housing, there’s nobody to work in the office buildings we have. The spiral is unbelievable.”
But neither candidate has offered a detailed plan to kick-start the still-slumping U.S. housing market, according to industry watchers who spoke with TRD (see related story Government briefs)
“I feel like the housing part of the conversation has been absent from the political discourse during the election this year,” said Jonathan Miller, president of appraisal firm Miller Samuel.
The Obama administration’s previous attempts to spur mortgage lending — rounds of quantitative easing, where the Federal Reserve buys up securities, injecting money into the economy and effectively lowering interest rates — has been ineffective, Miller said. (The latest round, known as QE3, was announced last month.)
To Miller, the problem is not low interest rates but tight credit.
“We all know that if you do two things that don’t work, you should do the thing a third time,” Miller said, sarcastically. “I think that’s the definition of insanity.”
Likewise, Obama’s approach to the foreclosure crisis — to encourage banks to modify home loans — is actually hurting the housing market by keeping people in homes they can’t afford, real estate attorney Adam Leitman Bailey argued. In New York, if those properties were on the market, the extra supply could bring down prices, he said.
On the other hand, Romney has not proposed concrete alternatives, experts said. His official campaign literature calls for selling off 200,000 government-owned foreclosed homes, reforming Fannie Mae and Freddie Mac to make them less reliant on taxpayer funds and implementing “creative alternatives to foreclosure” and “smarter regulations” to increase lending.
Romney has also touted the budget proposal of his running mate, Paul Ryan, but Miller said that would likely only damage the housing market.
For some in the real estate industry — who tend to favor Republicans in contrast to city residents, who largely support Democrats — the choice comes down to what they see as Obama’s anti-business approach.
“It’s hard not to believe that a change from Obama will be beneficial to business and that will, in turn, benefit our New York real estate market,” said Arthur Mirante II, the tri-state president of commercial brokerage Avison Young.
Mirante acknowledged that he’s not political, but said his view was popular among his peers.
Although Obama’s campaign has outraised Romney’s by a significant margin — not accounting for funds from political action committees — the Republican candidate has gotten more financial support from real estate professionals nationally, according to figures from election watchdog OpenSecrets.
Of the $348.4 million raised by the Obama campaign, about 3.5 percent, or almost $12.2 million, has come from individuals who work in the real estate industry, OpenSecrets figures show.
Romney, meanwhile, has raised almost $28.6 million from real estate sources, making up about 14.8 percent of his campaign’s $193.4 million war chest, according to OpenSecrets.
Plus, the Republican nominee is outraising Obama when it comes to outside sources: Groups have spent more than $128 million to oppose the President’s campaign. On the flip side, Obama-friendly groups have spent only $46 million opposing Romney. However, so far this year, Obama is outraising Romney among New York City real estate pros (see related story: In surprise move, Obama bests Romney for NYC real estate cash)
Jeffrey Gural, chairman of Newmark Grubb Knight Frank explained his support for Obama this way: “Typically, most wealthy people support the Republicans, if for no other reason than they’ve pledged not to raise their taxes — which I think is just not fair.”
Kalikow, who gave $2,500 to Romney’s campaign, is not particularly optimistic about the presidential election’s effect on the economy.
“If Obama gets reelected, it won’t be good, but it won’t be terrible, and if Romney wins, it’ll be good, but it won’t be great,” Kalikow said.
U.S. Senator, New York State: Kirsten Gillibrand vs. Wendy Long
Sen. Kirsten Gillibrand is the only U.S. Senator from New York running in the 2012 election. (Her colleague, Sen. Charles Schumer, will be on the ballot in 2016.)
Since taking over Hillary Clinton’s seat in 2009, Gillibrand has established herself as a notable female voice in the Democratic Party and a powerful fund-raiser. This election, she has raised $13.8 million so far, including $1.26 million from real estate professionals, making the sector her third-largest source of funds.
Indeed, Gillibrand is the second-largest recipient of real estate funds of any U.S. Senator or Senate candidate this election cycle, according to OpenSecrets. Among her top real estate donors are employees of Rudin Management, who contributed $74,600 to her campaign.
Gillibrand has touted her support for the Emergency Homeowners Loan Program foreclosure prevention measure, noting that $111 million of the program’s funds went to New York State.
She also supports increasing federal investment in public housing.
Her Republican opponent is Wendy Long, a Manhattan attorney who espouses many traditional GOP views, including the belief that overregulation will hurt New York’s economy.
In an August op-ed in the Wall Street Journal, Long warned that the Dodd-Frank rules aimed at reforming Wall Street could lead to “the Empire State’s downfall as the world’s financial capital.”
A New Hampshire native, Long worked as a litigator at Kirkland & Ellis and clerked for U.S. Supreme Court Justice Clarence Thomas. More recently, she helped create the Judicial Crisis Network, a nonprofit that advocates for judicial candidates who practice judicial restraint.
Long, who has an uphill battle running against the incumbent, has raised $336,976, including a $2,500 donation from an employee at the Houston-based developer Hines.
U.S. House of Representatives 13th District: Mark Murphy vs. Michael Grimm
Michael Grimm, a former FBI agent and first-term Congressman, is the only federal GOP incumbent on the ballot in New York City and, therefore, of note for real estate industry executives keen on maintaining the House’s Republican slant.
“As New York loses [Republican] congressmen, everyone that we can keep becomes very valuable,” Kalikow said.
“I’m very, very much concerned that if President Obama wins another term that we need checks and balances in Washington,” said John Catsimatidis, chairman and CEO of the Red Apple Group and Gristedes Foods, referring to Republicans gaining control of both houses of Congress.
Plus, as a member of the U.S. House Committee on Financial Services — which oversees economic, housing and banking policy — Grimm has a say on regulations affecting the financial industry, a key driver of New York City’s economy and its commercial and residential real estate markets.
Not surprisingly, Grimm’s main source of funding is the securities industry, with the single largest source of contributions coming from employees of Elliott Management, the hedge fund started by Paul Singer. Overall, Grimm has raised $1.78 million, including about $85,000 from real estate professionals.
Grimm’s opponent in the district — which covers much of Staten Island and Bay Ridge, Brooklyn — is Mark Murphy, a former aide to New York City Public Advocate Bill de Blasio.
Murphy’s surname is likely familiar to Staten Islanders: His father, Jack, was also a U.S. Representative, who spent 20 months in prison on political corruption charges. He recently received the endorsement of former Mayor Ed Koch as well as $5,000 in contributions from Extell employees.
But the race has gotten somewhat, well, grim, for Grimm.
In his first campaign, for the 2010 midterm elections, Grimm reportedly raised hundreds of thousands of dollars from supporters of Rabbi Yoshiyahu Yosef Pinto, the Israeli religious leader who counts many of the city’s real estate heavyweights among his followers.
The FBI is now investigating claims from some of Pinto’s followers that their contributions to Grimm’s campaign were illegal, the Associated Press reported. Murphy has called on his opponent to refund the donations, which Grimm has declined to do.
“My campaign and I followed the fund-raising rules, and took reasonable measures to vet the contributions received by my campaign,” Grimm said in a statement to the AP early last month.
U.S. House of Representatives 14th District: Joseph Crowley vs. William Gibbons, Jr.
Incumbent Democrat Joseph Crowley has received more donations from real estate professionals than any other U.S. House Representative in the country, securing about $145,000 of the $2.1 million raised by his campaign from the sector.
His donors include employees of the National Association of Real Estate Investment Trusts, which gave $11,000; Brookfield Properties, donating $10,000; and Rudin Management, which also gave $10,000.
Why is Crowley, who has represented the Queens district since 1998, such a fund-raising powerhouse? It’s likely because he sits on the House Ways and Means Committee, which oversees tax policy in the lower chamber of Congress.
Tax rates are not only a main source of difference between the Democratic and Republican Party platforms; they are a prime driver of New York City’s residential and commercial sale markets, mainly when it comes to taxes on capital gains.
“The capital gains tax has become a huge issue for owners in New York City and may push people to sell at very different numbers prior to January,” said Frances Katzen, a managing director at Prudential Douglas Elliman.
The capital gains environment may have an even bigger impact on the commercial real estate sector, said Robert Knakal, chairman of Massey Knakal Realty Services, noting that several of his clients have decided to sell this year because they anticipate the rate will go up in the new year.
Currently, the top capital gains rate is 15 percent, but that ceiling is set to rise to 20 percent in 2013 if Congress fails to pass an alternative budget, a measure that Obama supports. Separately, the capital gains rate for top-earners is set to go up by an additional 3.8 percent as a funding mechanism for health-care reform.
Romney has pledged to preserve the 15 percent rate for households making more than $200,000 annually.
If the rates go up, “you’d see a tremendous drop in the number of sale transactions occurring next year,” Knakal argued.
However, proponents of Obama’s plan argue that it would make the tax code fairer, since the tax break for investors tends to benefit high-income individuals, while providing a much-needed revenue boost for the federal government.
In the past, Crowley has voted against extending the Bush tax cuts, which set the rate at 15 percent.
Crowley is running against Republican William Gibbons, Jr., who has yet to set up a campaign website. Gibbons could not be reached.
New York State Assembly 65th District: Sheldon Silver vs. Wave Chan
Sheldon Silver is a powerhouse of New York State politics: the Speaker of the Assembly, a top fund-raiser, and a fixture in the Lower Manhattan district he represents.
But Silver is under fire, and his position as Speaker is on increasingly shaky ground.
The state Joint Commission on Public Ethics is investigating his role in authorizing a $103,000 taxpayer-funded payout to settle claims that Assembly member Vito Lopez sexually harassed two female staffers.
Silver reportedly never referred the matter to the Assembly Ethics Committee.
In late September, Queens State Sen. Tony Avella became the first Democrat to call for Silver’s ouster as Speaker, the New York Daily News reported.
Nevertheless, Silver is expected to cruise to victory on Nov. 6 against his largely unknown opponent, Tea Party supporter Wave Chan.
Indeed, the Assembly is less of a battleground than the state Senate, largely because the lower chamber is so heavily dominated by Democrats — they control 99 of the 150 seats — and many of the candidates are entrenched incumbents.
Nominees in numerous prime Manhattan neighborhoods are running unopposed, including Deborah Glick (whose district covers the West Village and Soho), Linda Rosenthal (parts of the Upper West Side and Clinton) and Richard Gottfried (Midtown West and Chelsea). For this reason, the primaries held on Sept. 13 became de facto general elections.
As far as real estate concerns go, the Assembly is reliably tenant-friendly, experts said.
But every year varies when it comes to what degree members push rent laws to the forefront of the agenda, said Mario Mazzoni, executive director of the Metropolitan Council on Housing, a tenants’ rights group based in New York City.
If Silver is replaced as Speaker, the power shift could benefit New York business interests — not typically a constituency Silver has worked to court — said Mirante.
“I would think that anyone new might take a fresher view than he has taken toward business in general in New York State,” Mirante said.
New York State Assembly 53rd District: Vito Lopez vs. Richy Garcia
Vito Lopez once enjoyed an exalted position among New York City Democrats as head of Brooklyn’s Democratic Party, chair of the Assembly’s housing committee and a top fund-raiser.
In the last election, Lopez raised $460,680 — the fourth-highest among Assembly members, according to figures from the New York Public Interest Research Group, a nonpartisan research organization. He received more than twice as much from the real estate industry as any other Assembly Democrat, NYPIRG’s research coordinator, Bill Mahoney, said.
As housing committee chair, Lopez was also at the forefront of most major housing-related legislation, including acting as the main sponsor of the Assembly’s update to rent regulations last year.
But since the summer, when a raft of sexual harassment claims from former staffers surfaced, Lopez relinquished both leadership positions and earned the unfortunate moniker “Vito Gropez.”
Now stripped of his powerful party role, Lopez’s fund-raising is set to “dry up quite significantly,” Mahoney said. “I don’t think people will see the return on the investment as worthwhile with him as it has been in the past years,” he added.
Lopez, first elected to the Assembly in 1984, is still widely expected to win reelection in his district, which covers much of Williamsburg and Bushwick.
His opponent is Republican Richy Garcia, whom the New Yorker reported is a 26-year-old Board of Elections warehouse worker. (When the magazine contacted Garcia about his platform, the candidate replied via text message: “I can’t do DAT I very busy rite now.”)
TRD was unable to reach him for comment.
A more pressing concern for real estate is who will fill the role of housing committee chair, setting the tone for how much of a priority the Assembly puts on housing issues.
Though former Assemblyman and Judge Frank Seddio replaced Lopez as party boss late last month, at press time the party had not appointed a successor for the committee chairmanship.
New York State Senate 15th District: Joseph Addabbo, Jr. vs. Eric Ulrich
The race for the 15th District in Queens is a crucial one to decide the balance of power in the state Senate. In fact, if incumbent Sen. Joseph Addabbo, Jr. fails to maintain his seat, there is almost no chance of the Democrats taking control of the chamber, NYPIRG’s Mahoney said.
To Mahoney and others, the question of which party controls the state Senate will play a bigger role than any individual race, given that Republicans are seen as more friendly to the real estate industry, while Democrats have taken the sides of tenants.
“It’s all about controlling and increasing the Republican majority in the senate,” said Frank Ricci, the director of government affairs at the Rent Stabilization Association, a Manhattan-based property owner trade group.
Ricci recalled the brief period of Democratic control of the Senate in 2008 when members introduced measures “every week” that would “hurt the residential real estate industry,” such as raising the threshold for luxury decontrol, or the rent that effectively removes an apartment from rent-stabilization rules.
For real estate developers, it is particularly important for Republicans to keep the majority in order to induce businesses to start new projects, said Catsimatidis. He added that he has several Brooklyn developments underway that are stalled because of a lack of tax credits.
Developers “need incentives from Albany to have people take money out of their pockets and create more housing and more development,” he said. He added, “Banks have to look at it [like] it’s a no-lose proposition, and that you’re willing to put up your money; [then] they’ll put up theirs.”
A former City Council Member, Addabbo was elected in 2008 to represent the district, which covers areas of Maspeth and Woodhaven.
His challenger is the 27-year-old Eric Ulrich, who became the youngest City Council member after winning a special election in 2009. He sits on the Council’s Housing & Buildings committee.
New York State Senate 37th District: George Latimer vs. Bob Cohen
One of the closest — and most closely watched — races in the state is the face-off between Republican Bob Cohen and Democrat George Latimer, who are vying to occupy the Westchester seat left vacant by the retiring Democrat Suzi Oppenheimer.
Not only is the race important for deciding which party controls the state Senate, but the candidates are also on opposing sides of the landlord-tenant divide.
An Assembly member since 2004, Latimer has received the endorsement of Tenants PAC, a group that works to elect pro-tenant candidates in New York State.
Latimer is a “strong supporter of tenants’ rights and stronger rent and eviction protections,” the group said, noting that it only supports candidates that “we know we can trust and who will actively support our legislative goals.”
Meanwhile, Cohen runs a small Manhattan real estate development company, and the main plank in his election platform is the reduction of property taxes for Westchester residents.
In the last election, Cohen ran a close race against Oppenheimer, winning the endorsement of the New York Times — not exactly a conservative bastion — in part because Oppenheimer had “too little to show for her years in Albany,” an editorial in the newspaper commented.
Cohen has repeatedly attacked Latimer for refusing to join him in calling for Silver to step down as Assembly Speaker.
“Anyone who hesitates to join this call is sending a message to women everywhere that this behavior is acceptable,” Cohen said in a statement.