Despite his reputation for efficiency and political maneuvering, Andrew Cuomo, the incoming New York State attorney general, has said little publicly about how he’s going to interact with brokers and developers.
Yet looking at his transition team, announced in late November, and reading other tea leaves provides a forecast of how he’ll handle the real estate aspects of his new job.
The Cuomo transition team includes Robert Abrams, former four-time attorney general of New York and Democratic reformist. The Democratic Cuomo also enlisted the help of Republican Edward Cox, a Manhattan lawyer (and Richard Nixon’s son-in-law) who tried unsuccessfully to run against Hillary Clinton in the 2006 race for the U.S. Senate. The liberal-plus-conservative meld of the team hints at just how adept Cuomo, the ex-secretary of the U.S. Department of Housing and Urban Development, is at the art of compromise.
Indirect influence
While Cuomo will not be in a position to develop statewide housing or rental laws, the attorney general does defend consumer rights statewide. Real estate is chock-full of opportunities to do so, such as investigating (and sometimes prosecuting) brokers who operate illegally. Governor-elect Eliot Spitzer, the exiting attorney general, was known for going after upstate home contractors who did not complete their jobs.
Additionally, his office issued subpoenas to the Real Estate Board of New York, demanding the powerful trade organization turn over records relating to the standardization of commissions and the establishment of a multiple listing service in New York City.
The attorney general’s office can also play a mediation role in large city developments, such as the determination of fiscal equity in the building of the new Moynihan Station.
Perhaps most important to the industry, the attorney general’s office is also responsible for approving condo offering plans that are submitted by developers prior to units being sold. Delays in the approval process can cost a developer hundreds of thousands of dollars.
Speeding up condo approval plans
Attending a recent fundraiser, Doug Heller, a partner at Herrick, Feinstein LLP, said he asked Cuomo if he wouldn’t consider charging more for condo approval plans in order to speed up the process.
Currently, the long delays in getting offering plans approved by the attorney general’s office remain an expensive stumbling block for developers.
Heller said that Cuomo’s response was that he would start by charging more for offering plan approvals that need a shorter turnaround time, and using the extra income to hire more lawyers and engineers for the department. (Cuomo’s office did not provide answers to questions from The Real Deal.)
Heller thinks Cuomo — whom he credits with exposure to the condo approval process at the law firm he worked for — will easily be able to speed the process.
Heller, who once worked in the attorney general’s office, said the maximum that can be charged for an offering plan is $20,000, but “when your offering is $80 million, wouldn’t you pay $40,000 to get your [project] out selling a month or two earlier?” he asked.
The HUD years
Talking to people who worked with Cuomo at HUD, where he was a cabinet-level secretary under President Bill Clinton, shows him to be an efficiency expert with a mixture of idealism and pragmatism.
Kent Swig, president of Swig Equities, credited Cuomo for turning around a bad situation at the agency. “He cut expenses and got increases in the budget,” said Swig, who is familiar with Cuomo’s work at HUD.
“He was really committed to doing what he was doing in Washington,” agreed Harold Simon, executive director of the National Housing Institute, a housing advocacy group.
“The bureaucracy went from 17,000 to 13,000 people, and the quality of HUD went from being an at-risk organization from the Government Accounting Office’s point of view, to a not high-risk organization,” he noted.
While at HUD, Cuomo sought to bring the agency’s operations to the street level by redesigning the offices and building them out more like retail storefronts.
“They wanted to be able to appeal to everyone, from someone who needed a place to sleep that night to a developer who wanted some support from HUD, “said Eric Munoz, a principal of the company that worked on the HUD Next Door project.
Swig, whose latest residential project (along with partner Yair Levy) is the rental-to-condo conversion of the Sheffield on West 57th Street, said he thought Cuomo was pragmatic enough to help change the current requirement that condo conversion developers not contact residents until a red herring has been approved, a time period of about 14 months.
Swig donated more than $70,000 to the Cuomo campaign, though he said he earlier supported Cuomo’s opponent, Charlie King, to whom Swig, his wife and company donated about $200,000 , according to campaign finance records.
Balancing the needs of landlords and tenants
Cuomo’s expertise in housing, economic revitalization and development is one of the strong suits he will bring to the attorney general’s office, noted several policy experts. He is seen as being able to balance private development interests and residential housing issues.
“He was involved with some of the most important economic revitalization projects,” said Kathy Wylde, president of the business group Partnership for New York City, including the Upper Manhattan empowerment zone and the South Bronx empowerment zone, she said.
Wylde said Cuomo’s experience working with nonprofits gives him “enormous expertise” in dealing with litigation, such as issues of eminent domain involving the city and private owners, where the attorney general is often called in to mediate.
But will Cuomo tend to be more owner-friendly or tenant-friendly in general?
“He has always been an advocate for the underprivileged,” said Wylde. “My guess is that will be a major part of his work to the extent that the attorney general has the power to protect the powerless,” she added.
Simon agreed: “I have no doubt that Andrew Cuomo is sincerely interested in finding ways to help low- and moderate-income people to find housing,” he said.
A gift for the practical
Since he won the election, Cuomo’s detractors are hard to locate, but those who did talk say Cuomo is a political animal.
“I don’t have any doubt that he has a commitment to the poor, but he is a practical politician, and his whole record speaks to that,” remarked one observer.
One accusation brought up during Cuomo’s run for office was the charge that when Cuomo negotiated a settlement for wrongdoing by Andrew Farkas’ company, Insignia Financial Services, he also excused them from paying back $200,000 in alleged diverted management fees because Farkas was a pal.
After leaving his post at HUD, Cuomo was employed by Farkas’ company, Island Capital LLC, where he made $1.4 million over a period of two years.
Farkas also contributed an estimated $800,000 to the Cuomo campaign over a period of years, according to records.
According to an investigative report by Wayne Barrett in the Village Voice, Insignia paid the government about $7.4 million of the $7.6 million in alleged management fees it had diverted, but the company never had to pay any penalties and continued in its government contracts.
One observer who spoke anonymously said he once witnessed Cuomo interrupting a speech in front of an audience of hundreds when he learned that a woman in the audience had fainted. “In a blink there was Andrew Cuomo holding her head up in his lap and positioned for the cameras. He was useless there except to show that he cared,” said the witness.
“He’s an opportunist,” he added.
Industry leaders gave generously to campaign
Cuomo’s campaign contribution records show a who’s who of the big names in New York real estate, including developers, brokers and real estate mortgage companies.
RFR Holding, a Manhattan-based property owner and developer, and its chief executives including partners Aby Rosen and Michael Fuchs, donated close to $300,000 to the Cuomo campaign over several years, according to public records.
Cuomo also received about $50,000 in campaign donations from Steven Roth, whose company Vornado Realty Trust is planning to co-develop (with the Related Companies) the new transit complex at Moynihan Station.
Executives of the Related Companies, including Stephen Ross, the chairman and CEO, and its president, Jeff Blau, also made contributions to Cuomo’s campaign totaling more than $100,000 between 2005 and 2006.
Cuomo also received $120,000 over a period of five years from Vincent Tese and his family members. Tese is a member of the board of directors of Mack-Cali Realty Corp., the publicly-traded real estate investment trust with more than $6.5 billion in market capitalization.
Among other big donors, Cuomo also received about $100,000 in contributions from Anthony Westreich, CEO and president of Monday Properties. And the new attorney general also received $50,000 from Joseph Moinian, CEO of the Moinian Group, one of the biggest owners and developers in the city.