A reform movement in New Jersey politics seeks to put an end to campaign contributions from developers looking to do business with local municipalities.
The Citizens’ Campaign, a non-partisan grassroots organization, has targeted the practice and is parading a model ordinance before local governments in hopes of strengthening prohibitions on “pay-to-play” contracting practices in New Jersey by bolstering local laws.
The proposed ban, which reformers hope will be passed in each of the state’s 566 municipalities, would prohibit real estate developers who have been designated as official builders for redevelopment sites from contributing to the campaigns of municipal officials. It would also prevent developers who’ve given money to local politicians from getting official redeveloper status for a year. Thirteen municipalities, as well as Mercer County, have approved the Citizens’ Campaign law. Newark and Jersey City, the state’s two largest cities, are now deliberating the law, which could have a serious impact on their development booms. A state-level version of the law is also under consideration in the legislature.
Pay-to-play has dominated the state’s political debate for more than five years, as officials battle New Jersey’s perception as being a hotbed of political corruption. There is already a statewide “pay-to-play” ban impacting the awarding of no-bid government contracts to contributors; the law passed in 2005, signed by former Governor Richard Codey.
In his State of the State address last month, Gov. Jon Corzine made ethics reform one of his top priorities.
“This ordinance protects the integrity of local government decision making, by cutting out the money,” Heather Taylor, communications director for the Citizens’ Campaign, said. “No one wants to see the community changed by an outside developer who gave a lot of money.”
Since local governments have the power to designate former industrial sites as “areas in need of redevelopment,” individual developers usually get those projects.
That brings perks that can include the extension of loans, public bond financing, capital grants, assistance with street changes, tax abatements, eminent domain power and preferential zoning changes.
Towns have also guaranteed loans on behalf of private developers after they get redevelopment projects. Since redevelopment status is awarded without public bidding, good government groups worry that contributions are exchanged for the development rights.
A sordid past
Their worries have ample precedent in recent New Jersey political history.
In 2004, U.S. Attorney Christopher Christie’s office announced that it had tape-recorded former Gov. James McGreevey using a code word, “Machiavelli,” to acknowledge a pay-to-play scheme. Fundraiser David D’Amiano was charged with asking for, and receiving, $40,000 in campaign contributions — and demanding $60,000 more — from a landowner who was locked in a dispute with the McGreevey administration regarding farmland preservation. D’Amiano said the contributions would help the landowner settle the dispute.
D’Amiano pled guilty to the crime, and it cast a huge shadow over the waning days of McGreevey’s administration, until McGreevey resigned in August 2004 after announcing he was gay.
Late last year, former State Senate President John Lynch, one of the state’s top Democratic Party bosses and McGreevey’s mentor, pled guilty to federal charges that he received a “success fee” for facilitating land deals in his base in Middlesex County while a senator in the late 1990s. It has been reported that developers could not do business in parts of Central Jersey without hiring Lynch associates and donating to Lynch and his backed candidates.
Through the courts, to a vote
Taylor, the activist, said designated redevelopers get disproportionate power to shape a community over the long term. Her group wants to make sure the developers are chosen on merit. She said the U.S. Supreme Court’s Kelo v. New London decision, a Connecticut case that allowed a local government to use eminent domain to obtain land for private developers, is a major influence on their concerns.
The ordinance is pending in Newark as a part of a comprehensive ethics reform package proposed by Mayor Cory Booker, though by mid-January it was stalled in the Newark City Council.
Councilman Ron Rice said the delay stemmed from concerns by some council members that it would affect their ability to raise money for future elections.
This is perhaps unsurprising in Newark, where a pay-to-play culture flourished for decades. The development practices of former Mayor Sharpe James are under investigation by the U.S. Attorney. Christie has focused on the James administration’s sale of city land for below market value to a developer, Manuel Rosa, who has been a long-time contributor to the former mayor and employs one of James’ sons.
Booker went to court during the mayoral race to stop James from selling city land at low prices; since taking office, he has been providing records to Christie’s office.
In Jersey City, where there are 39 designated redevelopment areas and development has been in high gear in the city’s downtown and waterfront, the proposed reform ordinance also sparked political fireworks.
Councilman Steven Fulop said he proposed the ordinance in order to put all development decisions on a level playing field, without campaign contributions being a part of the equation.
“If there is no public bidding we need to take the highest possible road,” said Fulop. “This will go a long way as it is written to eliminate the influence of this type of money.”
Mayor Jerramiah Healy said the state law already addresses “pay-to-play,” and opposes the new law because he said it would set an uneven playing field in the political arena. He said limiting donations would eventually mean only those who would be able to self-finance their campaigns would be able to run for office.
“I think this is a form of self-flagellation and to show that I am holier than thou [because] we have a state law on this,” Healy said. “Since I’ve been here, we literally do the right thing. Campaign contributions are never a criteria for designating a redeveloper. Never, never, never.”
Eric Silverman, president of Exeter Properties, has been designated a redeveloper for part of Jersey City and has done business in the city for more than two decades. While he has donated to municipal officials in past elections, he said he has never donated in exchange for any decisions.
Silverman said that he donates because of a desire to participate in the political process.
“In my experience, most elected officials are honest and ethical; I have never seen them swayed by campaign contributions,” Silverman said, noting that he will follow the new law if it is passed. Silverman was the only developer who would talk on record about this ordinance.
New York City officials also take aim at developers’ contributions
Limits on political donations from developers and other players in the land-use process are on the table in New York City, too.
Mayor Michael Bloomberg and New York City Council Speaker Christine Quinn are negotiating a campaign finance reform package that includes limits on campaign contributions from people and companies doing business with the city. In his January State of the City address, Bloomberg announced that he wanted to pursue contractual “pay-to-play” reform this year.
Eric Friedman, press secretary for the city’s Campaign Finance Board, said his agency targeted pay-to-play in campaign finance and has issued recommendations to the City Council. A major part of the debate centers on who may be considered to be doing business with the city, and how real estate developers would be classified.
“I think that most people who look at campaign finance will say that those who are involved in real estate are among the top donors,” Friedman said. “They are concerned with who leads the city.”
The board’s recommendations include changing the “do business” part of the law, which now uses a monetary threshold — anyone with $100,000 worth of municipal contracts is considered to be doing business with the city.
The proposed new criteria would include firms who submit planning, zoning and landmarks applications; officers and owners of those firms; subsidiaries of those firms; and professionals authorized to do business on behalf of the firms during the land-use process.
Friedman said the Campaign Finance Board has recommended the city adopt a regulation used by the Securities and Exchange Commission to regulate municipal bond professionals. The SEC prohibits bond brokers from doing business with governments where they have contributed to candidates. It also caps individual campaign contribution at $250, and the money can only go to candidates they can vote for. “It is a clear line and it works well,” he said. “We are looking to emulate that approach.”