New lobbying reforms will likely change the way the Real Estate Board of New York, the industry’s lobbying powerhouse, and the New York State Association of Realtors speak to legislators. The changes are expected to make the business of influencing legislation more bureaucratic — and, in some cases, more tricky.
The new rules, established this year, shed a spotlight on how REBNY advocates for the New York City real estate industry, and they raise the question of whether the industry group’s considerable power will be threatened. A look at current practices, and how they might change under the administration of Gov. Eliot Spitzer, shows an organization that may be at the zenith of its power.
In the short term, however, REBNY’s clout seems undiminished. According to news reports, Spitzer has been keeping a record of lobbyists he has met with, when he met with them, and what they spoke about. REBNY was reportedly among the many organizations the governor met with earlier this year. Several calls to the governor’s office to confirm the meetings were not returned. But, if anything, REBNY’s meetings with the governor illustrate the weight they pull in the formulation of state and local government policy.
The state Public Employee Ethics Reform Act created a State Commission on Public Integrity that will begin operating in September. The body replaces the Temporary State Commission on Lobbying, established in 2000, and combines its jurisdiction and powers with the State Ethics Commission. The new combined office will have 13 members appointed by Spitzer, seven nominated by him and the remaining six nominated by the Attorney General, the Comptroller, and the four legislative leaders, respectively. New regulations on lobbying reporting have also been passed, requiring that companies and lobbyists report their contacts with state officials on a quarterly basis. The rules also limit what an organization can give in gifts to a person in public office, broaden the types of activity that must be reported, and increase fines for violations.
While some might scoff at the new regulations, large New York companies and private interests have previously run afoul of restrictions designed to protect the public from pay-for-play politics. Businesses have offered goods, services or even cash to officeholders in exchange for adopting policies or laws that are favorable to their positions.
Trump Casino and Resorts broke the rules in 2000, and some non-real estate figures — such as the Yankees’ owners, in 2004 — have also run afoul of them. The Dolan family, which owns Madison Square Garden, was investigated for violating ethics rules outlined in the New York State Lobbying Act and the gift ban that took effect in January 2000. That year, Trump Casinos and Resorts, Ikon Public Affairs and the New York Institute for Law and Society were fined a total of $250,000 for not registering the latter two agencies as lobbying organizations with the state commission.
In the case of the Yankees, the team offered free tickets to approximately 130 public officials and failed to report the giveaways to the Lobbying Commission. The state lobbying law’s gift provision at that time stated that any registered lobbyist or client of a lobbyist is prohibited from offering a public official or district attorney any gift valued in excess of $75. The team’s owners faced penalties for the purported violations that included a one-year jail sentence and a $100,000 fine. The team did not believe it was engaging in lobbying. It managed to satisfy a technical discrepancy in its reports to the commission and paid a settlement of $75,000.
Penalties have gone up
But this year, the fines have tripled, and the value of what constitutes a gift has been redefined from something worth $75 or more to “any gift of nominal value,” said Walter Ayres, a spokesman for the state Commission on Ethics.
While the regulations are more stringent, REBNY is ready to operate within the new framework, though not without some frustration.
“Under the new rules you cannot buy people a cup of coffee anymore,” said Steven Spinola, president of REBNY. He said his organization is among those obligated by state and city laws to report on a quarterly basis any meetings with officials in which they discuss legislation.
The New York Association of Realtors also provides quarterly reporting of their meetings to the government, according to Duncan MacKenzie, NYSAR’s director of government affairs. “We comply with all the reporting laws, we tell them anything they want to know,” he added.
David Grandeau, executive director of the Temporary State Lobbying Commission, confirmed that REBNY and NYSAR routinely provide reports outlining their lobbying activity, and he said that neither has ever been cited for a violation.
The stakes are higher now. Fines once topped out at $25,000 and $50,000, depending on the type of violation. The state can now set the fine at up to three times the amount the person failed to report properly or unlawfully contributed, spent, gave or received. A $2,000 penalty has also been added for failing to retain records for the required time. Violators are barred from lobbying for a year.
The Real Estate Board of New York actively lobbies the state legislature, said Spinola. “We have a lobbyist in Albany that works for us, and that is the way we have been functioning for 25 years,” said Spinola.
The real estate group’s representative is Lester Shulklapper, an attorney at the firm of Wilson Elser Moskowitz Edelman & Dicker. Shulklapper declined to be interviewed for this story. The law firm also represents NYSAR, which is now fighting state efforts to allow local governments to boost taxes on home sales.
Besides Shulklapper, Spinola said his group also employs other lobbyists when a specific need arises. In his New York office, two REBNY staff members regularly speak to public officials and their assistants. One is assigned part-time to the state government and the other to city affairs.
“If you ask me what I do for a living, I am primarily [the industry’s] lobbyist,” said Spinola. “And I don’t believe lobbying is a dirty word — we make the best argument for the industry.”
In their fight to forestall any increased allocations for affordable housing in developments that receive 421-a abatements, REBNY managed to drive back a City Council proposal that would have required the abatement recipients to dedicate 30 percent — instead of the current 20 percent — of their condos to low- and middle-income apartments.
Since the state government has the ultimate responsibility to change the 421-a law when it is up for renewal in December, it will decide whether New York City is subject to the compromise version of the City Council law hammered out early this year.
REBNY is lobbying the state lawmakers, however, to adopt no changes or additions to the law, and it is asking for an extension on the time frame — currently one year — for adopting any new changes that are passed. They are also proposing alternative legislation that they are passing on to key lawmakers.
Clout — and criticism
Though REBNY’s reach and skill at lobbying have helped the real estate industry, critics think the organization and its members have too much influence in New York City, even if they’re straightforward about their objectives.
“The influence of the real estate industry in New York is over the top, it controls the agenda, and it shouldn’t be that way,” said Tony Avella, a New York City Council member from Queens. “They control virtually everything from zoning applications, to legislation, to permits.”
At least, he says, it’s not a secret.
“The officers of REBNY, like Steve Spinola, and some of the others who are also members, have always been fair and upfront,” said Avella.
Avella said REBNY’s influence is so great that legislative issues affecting the industry sometimes don’t make it out of the back room, and the real estate players influencing the policy direction are never identified. The Councilman said the problem is “too much money,” and that it will only be resolved when developers and brokers are no longer permitted to fund campaign chests for political office.
Suzanne Novak, deputy director of the democracy program at the Brennan Center for Justice at NYU School of Law, agreed. She recently co-authored a study that showed that New York State’s campaign contribution limits — at $50,100 per contributor per campaign — are higher than most other U.S. states’. That “basically makes them ineffective,” she said. “Here the contribution limits are higher than most families of four make in a year — they’re a joke.”
In addition to the lobbying changes, Spitzer has a campaign finance agenda as well. The governor is proposing limiting city and statewide candidate donations to $10,000 and $15,000, respectively, and capping contributions that political action committees can make at $350,000 a year. He is also proposing a variety of measures that will create disclosures for bundled contributions and eliminate some of the most popular loopholes, like the use of limited liability companies, to circumvent limits. Senate Majority Leader Joseph Bruno has battled the measures, but the two were still trying to hammer out a deal in May, according to reports.