Lhota: Too little, too late?

With time running short, the GOP mayoral candidate tries to close a gap in fundraising and support

Late last month, a federal appeals court ruled that a political action committee supporting Republican candidate Joe Lhota could begin accepting contributions of any size. The ruling, which struck down an earlier $150,000 annual cap on donations, was a shot in the arm for Lhota, who, according to the city’s Campaign Finance Board, raised only $700,000 in the first three weeks of last month, compared to his rival Bill de Blasio’s $3.7 million.

But it may be too little, too late.

With de Blasio’s commanding lead in the polls, Lhota may be hard-pressed to find donors willing to back him, sources said. (See related story, “A tale of two de Blasios”)

“Lhota has the sands of time running out, and he’s trying to get some traction,” said Bill Cunningham, a political strategist and former communications director for Mayor Michael Bloomberg.

Indeed, for many in the real estate industry — traditionally a GOP stronghold — the writing is on the wall, and though Lhota may be more pro-development than his rival, his slim chance of winning has prompted them to switch allegiances.

Magnum Real Estate’s Ben Shaoul, for example, gave Lhota $4,950 (the maximum permitted amount) in September, campaign finance records show. But in the following weeks, he spread his bets to de Blasio, making a $4,950 contribution. (Shaoul’s sister, Elizabeth, also donated $4,950 to the Democrat.)

Perhaps sensing the need for a strategy change, Lhota took off the gloves during the second mayoral debate late last month, accusing de Blasio of committing a “civil wrong” by advocating for tax hikes. He also aggressively attacked him for not doing more for affordable housing at Forest City Ratner’s Atlantic Yards.

And perhaps most provocatively, he said de Blasio’s “reckless” approach to policing would take New York City back to the time of “2,000 murders a year.” (By comparison, there were 418 murders in the city in 2012 and only 240 as of this September.)

But veteran political strategist Hank Sheinkopf — who worked on Bloomberg’s successful 2009 reelection campaign as well as Bill Thompson’s mayoral campaign this year — said that despite the fact that New York’s last two mayors were Republican, getting elected on the GOP line is not easy in a city where registered Democrats outnumber their Republican counterparts six to one.

“Republicans in New York City tend to get elected only during a crisis,” Sheinkopf said. “[Rudy] Giuliani was because of crime, and Mike Bloomberg was 9/11.”

So far (and barring any late campaign surprises), there haven’t been any intensely divisive issues this election season for Lhota to capitalize on, Sheinkopf added. The city’s economy has been rebounding in the wake of the financial crisis, and crime is drastically down. And despite Lhota’s reputation as a fiscal conservative and social liberal, he has yet to gain traction.

Bloomberg, with tweaks

Though Lhota does have the financial support of some real estate players — such as CBRE vice-chairman Kenneth Rapp, developer Edward Minskoff, and Rose Associates’ Daniel and Adam Rose — his vast experience in government, combined with his views on real estate-related issues, should have translated into more high-profile industry support, sources said.

Indeed, he’s pledged to continue many of Bloomberg’s key pro-development policies.

Unlike de Blasio, who is pushing for “mandatory inclusionary zoning” — which would force (rather than incentivize) developers to build affordable housing at projects that require city approval — Lhota signed on to Bloomberg’s “voluntary inclusionary zoning” stance. He’s even argued that de Blasio’s position is “unconstitutional,” saying that it’s tantamount to the government “taking” private property.

In addition, Lhota told TRD that he would use the city’s tax structure to reward developers who create between 20 and 30 percent of their units as affordable, but didn’t elaborate on how he would do this. He has also endorsed an $8 billion proposal by a coalition of housing groups, which would preserve 150,000 affordable units and require a $365 million annual increase over the city’s current spending projections. De Blasio, by comparison, has pledged to build or preserve 200,000 affordable units over the next 10 years.

Further, Lhota has advocated for the extension of the 421a tax abatement, which has been historically used to encourage construction in less-favored neighborhoods.

The GOP candidate has also backed a controversial Bloomberg proposal to lease New York City Housing Authority land to private developers for market-rate housing, and has said he would look to bring supermarkets and other private retailers to the complexes. “This will provide NYCHA with much-needed revenue to repair and upgrade its existing housing stock,” he said in a recent policy paper, and “will improve the quality of life for NYCHA residents by creating a real community atmosphere.”

In one of his strongest attacks, Lhota has seized on de Blasio for opposing Bloomberg’s controversial stop-and-frisk program, saying that doing away with the program was “another step closer to making New York City like Detroit.”

Notably, the policing issue might have real estate consequences. Indeed, Steven Spinola, the head of the Real Estate Board of New York, the industry’s leading trade group, recently told TRD that one of the industry’s biggest concerns this election season is crime, noting that it can create uncertainty that may hurt investor and builder confidence.

Spinola, who under Mayor Ed Koch served as head of the agency that later became the city’s Economic Development Corporation, recalled city safety coming into play when the city was trying to lease up the MetroTech Center in Downtown Brooklyn to office tenants. He said that when the developer of the Brooklyn complex, Forest City Ratner, brought in a potential tenant, “the tenant got scared off because a couple of people came up to us and panhandled.”

He added, “It does not give a good impression.”

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But Lhota has broken with Bloomberg on at least one issue that has been a fundamental component of the mayor’s real estate policy platform: rezonings. Indeed, Bloomberg rezoned over a third of the city during his 12-year reign, spurring development in places like Manhattan’s Far West Side, Williamsburg and Long Island City, with developers adding an astounding 40,000 new buildings.

Though Lhota supports the mayor’s Midtown East rezoning proposal, he told TRD in August that “we’ve saturated the market” with rezonings, and that “we should naturally slow it down until we start seeing results from the rezonings we’ve recently accomplished.”

Still, developers take comfort in Lhota’s pledge to overhaul the property tax system, which Spinola described as “broken.” Lhota said in the policy paper that the current system leaves many landlords with “the distinct feeling that assessments are being increased irrespective of a property’s worth on the market,” and that the system disproportionately taxes income-producing properties.

Nonetheless, and perhaps as a testament to de Blasio’s strong showing, Spinola said there is “no question that either candidate understands development.”

He added: “Each has a different philosophy on how to make it happen.”

Lhota’s village

Lhota, a Czech name that means “small village,” was born in the Bronx to a retired city police officer and a household goods saleswoman. At Georgetown University, Lhota, the first in his family to go to college, said he stole newspapers — which he promptly returned after reading —from his neighbors.

Now 59, Lhota is married to a former Giuliani fund-raiser with whom he has a 22-year-old daughter, and he has risen a long way from those humble beginnings. His net worth is about $13 million, campaign finance disclosure documents show, and his assets include a $2.7 million home in Nantucket as well as a $3.5 million duplex penthouse in Brooklyn Heights.

After college, Lhota went to Harvard Business School, and then had a successful investment banking career at First Boston and Paine Webber, where he specialized in public finance before joining Giuliani’s administration as the city’s finance commissioner. Lhota rose through the ranks of the Giuliani administration, eventually becoming the deputy mayor of operations.

In his time at City Hall, he developed a reputation for being a tough negotiator, especially with the municipal unions, according to the New York Times. In 1999, with the city facing the threat of a transit strike, Lhota reportedly posted a sign outside his office that quoted President Calvin Coolidge: “There is no right to strike against the public safety by anybody, anywhere, anytime.”

After Giuliani’s two terms ended in 2001, Lhota rejoined the private sector as a top executive at Cablevision and at telecommunications firm Lightpath. Then, in 2010, he jumped over to the Madison Square Garden Company, which was part of Cablevision until that year.

In 2011, Gov. Andrew Cuomo nominated Lhota to become chairman of the Metropolitan Transportation Authority, saying at the time that Lhota “brings one-of-a-kind managerial, government and private-sector experience to the job.” Though Cuomo has endorsed de Blasio, whom he worked with at the U.S. Department of Housing and Urban Development during the Clinton administration, he’s largely stayed out of the mayoral race.

“Governors enter New York City mayoral elections at their peril,” said Cunningham, the political strategist.

By many accounts, Lhota had a mixed tenure at the MTA. Although he was hailed for the rapid restoration of subway service after Hurricane Sandy and managed to slash hundreds of millions of dollars from the MTA’s budget, he was criticized for his testy relationships with MTA workers, alleged micromanagement and proposed fare hikes.

“Being at the [helm of the] MTA is like asking to get smacked in the jaw every day,” Sheinkopf said. “People who take that job should be highly regarded for wanting to take that risk.”

Lhota remains close to Giuliani — both men share a penchant for reciting lines from “The Godfather” — who went to bat for him last month at an event organized by the pro-Lhota PAC New Yorkers for Proven Leadership, which is being bankrolled by billionaire GOP political activist David Koch.

Giuliani warned attendees that if de Blasio wins, New York would become a pawn of special-interest groups, according to the New York Daily News.

But de Blasio has used Lhota’s ties to Giuliani against him, saying repeatedly that a Lhota administration would usher in an era of fearmongering that was characteristic of Giuliani.

And while de Blasio has fired up the masses with his “Tale of Two Cities” narrative, Lhota hasn’t crafted an equally compelling narrative, even those who have endorsed Lhota said.

“He’s not exactly inspirational, which would be a nice quality for a mayor, though not essential,” Crain’s New York said in its endorsement of the Republican.

Cunningham said Lhota has “perhaps the best background of anyone who’s run to lead the city.”

But, he added: “There’s also a dynamic out there that you can’t correct just because you have a very good résumé.”