How Much Are Real Estate Moguls Willing to Shell Out to Get the Attention of Politicos?
Whether it came out of love, or out of convenience, there is little question that New York City’s top landlords and developers are wedded to their politicians.
Ten of the biggest landlords and developers in New York City together donated approximately $6.5 million to political campaigns between 2013 and 2014, according to a Commercial Observer analysis of the most recent election cycle and state campaign finance records. That covers the citywide election of 2013 that propelled Mayor Bill de Blasio and a relatively fresh City Council into office, as well as last year’s statewide election that saw Gov. Andrew Cuomo and Attorney General Eric Schneiderman win second terms.
These donations went to statewide committees, single candidates and special interest funds. Contributions are so common at the state level because Albany controls many interests in New York City real estate, from property tax breaks to rent regulation and land use.
Glenwood Management was the biggest donor, doling out about half of all the campaign contributions. Public companies such as SL Green Realty Corp. and Vornado Realty Trust might be among the largest landlords in New York City, but their donations pale in comparison to the family-run Durst Organization and Tishman Speyer.
So what do these millions of dollars get these landlords with the most square feet in Gotham? It doesn’t buy you a vote on something like tax breaks, according to the industry and political experts. That’s very, very illegal. However, a donation here or there will ensure that an official will answer your calls, or get you into exclusive events to build a network.
“Being in business, I’ve always donated to Republicans and Democrats,” said John Catsimatidis, the billionaire owner of supermarket chain Gristedes and a 2013 Republican primary candidate for mayor. “You want to get your phone call answered. You want to go to parties. You want to piss with the large dogs.”
Glenwood Management has topped headlines for over a year now thanks to its high-volume donations throughout New York state, as well as its ties to former Assembly Speaker Sheldon Silver and ex-State Senate Leader Dean Skelos, both of whom are currently and separately on trial for corruption. The company is the third largest residential landlord in New York City, with 8.9 million square feet, according to data from CoStar provided to CO earlier this year.
During this two-year period, Glenwood donated $3 million to campaigns, committees and fundraising groups throughout the state, for both parties. Donations went to State Senator John Flanagan, a Long Island Republican who’s now the majority leader, State Senator Mark Grisanti, a Western New York Republican who lost reelection, and the Kings County Democratic County Committee, among many others. A significant portion of that went to state committees that help fund campaigns for members of their respective parties.
Through a slew of LLCs tied to Glenwood’s main office on Long Island, the company gave $380,000 to statewide Republican committees and $285,000 to the Democratic counterparts, according to state records.
In total, the company used 16 LLCs to make about 250 donations during this two-year period. A Glenwood spokeswoman did not return multiple requests for comment.
Because the state’s board of elections interprets LLCs as individuals, according to good government groups, if a developer has, say, 30 or 40 LLCs for each property, each can be counted as a person and allowed to donate up to $100,000.
Those donations seem to have slowed down, however, and Glenwood has only donated $61,000 since the start of this year. (It’s still an open question whether this had anything to do with the firm’s ties to the separate arrests and trials of Messrs. Silver and Skelos. See our story.)
Rudin Management Company—executives and members of the family—were the second highest on the list with nearly $1 million donated. Nearly half of that went to the New York State Democratic Committee, which received $400,000 through LLCs tied to the company.
The company, which declined to comment, is one of several New York family real estate dynasties that have dipped into the pool of political donations. Tishman Speyer, which until earlier this year was co-run by father-son duo Jerry and Rob Speyer, donated $785,600, according to state records. The developer did not comment for this story. The Durst Organization, which declined to comment via a spokesman, doled out $448,734.75 between 2013 and 2014—most of which went to Democratic candidates and committees.
Faith Hope Consolo, the chair of Douglas Elliman’s Retail Group and a past president of the Women’s National Republican Club, said real estate companies with a strong family history have traditionally been politically active. It is “the cost of doing business,” Ms. Consolo said in an email.
Public companies, namely SL Green, Vornado and Brookfield Property Partners, turned out to be some of the smallest donors. SL Green gave a comparatively meager $93,550 to campaigns, the bulk of which went to Mr. Cuomo’s reelection campaign.
Vornado as a company gave just $6,000, which went to the Real Estate Board Political Action Committee (the rest of the $65,300 comprises personal donations made by the real estate investment trust’s chief executive officer, Steven Roth. Most of that went to Mr. Schneiderman’s reelection bid). Brookfield and its subsidiaries donated $177,250 to Mr. Cuomo’s campaign, the housekeeping committee of the State Democratic Committee and to George Maziarz, a Western New York state senator who decided not to run for reelection. A Brookfield spokeswoman declined to comment.
“The real estate industry has always been civically engaged, which translates into political participation, among other areas,” Ms. Consolo said. “In New York City, real estate funds are pretty much focused on Democratic candidates, because that is the majority party here. But statewide, there is a broader range of candidates from both parties with platforms that are relevant to real estate interests.”
Ms. Consolo noted that 10 percent of all statewide donations last year came from the 16,000-member Real Estate Board of New York, the lobbying arm for the industry. Of those, she added, the money is distributed almost evenly between both parties. REBNY declined to comment for this story.
But that trend changes at the federal level, where it’s more about being a player and less about business concerns, Ms. Consolo and several other veterans told CO. With less than a year until the 2016 presidential election, more donations will start showing up that illustrate party lines for the principals of these companies.
“Interestingly, the entire donor profile shifts at the federal level, as we’re seeing now, with the lions’ share of the New York-based largesse actually going to Republican candidates,” Ms. Consolo said, adding it’s the “business” party.
A search of Federal Elections Commission filings found that Related Chairman Stephen Ross, also the owner of the Miami Dolphins, has predominantly donated to Republican candidates and causes at the federal level. For instance, Mr. Ross shelled out $25,000 to the Boehner for Speaker committee in April 2014, and more recently he gave $5,000 to House of Representatives Majority Leader Kevin McCarthy’s campaign last September, FEC filings show.
But not everybody leans right. The Durst family has historically donated to Democratic candidates and political action committees. Douglas Durst, the head of the company, donated $12,500 to President Barack Obama’s reelection campaign between 2011 and 2012, according to FEC records.
In March 2014, Mr. Durst donated $32,400 to the Democratic Senate Campaign Committee, which helps campaigns for the upper chamber nationwide.
Because there’s less of a business stake at the national level, real estate bigwigs are more likely to vote with their hearts, said Hank Sheinkopf, a longtime Democratic political adviser. The state controls most interests in real estate, so a top honcho’s main federal concerns lie with personal tax brackets or personal causes.
“What people do in that way is different on a national level,” he said. “They’re less impacted generally by what happens on the federal level. Although there is tax policy that some people in that business are worried about.”
Mr. Catsimatidis boasted that he gives to both parties at the federal level, albeit not evenly. He showed up at a Hillary Clinton fundraiser in the Hamptons over the summer (his presence was noted by Page Six). And FEC filings show he’s personally given $2,700 to each of the campaigns of Ms. Hillary Clinton, a Democrat, as well as to Florida Gov. Jeb Bush and to the now-defunct campaign for Wisconsin Gov. Scott Walker, both Republicans.
For him, he said, it’s continuing the longtime relationships he’s maintained with some of the candidates.
“I gave to Hillary,” Mr. Catsimatidis said. “I know the [Clinton] family 25 [to] 30 years. I know the Bushes for 25 [to] 30 years. I gave to Bush.”
Give and You Shall Receive…Sort Of
So aside from the page one candidates with last names like Cuomo, Clinton or Bush, who got most of the donations? The statewide party committees, which distribute money to their respective candidates, were the biggest combined recipients, with more than $1.7 million from the 10 biggest landlords and developers.
New York might be a blue state, but it’s got a tinge of purple when it comes to the big committees. Republicans brought in $492,000 from six of the 10 donors, most of which came from Glenwood’s $380,000 worth of donations, state filings show. A distant second was Silverstein Properties, which gave $27,000 to the Senate Republican Campaign Committee. Tishman Speyer, Rudin Management Company and the Related Companies each gave $25,000 to Republican committees, while Durst gave $10,000.
Most of the $492,000 of GOP donations went to the Republican’s state senate campaign committee, which held onto its thin majority in the chamber last November, said Susan Lerner of good government group Common Cause. A lot of that money has been used for upstate Republicans who hold sway in the senate and can influence tax policies and other real estate interests that the state controls.
“The money follows the power,” Ms. Lerner said. “The power in the state senate is currently in the hands of the Republicans. This isn’t ideological. It’s what we believe is a business decision.”
Democrats fared much better with $1.2 million, also from six of the 10 donors. Rudin Management Company carried most of the water, with $400,000, followed by Tishman Speyer’s $300,000 worth of donations and Glenwood gave out $285,000.
The outspending to Democrats reflects the party’s dominance in both the city council (where it now has 48 of the 51 seats), as well as the state assembly (where Democrats hold 102 of the 150 seats), Mr. Sheinkopf said.
“If you donate to both sides, you have no enemies,” Mr. Sheinkopf said. “No one can be jealous.”
And in a state like New York where the party lines are drawn Democratic for the most part in urban areas and Republican in the suburbs and rural reaches, it’s easy to figure out who is the winning bet, or you could say, a smart investment.
Many believe there are benefits to making these donations, but that’s not a hard and fast rule. Mr. Catsimatidis, who said he self-funded his failed mayoral campaign, said he’s never gotten anything in return for his giving, or really made any requests.
“By and large, I don’t think I ever asked for anything,” he said. “I don’t think I ever got anything. But it doesn’t mean that other people don’t do it.”
Jobs for New York, an independent committee established by REBNY, did the best out of any single group, taking in $1.2 million from these landlords, mostly in 2013. The group’s mission is to support “city council candidates who are committed to creating good jobs, affordable housing and strengthening the middle class,” according to its website, with the shared bond that they are pro-development. The group went on to play an active financing role last year in keeping Republicans as the state senate’s majority party.
Mr. Cuomo’s campaign raked in more than any single candidate who received donations from these 10 companies and stakeholders. The governor, who won reelection last November following an unexpected Democratic primary, took in $946,500 from all but two of the developers and landlords. (CO couldn’t turn up any donations from Silverstein or Vornado.) Mr. Cuomo’s office did not return a request for comment.
Glenwood’s donations through 13 LLCs accounted for about half of that, with $495,700 toward the governor’s second-term bid. A New York Public Interest Research Group, or NYPIRG, report last year put the total Glenwood donated to Mr. Cuomo over a four-year period at $1 million.
The pro-business Democrat took in $117,500 from Rudin Management Company, $75,000 from Brookfield and $60,800 from Tishman Speyer. An LLC tied to SL Green, which declined to comment via a spokesman, made monthly payments from April to December of last year, as regularly as if they were student loan payments.
Blair Horner, the director of NYPIRG, said the volume of donations was so high last year because Mr. Cuomo was facing reelection, as well as an expected battle over the expiration of rent stabilization and the 421a tax abatement this year.
“Where you’ll see the real estate industry ratchet it up is when they have important issues on the table,” he said. “With a lot at stake, they’re willing to fork over money.”
Mr. Schneiderman’s reelection campaign took in $395,000, most of which came from Durst and Glenwood. Mr. Schneiderman’s office declined to comment via a spokesman. But even less visible figures have scooped up some of the cash. Timothy Kennedy, a Democratic state senator representing parts of Buffalo and its suburbs, received more than $100,000 combined from several developers. Calls and emails to Mr. Kennedy’s office were not immediately returned.
Other candidates who received contributions make up a who’s who of state and local politics from both sides of the aisle. At the state senate level, there’s Independent Democratic Conference head Jeffrey Klein and John DeFrancisco, a state senator from Syracuse who’s now the number two man in the chamber. Assembly members include David Weprin, a Queens Democrat, and Daniel O’Donnell, also a Democrat, who represents Morningside Heights and the Upper West Side. City- and countywide campaigns include those for district attorney and borough president.
While everyone is adamant that there is no quid pro quo for all this cash, the politicians themselves seem only too willing to do favors for the real estate industry, with a reported 68.6 million square feet under development by the end of 2015.
Take the recent battle in Albany over the expiration of rent regulation and 421a, which gives tax breaks in exchange for allocating some units as affordable housing. Rent regulation was renewed with minor tweaks that tenant advocates did not believe were enough. The current structure of 421a was extended for six months (expiring at the end of this year), as developers and organized labor negotiated construction wages.
Although Mr. Cuomo was criticized for the small tweaks to rent regulation, he defended that the changes were stronger than those in years past, as the Observer reported in June. “The pattern was to roll back rent protections every time there was a sunset,” he said. “This is the second time that rent protections will be increasing.”
Essentially, it lets a developer have a few more ears willing to listen when there’s a problem with zoning, or a community is wary of a project that could use local support, said Edward Mermelstein, a real estate attorney and founding partner of Rheem Bell & Mermelstein.
“There’s very little expectation that you will have anything other than access, but you know that someone will be picking up the phone on the other end,” Mr. Mermelstein said. “There may be certain complaints in terms of the size of the property being built and the community may be against it. It’s very hard to have that access if you don’t have a history.”
Another real estate attorney said donations go a long way when it comes to arranging meetings to discuss an issue. In other cases, he added, a few drops in the campaign chest could lead to a little pay-to-play.
“I donate to everybody that looks like they could win because I need political favors,” the attorney said on condition of anonymity. “In New York City, most of the time a donation will make sure the politician will take your calls, maybe meet with you for lunch or breakfast, and if you get really lucky and come into contact with a corrupt politician and you donate enough money, they will even put your bill through for you even if it is not good for New York.”