Citizen Schumer: Brooklyn’s Own Takes Control of the U.S. Senate
Here's what it means for the New York area's real estate, infrastructure and transit
After news organizations called the presidential race for Joe Biden on the Saturday following the Nov. 3 election, New Yorkers reveled in the win with spontaneous celebrations across the city.
Two months later, when two Senate races in Georgia were called for the Democratic candidates, handing Democrats the majority in that chamber, the celebrations in New York were more muted, and then quickly overshadowed by the storming of the U.S. Capitol that same day. But the double victories in Georgia were arguably equally as consequential for America’s largest city.
The takeback of the Senate meant that the senior senator from New York, Charles E. Schumer, better known as Chuck, would be the incoming Senate majority leader and one of the nation’s most powerful people. That touched off immediate anticipation about what Schumer might do in terms of federal largesse for his hometown.
“He is someone that was born for this job,” said Scott Rechler, CEO of RXR Realty. “He knows how to navigate the Senate, he knows how to get things done, and he cares deeply about bringing things home to New York.”
Born and raised in Brooklyn, Chuck Schumer was elected to the New York State Assembly in 1974, when he was just 24 years old, and his political career progressed from there. Schumer spent three terms in the Legislature before successfully running for Congress in 1980; he served as a member of the House until 1999, after unseating “Senator Pothole” Al D’Amato the prior year. He became the chamber’s minority leader in 2017.
But, while Schumer will head the Senate during a Democratic trifecta, the Democrats’ narrow lead in the Senate and the fractious political environment in which Biden will take office means his license to enact legislation may be limited.
Nevertheless, Schumer’s position has many New Yorkers hopeful that the city will receive the attention and funding that it desperately needs in light of the pandemic that has ravaged small businesses, the real estate market, and the city budget.
Schumer has already been vocal about his support for federal funding for local governments during COVID, and for New York’s transit system, in particular. Throughout 2020, Schumer secured $8 billion in funding for the Metropolitan Transportation Authority, lobbying for the funds during negotiations for both stimulus deals passed by Congress.
The move saved the MTA from making severe cuts to personnel and service across both the subway and bus system that serves Gotham and the rail system that serves the region.
In addition to Schumer’s personal and political connections to New York, with the Democrats in power, a third stimulus plan will almost certainly include funds for city and state governments, as Biden has already indicated in a preview of his proposed $1.9 trillion stimulus bill. In the previous go-round, a primary sticking point between Democrats and Republicans had been the Democrats’ push to include funding for state and city governments, which the Republicans opposed.
“If Mitch were there, New York would be totally screwed,” said Jeff Gural, chairman of GFP Real Estate, and a Schumer and Biden fundraiser. “The fact that Chuck is there is a benefit.”
Gateway to power
In January 2019, Schumer spoke at the annual gala for the Real Estate Board of New York. He was in the midst of a public spat with President Trump over funding for the Gateway Program, a three-pronged, desperately needed, nearly $30 billion project to bolster the passageways between New York and New Jersey under the Hudson River.
Everyone agreed that Gateway was critical. The project, which would restore one Hudson train tunnel and build an entirely new one, was only waiting on funding from the federal government. Managed by the Gateway Program Development Corporation, in partnership with the Port Authority of New York and New Jersey, the project had backing from Republicans and Democrats in both states and in Washington. New York and New Jersey had agreed to fund half of it; the Obama administration had supported it. And, initially, it appeared Trump had, too.
In the 2016 presidential race, Trump campaigned on a $1 trillion infrastructure bill, and once directly commented on the state of the country’s bridges and tunnels. “I’m going to start swimming across rivers and lakes now,” the Queens native and former Manhattanite said. “I don’t want to drive.”
Initially, his administration had signaled that Gateway was a priority, and Trump found some rare common ground with Democrats over a potential infrastructure bill that would have funded the project.
But then Trump pulled back. In September 2017, Trump met with Schumer and the governors of New York and New Jersey in a surprisingly friendly meeting to discuss Gateway. He signaled his total support for it, according to reporting from Politico. After the meeting, though, Trump pulled Schumer aside. He wanted to make a deal: the Gateway project for funding for the border wall between the United States and Mexico.
Schumer declined, and the Trump administration’s cooperation on Gateway disappeared.
At the REBNY gala in 2019, Schumer told the who’s who in New York real estate that he was trying to get Gateway to proceed. “I’m doing everything I can to do it,” he told the audience. “I hope all of you will tell anyone who has friends in the administration that the tunnel should not be held hostage for anything.”
While the speech was unique to the Trump era, Schumer’s relationship with REBNY was not. Schumer has been a regular attendee at the soiree for years, including in 2020, when New York City Mayor Bill de Blasio and New York Gov. Andrew Cuomo chose to skip it, highlighting a growing rift between the Democrats of New York and the real estate industry. Schumer gave the opening remarks, clad in a white scarf emblazoned with the REBNY logo.
In 2017, Schumer was honored at the event with the John E. Zuccotti Public Service Award, with special mention for his role in jumpstarting the development of Manhattan’s Far West Side, which dates back to his first years in the Senate. In 2001, Schumer led an advisory group, known as the “Group of 35,” in an attempt to address the shortage of office space in Manhattan. The resulting report recommended a combination of tax breaks, transit projects and zoning changes to increase development in Downtown Brooklyn, Long Island City and the Far West Side.
“It is not an overstatement to say that today’s New York City skyline looks the way that it does thanks in part to Senator Schumer,” REBNY wrote in its statement regarding the award, pointing to his work on the 2001 report. “The recommendations successfully resulted in a construction boom on the Far West Side that is still going strong.”
After 2001, Schumer continued to actively support real estate and infrastructure projects in New York, including the expansion of the Javits Center; the redevelopment of the Farley Post Office, part of which opened this month as the Moynihan Train Hall; and his continued advocacy of the Gateway project.
In a statement, REBNY president James Whelan highlighted the need for a stimulus package and federal aid. “We also look forward to working with federal elected officials to advance policies — including a robust infrastructure plan — that will create good jobs, produce more housing and get our economy back on track.”
But he put the onus on New York politicians as well. “However, even as we focus securing crucial federal support, New York City and State elected officials must not forget the equally important role they have in advancing policies that will create more of the good jobs and housing needed to rebuild our State’s economy,” Whelan said.
The $2 trillion plan
For more than a decade, the federal government has attempted to pass a sweeping infrastructure bill that has ballooned in size as the years passed.
Trump’s campaign promise of a $1 trillion plan grew to $1.5 trillion in a deal his administration proposed in 2018, which relied heavily on private investment for its funding. The Democratic-controlled House introduced and passed a $1.5 trillion deal in 2020, called the INVEST Act, that the Republicans dismissed as “a massive, progressive wishlist.” And Biden campaigned on a $2 trillion infrastructure bill, as part of his Build Back Better program.
Biden’s plan covers broad areas, with an eye to creating jobs, stimulating the economy, and moving the country toward a more sustainable future, in addition to addressing critical infrastructure needs. Biden’s proposal includes a plan to: upgrade the country’s aging railway system; fund municipal transportation for cities with populations of 100,000 people or more; shore up the auto industry with a focus on electrification; upgrade and expand access to broadband; fuel innovation in clean electric power; and fund construction projects across the nation, including building schools and 1.5 million units of affordable housing, as well as retrofitting commercial and residential properties.
The plan is built on Biden’s decades of experience, including as vice president in the Obama administration, where he oversaw the stimulus package after the 2008 recession and helped architect the bailout of the auto industry. He’s also known as “Amtrak Joe,” because he used to commute to D.C. by train as a senator from Delaware, and is therefore seen as a friend of the railways and public transportation.
But, like the administrations before his, the real question is how to fund such a massive bill. Trump’s 2018 plan, which many considered impractical, would have fronted just $200 billion in federal funds, relying on private and local investment for the rest.
In addition, with a 50-50 split in the Senate, Democrats will need at least 10 Republicans to join forces with them, as most legislation requires 60 votes in the Senate, though there are some workarounds. That means it will be up to Schumer to convince enough Republicans to get on board.
And, until now, there hasn’t been a ton of appetite on the Republican side. While Trump gets most of the attention for the failure to push through an infrastructure agenda, outgoing Senate Majority Leader Mitch McConnell’s “long-standing indifference to infrastructure policy” has been a primary obstacle, according to the Brookings Institution.
“Oddly enough, Trump was a big proponent of infrastructure,” GFP’s Gural said. “[House Speaker Nancy] Pelosi told me that when they first met, right after he was elected president, he said that he wanted to do a trillion-dollar infrastructure plan. Mitch McConnell told him to forget about it, because it was not something that the Republicans were interested in, because they didn’t want to raise taxes in order to pay for it.”
Real estate leaders now hope that Republicans change their tune, given how critical an infrastructure bill could be to stimulating the economy.
“Hopefully, the fact that we’re going to have such economic devastation, the Republicans will go along,” Gural said. “Because, a) our infrastructure is falling apart, but, b) we need the jobs. So I’m really hopeful that Schumer and Biden are able to persuade Republicans to go along.”
Rechler said it may requiring breaking the $2 trillion plan into smaller pieces. “This may not be a big infrastructure bill; this may result in a series of bills that one may be tied to airports, one might be an infrastructure bank, it may not be some multitrillion-dollar infrastructure bill,” he said. “But I think there’s a realization, both on the Republicans’ and Democrats’ side now, that we need to reinvest in our infrastructure, and, at the same time, we’re doing it to help spark the economy.”
One long-standing question, when it comes to infrastructure funding, is the degree to which funds are spent on highway and road infrastructure versus public transportation. Since the 1980s, roughly four times as much federal funding has gone to highways as to public transportation, because of a rule implemented in 1982 limiting public-transit funding to 20 percent of highway funding.
That was largely due to the fact that the highway funding was paid for by a gas tax. That revenue no longer covers the costs of highway infrastructure and has to be supplemented by taxpayer money, according to a House resolution introduced in December demanding that equal amounts of funding go to both.
“Transportation funding has gone so disproportionately to whiter, wealthier, less-urban communities, and that has compounded racial injustice in this country as federal policy,” said Danny Pearlstein, policy and communications director at New York City transit advocacy group Riders Alliance.
And that’s one reason why Schumer in the driver’s seat could be transformative for public transportation.
“It’s potentially a sea change for public transit, and that’s because we’ve never had a majority leader from Brooklyn who spent his life riding the subway,” Pearlstein said. “Schumer will appreciate the subway and bus, the transit system overall, as a core piece of common public infrastructure and a really important part of the social contract.”
Transit in New York
Schumer comes to power in the Senate at a perilous time for a New York City transportation ecosystem that he has not only long used, but long championed.
“With Sen. Schumer poised to be the majority leader, he certainly understands the needs and issues for New York better than anyone,” said Chris Jones, senior vice president and chief planner at the Regional Plan Association.
On the transportation front, a primary issue facing the region is the deficit the MTA is facing, even after $8 billion in federal aid that Schumer helped secure for the agency. The MTA began 2020 with a $55 billion capital plan, but all new awards have been suspended in light of the current crisis, a spokesperson for the MTA said.
In December, before the second stimulus, the MTA passed a budget assuming $4.5 billion in federal aid, without which there would have been steep cuts in jobs and service in addition to the pause in the capital plan. Schumer came through with $4 billion in addition to a previous round of funding in the CARES Act, leaving the MTA with an expected $8 billion deficit in 2021.
The cuts would be devastating, not only to MTA employees and riders, but to the real estate industry as well, said Gural. “If mass transit is not efficient, it will encourage people to work from home.”
Public transit is not solely a lifeline for city residents, it is a requirement for economic activity, Pearlstein said. “Public transit is fundamentally about access, and improving access for everybody to everything. And, the more access more people have, the more economic activity we’ll have.”
The MTA has also been waiting on the federal government to move forward with congestion pricing, which would add $1 billion a year to MTA coffers. The federal government needs to tell the Department of Transportation what environmental, and other reviews, it needs to conduct before it can move forward, and officials are already working with Biden’s transition team to make that happen.
“We’re energized by the new leadership team in Washington, given that President-elect Biden, incoming Majority Leader Schumer and Speaker Pelosi are all longtime champions of mass transit and have already demonstrated a commitment to helping transit agencies survive the pandemic,” a spokesperson for the MTA said.
There are many such capital projects across various state and city agencies that are ready to hit the ground running. Combined, the city’s various agencies — the MTA, public housing, the Port Authority — have capital plans totaling $200 billion over the next five years, said RPA’s Jones.
“The plans are in place, the bulk of those plans represent projects that could go into construction very soon. It’s a way to get the economy going very quickly,” he said. “Most of that $200 billion is not yet funded, and, typically, the federal government provides a large share of the budget for transportation and housing.”
The various capital plans include large-scale projects like Gateway and upgrades to John F. Kennedy International Airport, and other projects from the Port Authority.
“Because it’s been so infrastructure-focused, it has a lot of projects on its board that had been planned and have gone through all the engineering that have the, you know, all the environmental work done, and so they’re what I’ll call ‘shovel-ready-type projects,’” said Rechler, who previously served on the board and as chairman of the Port Authority.
Back in Obama’s first term as president, Biden helmed a stimulus bill that focused on shovel-ready projects in the wake of the Great Recession, said Rechler. “I think if they took a similar approach today, we’d have a much deeper and reliable bucket of shovel-ready projects to allocate capital to not only enhance our infrastructure, but enhance our economy.”
The arguments in favor of infrastructure spending, then, are clear: It stimulates the economy and creates jobs, while providing critical infrastructure and addressing structural issues like inequality and sustainability. The uncertainty is only in the execution.