What Cuomo’s Scandals Mean for New York Real Estate, Economic Development

Developers and industry groups are keeping the governor at arm's length for now

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Andrew Cuomo is having his #MeToo moment, and any friends he has are remaining silent.

The third-term Democratic governor started the year with near-total control of the state’s coronavirus response, a plethora of infrastructure projects that prompted comparisons of him to Robert Moses, and as the favored candidate of New York’s deep-pocketed real estate community.

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But Cuomo’s vise-like grip on the state, including its economic development policies, could be weakening after two crises involving his suppression of statistics related to COVID nursing home deaths and multiple allegations of harassment prompted a parade of lawmakers to call for his resignation.

“Cuomo is someone everyone respected, but nobody liked,” one real estate source who declined to give their name told Commercial Observer. “Nobody is sorry on a personal level that he is being exposed as a bully, but the business and real estate world is thinking, ‘Oh my god, what else could go wrong.’”

The complaints of bullying and harassment snowballed after Cuomo threatened in a private call to “destroy” Queens Assemblyman Ron Kim, who criticized his administration’s handling of nursing home deaths.

Kim revealed the conversation on CNN on Feb. 17, prompting Manhattan borough president candidate Lindsay Boylan to share her story. Boylan said that when she was a state economic development aide, the governor repeatedly flirted with her, suggesting that they play “strip poker” while on a flight back from a work event in Western New York in 2017, and kissing her on the lips in his Manhattan office the following year.

Others added their uncomfortable experiences with the governor. Charlotte Bennett, then a 25-year-old executive assistant, recounted how Cuomo asked her in June about her personal life, and said he was lonely and looking for a girlfriend, and that he could date anyone over the age of 22.

Then, Anna Ruch, a woman Cuomo had never met before, said the governor put his hands on her face asking if he could kiss her at a wedding reception in 2019. A friend of hers captured the squirm-inducing interaction on her phone.

Cuomo first denied that Boylan’s harassment claims happened. When Bennett’s story became public, Cuomo said he did not intend to act inappropriately and believed he was being a good mentor. When Ruch’s story and accompanying photograph were revealed, Cuomo said his actions were misinterpreted as “unwanted flirtation.”

But the torrent of criticism over his actions only grew. A handful of lawmakers in both parties, including frequent foe Mayor de Blasio, have suggested that Cuomo should step down, while state legislative leaders and other members of New York’s congressional delegation have called on state Attorney General Letitia James to lead an independent inquiry into the matter. (Cuomo resisted ceding control of the investigation for several days).

On March 3, Cuomo spoke publicly on the matter at a virtual press conference explaining, “I now understand that I acted in a way that made people feel uncomfortable. … I feel awful about it and, frankly, I am embarrassed by it and that’s not easy to say.” He refused to resign and added he never touched anyone inappropriately.

The timing of Cuomo’s sexual harassment scandal has added a dose of uncertainty unseen in Albany since former Gov. Eliot Spitzer’s abrupt resignation in 2008.

Cuomo’s office currently faces twin probes into his handling of nursing home records and his personal conduct, with little sense how long either will last. Emboldened state legislators reached an agreement to curtail emergency powers granted to Cuomo a year ago to combat COVID, even though the pandemic is far from over. And Cuomo donors temporarily ceased raising money for his re-election campaign, at least as long as an investigation would take place.

“Everything has frozen for the moment until this investigation happens,” said one Cuomo-allied developer, who declined to speak publicly for fear of alienating the governor. “He’s an aggressive guy, and he has a certain way of talking to both men and women. He mocks people, he teases people. It’s in his interest to get this going now and get it over with, one way or another.”

But the governor’s favorability ratings have begun to slip. Only 49 percent of New Yorkers approved of the job he was doing at the end of February, compared with 66 percent in July, a Marist poll found. A Siena poll found Cuomo’s approval rating in mid-February was 56 percent. This was before the latest harassment allegations. A Quinnipiac poll in early March found that 55 percent of New York voters thought Cuomo should not resign, though 59 percent don’t want him to run for re-election in 2022.

Longtime critics say that more than anything the public is finally understanding the connections between Cuomo’s personal bullying and his controlling managerial style.

“What’s critical to understand about Cuomo is that the nursing home scandal (control, secrecy, self-protection, ‘I will destroy you’) is not separate, but connected to sexual harassment (control, secrecy, self-protection) or the Moreland scandal (controlling subpoenas),” Cuomo’s former Democratic primary opponent Zephyr Teachout tweeted. The Moreland Commission was an investigation into possible political corruption that Cuomo initially backed before he disbanded it in 2014.

Developers have not abandoned Cuomo, who has been their strongest advocate in Albany for the past decade, but few would say anything about his predicament. CO called 16 real estate leaders and associations, and only three responded on the record. One wrote back that the issue was “too hot to handle,” and most refused to comment.

Buffalo developer and conservative activist Carl Paladino, who ran against Cuomo and lost in 2010, said Cuomo’s reign will be over soon.

“I think that’s only the tip of the iceberg, these two girls,” Paladino said. “A lot more of them are going to come out. He’s a bully in the office and he thinks he’s made for women. He’s circling the drain. If the press keeps after him, he’ll have to go.”

But fellow developer Don Peebles, who had contributed to Cuomo and other Democratic campaigns, believes the governor deserves due process, and that Albany leaders should focus on stabilizing New York’s economy while James’ investigation unfolds.

“His national image has been bruised and a fourth term becomes much more problematic for him now, but I would be surprised if he stepped down or was forced to,” Peebles said. “If it were to be proven true that he harassed government employees, he’d have to re-evaluate things.”

A drawn-out internal investigation could have broader implications beyond the governor’s political career. Cuomo proposed a $193 billion budget for fiscal year 2022, and, under New York law, exercises immense power in negotiations over what proposals get included or excised.

Yet, legislative leaders are in an uncommon position of having leverage over the governor, thanks to Democratic supermajorities in both chambers. A $12.7 billion windfall of federal aid higher than estimated tax revenues has lowered the state’s deficit, but lawmakers and the governor must decide how to close an $8 billion budget gap.

Progressive legislators have been pushing to boost tax rates on households earning more than $1 million, but Cuomo scuttled the proposal in December. He may not be able to stop a wealth surcharge passing this month.

“I don’t see how there aren’t higher taxes. It’s just about how much, and on who, and what services will be cut,” Republican political strategist Susan Del Percio said. “Before the recent allegations, Cuomo was already going to have to truly negotiate for the first time instead of strong-arming them. Now, he’s in no position to strong arm to get what he wants.”

Legislators could also exert more authority over state spending. Billions of dollars in COVID aid, including $1.3 billion in rental assistance funds, need to be distributed. And some lawmakers have already vowed to reverse a Cuomo plan to move $145 million set aside for the Metropolitan Transportation Authority to the state’s general fund.

“Accounting gimmicks, where funds are being shifted from one agency to another, is all a mistake that ultimately means less money for mass transit and, right now, that is what we need most of all in order to get people moving again,” Queens Sen. Mike Gianaris, a Democrat, told Politico.

Real estate leaders, meanwhile, are wary that a distracted executive could lead to a litany of tax increases and budget maneuvers by April 1. But property owners say the greater danger involves a potential repeal of the lucrative 421a tax abatement for development, the canceling of rent and mortgage payments during the pandemic, and a prohibition against evicting tenants without good cause when the state residential eviction moratorium expires on May 1.

Good cause eviction would hinder the state’s recovery, not help it,” Jay Martin, executive director of the Community Housing Improvement Program, a landlords and property managers group, said of the proposed ban. “It will stop development at a time when we need to create more affordable housing, it will drive private investment out of the state at a time when we need jobs and budget revenue, and it will increase rents at a time when renters need a break.”

Cuomo’s scandals could also endanger his legacy of multibillion-dollar public works projects. His administration’s most significant accomplishments, including the rehabilitation of LaGuardia Airport, the opening of Moynihan Train Hall, the construction of the Mario Cuomo and Kosciuszko bridges, and further modernization of the subway system have had dedicated streams of capital funds and capable leaders.

“The leadership of the MTA and Port Authority recognize that these projects must be done and now is the time, with interest rates still low and the private construction industry stalled,” Mitchell Moss, an urban policy professor and director of the Rudin Center for Transportation at New York University’s Robert F. Wagner Graduate School of Public Service, said. “This is precisely the time for the public sector to build, and we are lucky that the projects are planned or under construction.”

Cuomo is famously fastidious when it comes to completing infrastructure projects on time and maintaining them. He personally inspected the Canarsie Tunnel between Brooklyn and Manhattan in a midnight visit in 2018 ahead of a planned L-train shutdown, for instance (before personally nixing the shutdown). But two career-threatening investigations could distract Cuomo from managing them effectively.

“He has an ambitious agenda of additional projects that he intended to make his legacy, but they could suffer from a lack of focus that would drain his ability to push past the obstacles that large projects like that inevitably have,” Cozen O’Connor real estate attorney Kenneth K. Fisher said.

Meanwhile, Cuomo’s stature in Washington is declining by the day. The Biden administration is beginning to sketch the outlines of a multitrillion-dollar infrastructure bill, at the same time that the White House and members of Congress are being asked questions about Cuomo’s behavior.

“No one is going to be rushing to put their arms around him,” Fisher said. “He has a genuine relationship with President Biden. That relationship has been devalued. It is one thing for the president to stand with him on the nursing home issue, but [harassment] is another category, and that’s not good for the state.”