Manhattan Sees 37 Percent More Properties Owned by LLCs Than the Rest of State
By Mark Hallum September 25, 2023 12:11 pm
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Reinvent Albany has shell shock after crunching the numbers on properties owned by LLCs in New York.
The watchdog organization found that 37 percent of all buildings in Manhattan are owned by anonymous limited liability companies, with the borough having five times more properties owned by shell companies than the rest of the state, according to a report from the group.
Out of all the 844,651 properties in Manhattan, 104,792 are owned by shell corporations while statewide 272,358 out of 4.6 million are owned by LLCs, according to the data.
The findings prompted Reinvent Albany to urge Gov. Kathy Hochul to sign the LLC Transparency Act — which would make the owners of LLCs public record — after it was passed by both the New York State Senate and Assembly in June.
“[LLCs] are a favorite tool of narcotics traffickers, tax cheats and oligarchs, including those responsible for supporting Russia’s bloody invasion of Ukraine,” Reinvent Albany wrote in an open letter to Hochul. “This legislation balances public and private interests by deterring these types of wrong-doing while allowing individuals with legitimate privacy interests to request waivers.
“Beneficial ownership transparency offers unalloyed benefits for business, local government, civil society, law enforcement, tenants, homeowners and organized labor,” the letter continued.
Hochul’s office did not immediately respond to a request for comment.
The new law, if signed, would force LLCs to file the names of beneficial owners with the New York Department of State (DOS). Owners with privacy concerns such as celebrities and victims of domestic violence can apply for an exemption, but the qualifications have yet to be decided by the DOS.
If property owners don’t comply with the filing requirements for a period of two years, they’ll be forced to pay a civil penalty of $250.
Real estate attorneys and other industry leaders told Commercial Observer in July that they were skeptical that the legislation would accomplish its goals of targeting only organized crime, considering the low fines and the lack of rules by the DOS.
“Detractors seem to come from exactly one place: the real estate market for luxury condominiums in New York City, a market historically rife with money laundering facilitated by anonymous shell companies, exactly the type of illicit activity this legislation is designed to curb,” the letter from Reinvent Albany continued.
Assembly member Emily Gallagher and State Sen. Brad Hoylman sponsored the bill and also plan to hold a press conference on Billionaire’s Row in Manhattan on Wednesday to put pressure on the governor to sign the legislation.
Mark Hallum can be reached at mhallum@commercialobserver.com.
