NYC Leasing Controversy Exposes City’s Office Bloat, Alleged Conflicts of Interest

New York Mayor Eric Adams’s growing list of problems grew longer last month when the Manhattan district attorney’s office opened an investigation into an agency that manages the city’s $1.5 billion real estate portfolio.

On Tuesday, City Council members chided two Department of Citywide Administrative Services (DCAS) officials over their subordinate’s decisions to approve several commercial leases and then go on vacation with a Cushman & Wakefield (CWK) broker who repped the city on the deals.

At a hearing looking into two of the leases, City Councilman Lincoln Restler of Brooklyn repeatedly questioned Department of Citywide Administrative Services (DCAS) Deputy Commissioner Jesse Hamilton’s qualifications to manage office leases for city agencies and his motivations for awarding contracts that financially benefited an Adams donor. 

A longtime political protege of Adams, Hamilton served as a state senator in Adams’s former Brooklyn district before joining his administration. In 2022, Hamilton was initially hired as DCAS’s general counsel before a promotion four months later, and he now manages 37 million square feet of office space, despite lacking a background in commercial real estate.

“He does not have experience to oversee it. It seems his relevant experience is his personal relationships to the mayor,” Restler said at a City Council Committee on Governmental Operations hearing in council chambers.

Restler then asked DCAS Commissioner Louis Molina and Shameka Overton, executive deputy commissioner of asset and property management, about Hamilton’s relationship with Diana Boutross, a longtime C&W retail broker and Adams supporter whom Hamilton reportedly lobbied to join Cushman’s city commercial leasing team. 

Molina said he was not aware that one of the leases Hamilton had approved for 14 Wall Street was owned by an Adams campaign donor, billionaire Alexander Rovt, or that Hamilton and the mayor’s chief adviser, Ingrid Lewis-Martin, had a longstanding friendship with Boutross. Overton became Hamilton’s supervisor only in September. (Hamilton skipped the hearing despite telling Politico he would attend.)

“I don’t have extensive knowledge of these areas [of real estate] but manage a team of professionals that do,” Overton said. “No one from the agency does. We all rely on the team.”

Molina insisted that Hamilton did not break city rules.

“So far Jesse’s responsibilities have not been modified and there’s no formal review of actions he’s taken,” he said. 

This controversy over the city’s leasing activity is the latest scandal to roil the Adams administration. Federal prosecutors indicted Adams in September for allegedly accepting illegal foreign campaign donations and tens of thousands of dollars in luxury travel benefits in exchange for speeding up the opening of the Turkish consulate without fire approvals. 

But federal and state investigators are also looking into an alleged police department-run protection racket that shook down city nightclubs and restaurants, a possible bribery scheme involving a consulting company and another top Adams aide’s ties to China.

To add to that list, the Manhattan district attorney’s office opened an inquiry this month into city leases focusing on possible bribery, money laundering and other crimes, The New York Times reported. Meanwhile, the City Council is looking into several DCAS leases, including two in Manhattan properties that Boutross handled for the city. 

And Comptroller Brad Lander — who is campaigning to unseat Adams as mayor — has launched an audit into the city’s leasing activity, The City reported.

When asked about the DCAS lease hearing on Tuesday, Adams staunchly defended his longtime friend’s conduct and said the accusations against the city agency were untrue “innuendos.” Adams insisted that his administration has been “saving taxpayers millions, if not billions, of dollars.”

However, the costs of city leases have risen during the Adams administration even as fewer city employees are working in offices.

The amount of office space that DCAS has leased grew since Adams was sworn in nearly three years ago, from 1.136 million square feet in fiscal year 2022 to 2.884 million square feet in fiscal year 2024, according to the mayor’s management report. That occurred as the city’s headcount shrunk slightly to 94 percent of its pre-pandemic peak, and many city workers have flexible work schedules that keep them from coming to their offices five days a week.

“Why would we be increasing our leases if we should be consolidating our spaces because the workforces aren’t there all the time?” one former DCAS official told Commercial Observer. “If 40 percent of work is being done at home and 60 percent is being done in the office, you don’t need that much space, so why is it trending up?”

Molina attributed the increase to deals in the pipeline from the prior administration, as well as the temporary square footage needed to handle the influx of asylum seekers.

As it stands, the city’s process for leasing office space on the commercial real estate market has far more guardrails than a private company’s search.

When a city agency wants to move offices or find somewhere to store its records, the Mayor’s Office of Management and Budget (OMB) must approve the need for new space. Then DCAS assesses city-owned properties to determine whether an existing building could meet the need for offices or storage. Then DCAS works with agency leaders and city brokers to determine the square footage, configuration and special arrangements that an agency requires before sending out a proposal request to potential landlords.

When city officials have a few options, DCAS assesses building conditions and takes measurements and cost estimates before beginning to negotiate with a landlord and their brokers. Once DCAS and its city agency client has settled on the terms it goes through a long review process of various city agencies before it gets signed.

But that’s not what allegedly happened on some of the deals Hamilton handled. When DCAS officials were planning to relocate the Department for the Aging (DFTA) from its longtime home at 2 Lafayette Street, they zeroed in on 250 Broadway, where the City Council and several other agencies already have offices. The other candidate was 14 Wall Street, a building owned by Rovt, a prominent Adams campaign donor whose family recently contributed $15,000 to the mayor’s legal defense fund. 

Citywide administrative services officials evaluated both buildings and made an offer to 250 Broadway’s owner AmTrust Realty, until Hamilton overruled their decision, handed the deal to Rovt, and told staff not to speak with the winner, Politico reported. As a result, DFTA will lease 80,000 square feet on three floors in Rovt’s building where asking rents were about $50 per square foot. (Molina defended Hamilton’s decision, saying the move would save the city $31 million.)

Hamilton also signed off on a 21-year lease that moved the Administration for Children’s Services (ACS) from 150 William Street to 110 William, a building that C&W repped the city on. Under the deal, ACS would rent 641,000 square feet at a price of $44 per square foot, or $28 million in its first year, and the city would reimburse the landlord for $42 million in renovation costs. The deal was a windfall for the building’s landlord, who was able to restructure $334 million in outstanding debt incurred during the pandemic.

In addition, Hamilton has shilled for the Bronx Logistics Center, a 1.3 million-square-foot Hunts Point warehouse owned by Turnbridge Equities DCAS was considering purchasing for $670 million. In a video shown at the City Council hearing, Hamilton encouraged city agencies to lease or buy space within the industrial complex. Employees from JLL (JLL), which secured a $381 million loan for the property, have donated more than $15,000 to Adams’s mayoral campaigns, Gothamist reported. Molina said he was unaware of the video’s existence. (A spokesperson for JLL did not immediately respond to a request for comment.)

“In my years of government experience, I can never recall DCAS promoting a private site for utilization,” Restler said at the hearing. “It’s not DCAS’s role to promote the best interest of private property owners.”

Restler also peppered DCAS officials on a lengthy trip to Japan Hamilton took with Boutross, Adam Clayton Powell IV, a former Harlem politician turned lobbyist who represents developers, and Lewis-Martin last month. 

Agents with the Manhattan DA’s office seized Hamilton, Boutross and Lewis-Martin’s phones when the group returned from their vacation on Sept. 27, and federal investigators simultaneously served Lewis-Martin a subpoena, although none of the individuals has been charged with any wrongdoing.

Molina said he was not aware that Hamilton and Lewis-Martin were close friends with Boutross or that Hamilton was traveling internationally with them as well as a lobbyist last month.  

“Based on what I have been informed and up to date, there has not been anything internally that the deputy commissioner has done to violate DCAS policy or have a conflict of interest,” Molina said during his testimony. “The trip was not paid for by the City of New York. It was a personal vacation.”

But Boutross and Powell both have extensive business with the city. The coziness of the trip suggests an appearance of impropriety, since a vendor would have access to the administration that other vendors would not, although Powell insisted to The City that everyone paid their own way on the trip. The acceptance of any gifts from a city vendor is prohibited under city law.

“The mere thought of someone on a brokerage team that handles leasing of state and city properties traveling with an official involved in the decision process is totally unheard of,” one broker with experience representing the city told CO. “There’s a real wall of what can and can’t be done versus a regular tenant, and what’s appropriate and what’s not. You can’t pay for anything.”

A C&W spokesperson declined to answer questions about Boutross and Hamilton’s relationship, saying only, “We have a longstanding, 15-year relationship with the city that spans across multiple mayoral administrations, and we are proud of the important work we’ve done for DCAS.”

Molina said his agency would review all of its divisions to find “areas of efficiency” but would not commit to a specific review into Hamilton’s leases. One may be coming anyway. Adams revealed that First Deputy Mayor Maria Torres-Springer will be looking into DCAS policies and procedures, but he did not elaborate on what that specifically involved.

Molina announced after the hearing that DCAS would not move forward to acquire the Bronx Logistics Center and that he would conduct a review into the “unauthorized” video production.

Plus, the city will look to expand the number of brokerages representing the city from two to five in its next contract, which Molina promised would be released by the end of this year.