Friday, January 30, 2015


I would be remiss not to mention the recent arrest--and now replacement as Assembly Speaker--of Sheldon Silver. While the press is rightly having a field day, I fear the feeding frenzy is overlooking some really important subtext, most significantly, within the context of the massive power wielded by the real estate industry in this state and city. Almost everything leads back to real estate in New York.

Specifically, Silver's arrest should necessitate a re-examining of the state's 421a program and its ilk, which give private developers financial incentives to construct "affordable" housing. Like rent regulations, 421a is up for renewal this year, and as you can imagine, REBNY and the like are practically wetting themselves. I'm hoping U.S. Attorney Bharara follows up this arrest with arrests of the developers who are as guilty of corruption as any elected official. The great William Greider has written an interesting piece comparing the crimes committed by Silver with those committed by JP MorganChase CEO and super villain, Jamie Dimon.

Media accounts have cited that one of the cooperating witnesses in the case against Silver is developer Leonard Litwin of Glenwood Management. No matter how respected Litwin may be--or how nice a man he is according to the New York Times (though when the Times extols the virtues of a bigwig in real estate, it seems rather redundant)--the fact is that despite an influx of public money, Glenwood's WTC residential building only produced five percent affordable units, and Litwin has an extensive history of throwing money at legislators to get his way.

It also stretches beyond credibility Glenwood senior officials were unaware of the kickbacks to Silver via the use of a separate law firm. I also found it interesting the newspaper singled Silver out for how much he received over the years from Glenwood.  

According to press reports last year, Glenwood was Governor Cuomo's biggest donor, with $800,000 coming from 19 different LLCs since Cuomo first took office. In fact, this is all part of the Moreland Commission scandal. Commission members flagged such donations from real estate LLCS (Limited Liable Companies) exploiting a loophole in the law, before being shut down by the governor. There is no way I'm excusing Silver; it's just that the hypocrisy and double-standard is quite galling.

For the record, my beloved late grandmother lived in a Glenwood building on East 75th street, from around 1988-2003, when she died at 92. It's one of those behemoths--sitting over an entire block--that mark much of the area, guilded with excessive (and tacky) ornamentation like giant chandeliers and lots of glass to appear "luxury." It was all very bougie and wannabe, and generally appeals to the yuppie demographic.

My grandparents faced a housing emergency after my grandfather's health deteriorated and they were unable to move to Florida as had been planned. Having lived in the neighborhood since the 1960s, they preferred to stay near their friends and family. There was a pre-existing relationship between my aunt and someone in the Litwin family, which is where Glenwood came in. My grandparents also needed to have a doorman and elevator because of their ages. Ultimately, grandpa died in 1990.

The year before her death, my grandmother's stabilized rent was $2,222, while she lived on a fixed income of $40,000. That means more than 65 percent of her income was dedicated to housing costs. I'm not really certain to whom those 'affordable" units went, because she would have been an ideal candidate, and I'm sure her unit became market rate after her death.  

I'd be very curious to see an actual break down of which units in any Glenwood building are "affordable," to whom they are rented, and how the city and state ensure the units remain affordable--in exchange for the assorted tax breaks Glenwood has received over the years. Based on the way the NYCHPD functions (or doesn't, to be more accurate,) it would not be a shocker if an analysis revealed many of those units set aside no longer fell within the affordability guidelines, despite the rules. And that could apply to any developer who received this kind of corporate welfare.

The things I most remember about that building was how cheap it all seemed, including the construction--we could hear people ringing doorbells for other apartments when her door was closed, and noise consistently bled through the walls and ceiling. She lived on the ninth floor overlooking parts of Second Avenue, and while it is a busy thoroughfare, the windows did little to insulate her from the traffic's cacophony.

I also remember how much money she felt coerced into laying out every holiday season because of management's 'suggested' tips for the building's gigantic staff--most of whom she never knew. My grandmother was very fair, so even though it directly impacted her adversely, she wanted to ensure she did the right thing regarding the building's personnel.

However, management didn't exactly operate under the same standard. As has been the case for decades for regulated tenants citywide, she was not at the top of the management's to-do list regarding repairs or other work. I will say, however, the few members of the staff with whom I had regular interaction were very nice and definitely kept an eye out for her, for which our family will always be grateful.

By the way, Mayor de Blasio "officially" named Litwin to the city's DNC host committee, as reported today, though he was initially named in November. Litwin contributed almost $5000 to de Blasio's mayoral run. The NY Post wrote about Litwin, "He is known as one of the top political donors in New York 
ate — and has skirted around caps on campaign contributions by funneling millions of dollars in donations throughst more than 20 limited-liability companies controlled by Glenwood." Just the association you want to waive in people's faces to prove your administration has some kind of moral high ground.

Going back to Silver, his "temporary' replacement as speaker appears to be Bronx member and Democratic county leader, Carl Heastie. Aside from the fact that Heastie is considered a friend to real estate (and potentially, the Rent Stabilization Association), he is a selected party leader. While it is not illegal, to wear both hats as an elected official and party honcho simultaneously has not worked out well traditionally for the people of the empire state. 

Most recently--from Clarence Norman to Brian McLaughlin to Guy Velella--we have been let down time and again by individuals allowing party and personal business to supersede their responsibilities and duties to governing for all. Unfortunately, today's pervasive culture of corruption in Albany isn't limited to abuses by party leaders, but also includes senior electeds who often have close ties to party machinery. Most of these individuals could not have risen so high in the ranks without party backing--John Sampson, Malcolm Smith, Carl Kruger, Pedro Espada Jr... 

And as long as state legislators are allowed to "earn" additional income because their jobs aren't considered full-time--and then don't even have to fully disclose the source of outside income--we will never have a truly responsive government. It's difficult to imagine state legislators start with a $79,500 base pay, plus living expenses and lulus, and it's not considered full-time employment. (The New York City Council operates similarly, but those members earn even more!)

Though the days of Carmine DeSapio and Tammany Hall are technically long gone, the reform movement's struggle of the 1940's-1960's (in which my father was extremely active) have become utterly meaningless. For the most part, reform clubs are today's regulars. Sadly, I guess we have learned nothing from the Ed Koch-Stanley Friedman-Donald Mannes-Meade Esposito debacles.