ethics aint pretty: February 2014

There's been a great deal of analysis and punditry describing New York City's new progressivism, with the election of Mayor Bill de Blasio. The selection of Melissa Mark-Viverito--spearheaded by de Blasio--as City Council Speaker has only added to this perception.

Yet, to be progressive here can mean something different to what outsiders might assume. Yes, it means supporting issues like universal pre-K or paid sick leave. But to be labeled progressive-- which may be technically accurate--can also be somewhat meaningless, particularly when it comes to the enormous power and influence of the real estate industry.

Probably more than in any other state in the nation, New York State and New York City are tightly controlled by its iron grip. Though state republicans outside the city tend to benefit most from its largess, it's not uncommon for political ideologies to become inconvenient or even irrelevant in the face of such enormous wealth and power. In fact, it's usually the rule, not the exception.

Common Cause/NY released a report last year, "raising serious questions about the potential influence of tens of millions of dollars in campaign contributions on public policy relating to real estate and development in New York City." The findings include:

--Since 2005, the Real Estate Board of NY (REBNY) and the 37 companies comprising its leadership have contributed $43.9 million to state and local candidates, committees, and PACs;

--REBNY’s contributions have increased in recent election cycles, with $17.1 million given since 2011 alone;

Common Cause/NY also faults the real estate industry and its ancillary partners for deliberately trying to circumvent rules governing campaign funding so they could exceed legal limits. The report states, "Using loophole to maximize its influence in city races through the “Jobs For New York” PAC by registering it at the state level... to bypass the New York City campaign finance system’s limits on campaign contributions." As evidence, the report cites:

--Just sixteen REBNY member companies... contributed the entire $5.26 million raised by “Jobs For New York” in [the] first half [of[ 2013 for an average of $328,750 each.

Money isn't the only way the industry influences elected officials; it commonly translates into the upper echelons of government by way of who assumes what kind of jobs and where. As a consequence, public policy--generally favoring the real estate lobby--is directly affected. That notorious revolving door between government and industry is alive and well in New York, particularly with real estate firms and developers.

For example, the former chief-of-staff for two former Bloomberg deputy mayors, Angela Sung Pinsky, is now not only the senior vice president at REBNY, she's also married to Bloomberg's president of the NYC Economic Development Corporation (NYCEDC).

NYCEDC is the opaque entity considered to be the chief engine for certain kinds of economic development, usually involving private developers, large development projects and huge quantities of public resources, whether or not an affected community supports the plan. (Mostly, the needs and interests of the community are ignored.) Sung Pinsky coincidentally worked for former Deputy Mayor Dan Doctoroff, probably the most identifiable figure associated with steamrolling such projects largely connected to EDC including the Hudson Yards boondoggle, and NYC's failed 2012 Olympic bid/Westside Stadium proposal.

Jaime McShane, the longtime spokesperson for the most recent Council Speaker, Christine Quinn, joined the staff of REBNY for a newly-created job. Quinn---once a tenant activist--became so close to real estate interests that it became common knowledge she simply did their bidding. She consistently turned a blind eye to abuses by developers, even within her own district and at the expense of her constituents, as was the case with the Trump 'Hotel' in Soho. Quinn will never overcome the stigma that she couldn't or wouldn't prevent the closure of St. Vincent's Hospital, when the Rudin family who owned the site wanted to convert the properties into luxury housing.

Another real estate organization, the Rent Stabilization Association (RSA) is dedicated to weakening or eliminating the state's tenant rent regulations; the RSA president is Joe Strasburg, who was chief-of-staff for former Speaker Peter Vallone, a man inexorably linked to this lobby. Vallone was the force who, in 1993/4, pushed through vacancy decontrol of regulated affordable apartments in NYC. Vallone also famously punished a handful of members who dared vote against a watered-down lead paint bill in 1999, because the industry supported weakening the current regulations. (I was working for one of the members who voted against the Vallone bill at the time, and it became clear to us she was being sent a message when all of her subsequent legislation was routinely killed.)

The vast influence of REBNY and the like can be seen every day, even if we don't realize it. It's reflected in the thousands of commercial rent evictions every year, and the countless empty storefronts across the city. It's in the ever-growing homogenification of the city with the explosion of chain stores, usually at the expense of local mom and pop businesses.

It's reflected in record high homelessness numbers. Its seen in the loss of rent regulated apartments--conservatively estimated between 300-400,000 by the Metropolitan Council on Housing-- since the mid-1990's and in the sale of countless Mitchell-Lama buildings --a program exclusively designed to create and maintain affordable housing--for private, free market purposes.

It's manifested in the billions of city and state resources lost through abatement programs and incentives given to developers like 421-a or "payments in lieu of taxes" (PILOTS), supposedly to build affordable units--which often don't get built (as is so far the case with Atlantic Yards). And even when the affordable housing is created, they don't necessarily end up justifying the loss of public revenues. For example, sometimes, the definition of "affordable" is allowed to be so flexible that the people who really need them can't qualify. Or, the small number of units required to obtain the tax break remains affordable for a small window of time, not in perpetuity. That's billions the city could use to build its own affordable housing, use for education, or for any number of other purposes.

So, there has been concern about Mayor de Blasio because of his support for some controversial development projects--like Brooklyn's Atlantic Yards/Barclay Center, which decimated a neighborhood, or for N.Y.U.'s voracious expansion plan, despite overwhelming community opposition. While Quinn was the industry's first choice, the de Blasio campaign still managed to receive hundreds of thousands in contributions from some of the largest development firms like Extell and Related Companies--many of whom do business with the city. De Blasio also received more than $70,000 in campaign donations from Forest City Ratner, the developer of Atlantic Yards.

Also worrisome is the fact that though he returned donations from one of the city's most notorious for-profit owner/operators of hotels housing the homeless--about which de Blasio has been critical--he kept thousands raised and donated by some of the firms closely tied to the initial owner.

On the other hand, the mayor wants to create or preserve 200,000 affordable apartments, and has been very frank in his public rhetoric regarding stricter affordability criterion and requirements under his watch. De Blasio has discussed the need for affordable housing, and often, and has called for the first ever rent freeze for regulated apartments. His campaign's "Affordable Housing" policy paper calls to end giveaways for big developers and enact mandatory inclusionary zoning (IZ)--though IZ doesn't necessarily work, enforce affordability standards, and protect renters, among others. It also discusses de Blasio's plan to:

--Target revenue streams to fund information programs and civil legal services that cost-effectively prevent evictions--programs decimated during the tenures of Giuliani and Bloomberg;

--Guarantee access to emergency shelters for the homeless. Most significantly, de Blasio wants to return to the policies before Bloomberg, when a percentage of public housing units were allocated for homeless families, policies homeless advocates say have proven to work.

One could, therefore, take away a decidedly mixed record for de Blasio when it comes to real estate. Crain's New York even called him a part-time populist.

Now that he's in an actual position in which he can represent the majority of New Yorkers against the most powerful lobby in the state, de Blasio has the opportunity to put his money where his mouth is in the wide array of agencies and boards dealing with land use, zoning, housing and real estate, all of which will be comprised of de Blasio appointments. That includes:

--Commissioners to head agencies like Housing Preservation and Development (HPD) and Small Business Services;

--Chair of the NYC Housing Authority, and all seven members of its board;

--Chair of City Planning, and six of thirteen commissioners;

--Chair of the Landmarks and Preservation Commission, and all 11 commissioners;

--All five appointees at the Board of Standards and Appeals, which grants developers zoning variances;

--All nine members of the Rent Guidelines Board, including five to represent the general public and the chair;

--President of the Housing Development Corporation.

At this point in time, some of his appointments like EDC's president (a Bloomberg holdover), the new chair of City Planning or his deputy mayor for 'Housing and Economic Development' certainly don't represent the kind of break with the policies of Giuliani and Bloomberg for which many were hoping. In fact, the new City Planning chair is a quintessential example of the 'permanent government'. There is already grousing about his H.P.D. appointment because of her association with N.Y.U.'s Furman Center for Real Estate and Urban Policy, an organization some equate with REBNY, perhaps unfairly.

To his credit, de Blasio did include 'Housing' in the title of deputy mayor Alicia Glen's jurisdiction, which is a first. However, many progressive see her corporate world background and work as an H.P.D. official for Giuliani as not fully supporting de Blasio's break with previous philosophies of governing.

Many have hoped the new administration would mean a dilution or even break from the real estate industry's stranglehold. Since Bill de Blasio is the mayor, his appointments are supposed to follow his philosophies and policies, so change is still possible. Ultimately, it's his responsibility if New York City really becomes a progressive bastion, and how that looks.

This article was updated on February 11, 2014.

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