NEW YORK CITY-Just as this year's local political races kick into high gear, the campaign contribution practices of several real estate developers and one leading industry association are being called into question.

Three big industry firms and two smaller companies have been subpoenaed by the Moreland Commission to Investigate Public Corruption—a watchdog group created by Gov. Andrew Cuomo—for information about tax breaks they received in state legislation, according to the Wall Street Journal. At the same time, a new report from community organization Common Cause/NY has called into question several political campaign contribution practices of REBNY and a healthy handful of its member organizations.

Subpoenas have been issued to Silverstein Properties Inc., Extell Development Co., and Thor Equities over their residential developments of 30 Park Place (which is a residential tower at a planned Four Seasons hotel), 157 W. 57th St. (known as One57) and 520 Fifth Ave., according to Crain's New York Business. The other firms subpoenaed were Fisher Brothers, for a residential tower at 86 Trinity Place, the former home of the American Stock Exchange; and Friedman Management for 113 Nassau St.

At issue, Crain's reports, is the inclusion of the five buildings in state legislation that will allow them to substantially lower their tax bill. Buildings in high-density neighborhoods such as the financial district and Midtown, where the five buildings are located, are normally disallowed from using such credits.

The Moreland Commission plans to examine whether campaign donations to lawmakers in the state assembly and senate could have swayed them to make the exception for the five buildings, where apartment units will sell for millions of dollars each.

The commission requested “extensive information,” the Journal reports, including emails and other communications with lobbyists and elected officials over multiple years relating to the tax break. A Silverstein spokesman declined to comment while an Extell spokesperson says “Extell Development Company will cooperate fully with any agency trying to improve government.” Thor's spokesman was still looking into the issue at press time and arequest for comment to press representatives at Fisher Brothers went unanswered. A phone number for Friedman Management was not working properly.

Meanwhile, a community organization called Common Cause/NY—which is part of Fair Elections for New York, a coalition working to institute campaign finance reform—has been issuing reports on the campaign contribution practices of several industries, and this week's target was commercial real estate.

Chief among those in Common Cause/NY's crosshairs was REBNY. The association and the 37 companies that make up its leadership provided funds—to the tune of $43.9 million to state and local candidates, committees, and PACs since 2005—primarily to candidates for the state Senate and other posts outside of New York City. Such a contribution strategy keeps New York City rent regulations weak while strengthening multi-billion dollar subsidies, Common Cause NY argues.

Additionally, the group charges, REBNY and many of its consituents are taking advantage of a loophole in state campaign finance laws that, in essence, allow LLCs to go well beyond the typical ceiling for corporate donation as well as give them the ability to form multiple, separate LLCs to keep issuing checks to the same candidates; sometimes even within the same day.

Among the REBNY members that “are the worst offenders,” Common Cause/NY says, are Newmark Grubb Knight Frank; the Durst Organization; Jack Resnick & Sons and the Related Companies. A spokesman for Jack Resnick declined to comment. REBNY and its three members on this list did not respond to requests for comment by press time.

Common Cause/NY also accuses REBNY of using the “LLC loophole to maximize its influence in city races” through its political action committee, called Jobs for New York.

Common Cause/NY concedes that no laws have been broken by these practices and says it is merely working to point out the need for campaign finance reform. Notes executive director Susan Lerner to GlobeSt.com, “Everything the real estate industry has done is technically legal. But it is an excellent illustration of how weak campaign finance laws are and of their need to be changed.”

Still, Common Cause/NY in reporting the results of its research into these donations practices, says, “the Fair Elections for New York campaign is calling on the Moreland Commission to subpoena all relevant information related to contributions as part of their sweeping investigation of corruption in New York State.”

For its part, REBNY is defending its actions. “All contributions are made in accordance with the law and duly reported," says a spokesman to Crain's. "It is more than inappropriate to suggest illegal motives without offering a single fact. If this group is really interested in being seen as an impartial advocate of campaign finance reform, it should act like one."

Lerner counters, telling GlobeSt.com, “It's perfectly legal but that doesn't make it desirable from a public policy point of view. This is not the state of affairs that the vast majority of New Yorkers want to see. They believe special interests are dominant in Albany and money is corrupting our system.

She adds, “It's unfortunate that people who engage in poor conduct become uncomfortable when such conduct becomes transparent.”

Instant Insights /

CRE Developers, REBNY Under Fire for Political Contributions

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