In 2013, NY PACs Rushed to Fund Campaigns

The Hudson Yards complex  on Manhattan's West Side is being developed buy The Related Companies, a contributor to PAC in the 2013 NYC elections. (Photo by JasonParis, Creative Commons license)

The Hudson Yards complex on Manhattan’s West Side is being developed by The Related Companies, a major contributor, through six subsidiaries, to the real estate PAC in the 2013 NYC elections. (Photo by JasonParis, Creative Commons license)

In New York’s 2013 elections, candidates for office weren’t the only ones raising and spending millions of dollars to influence the outcome.

In the biggest surge of outside campaign spending since New York City adopted a public campaign finance system in 1988, 50 separate political action committees spent almost $16 million.

The spending binge was a result of the U.S. Supreme Court’s decision in the Citizens United case, which opened the floodgates to unlimited spending by independent groups in political elections.

The back-door money went for TV ads and mailings aimed at helping favored candidates win election, and trying to make sure their opponents lost.

Thanks to a preemptive move by the city’s Campaign Finance Board to mandate disclosure of the spending, New Yorkers at least got to know the names of donors and how they were spending their money. But unlike the limits imposed under the city’s campaign finance laws, which allow only individual donations up to $4,950 per candidate, the sky was the limit as long as the PACs remained independent of candidates’ campaigns.

Records show that the PACs spent as little as $1,200 (by a union representing school cafeteria employees and crossing guards) and as much as $4.9 million (by a real estate group). The second biggest expenditure was by the United Federation of Teachers, a city election powerhouse representing 200,000 teachers and educational employees. The UFT plowed $3.5 million into the elections, most of it to support races by City Council candidates.

But the biggest donors to council races were the city’s real estate titans, who raised nearly $7 million in a bid to influence the election of City Council members. Spending for the PAC was coordinated by the industry’s lobbying arm, the Real Estate Board of New York. The money went to pay for scores of glossy mailings to voters. Some extolled the virtues of candidates the PAC favored; other mailings drew criticism for their harsh attacks on those the PAC opposed. Either way, the mailings offered no hints as to who was responsible for them. The brochures listed the logos of a handful of unions that lent their names to the effort, but which donated no funds. The names of the real estate firms that paid for the push were nowhere to be found.

But after the elections, REBNY President Steven Spinola was quick to declare victory, asserting that 18 of the 22 candidates backed by his group had won their elections.

The group’s goal, Spinola said, was to make sure council members kept “an open door” to hear the industry’s message.

But determining just who was doling out the big bucks proved challenging, since most of the contributions to the real estate PAC, dubbed Jobs for New York, came from murky corporate entities that are otherwise ineligible to donate directly to candidates in city elections.

All told, 134 separate contributions were made to the real estate PAC, via checks submitted by subsidiaries of major corporations with obscure names like 1345 Cleaning Service Co., II LP, and TS/TSCE India Nominee LLC.

In an effort to determine who exactly was writing the checks, CUNY Graduate School of Journalism students sifted through property records, corporate registrations and court documents to identify the names behind the corporate donors. The search revealed a who’s who of New York’s real estate heavyweights, including many of the city’s most active developers.

And – no surprise here – since many development projects require city assistance or zoning waivers, the survey found that two-thirds of those writing the fat checks are actively involved in city business.

Eighteen of the 26 major companies responsible for the bulk of the donations, the investigation found, are included on the official “Doing Business” list compiled by the Mayor’s Office of Contracts. Under a 2007 city law (see “Business Donors Get Around NYC Campaign Curbs“), principals of those firms are limited to a maximum donation of $400 per candidate. But when it comes to the independent spending authorized by Citizens United, all gloves are off, and records show that the city’s real estate industry made the most of it.

Among those writing big checks to the independent PAC, the investigation found, were many of the same players who served as major bundlers for candidates. They included:

– The Durst Organization, which channeled $637,500 to the PAC through seven separate subsidiaries, making it the biggest contributor to Jobs for New York. Durst is a partner in the soaring new One World Trade Center, and owns more than a dozen Manhattan properties including One Bryant Park, a 51-story office tower that houses Bank of America and which received millions in government tax abatements and bond guarantees.

– The Related Companies contributed $500,000 to the PAC through six of its property-holding subsidiaries. Related’s city-assisted projects include new shopping malls at the Bronx Terminal Market and Brooklyn’s Gateway Center as well as the sprawling new Hudson Yards development on Manhattan’s West Side, which is receiving city tax incentives worth $106 million, according to the Independent Budget Office.

– SL Green Realty Corp., a major city real estate investment firm whose properties have received city tax abatements, donated $425,000 to the PAC.

– Newmark Grubb Knight Frank, an international real estate service firm based in New York, donated more than $400,000 through 27 separate subsidiaries, including Cougar II Associates, Flatiron Leasing Partners and GSH Associates.

– Two Trees Management Co., developers of the former Domino sugar plant in Brooklyn, gave $250,000 to Jobs for New York, through two limited liability companies, a legal entity frequently used by real estate developers.

Real estate industry officials said they were simply taking advantage of the new rules. “The world is changing, obviously,” said Spinola of the Real Estate Board. “And as a result of a Supreme Court decision, we have a right.”

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