REBNY, the governor, and the enduring influence of big real estate on Albany (and an Atlantic Yards flashback)

Yesterday's New York Times investigation, Cuomo’s Office Hobbled Ethics Inquiries by Moreland Commission, concludes:

While the governor now maintains he had every right to monitor and direct the work of a commission he had created, many commissioners and investigators saw the demands as politically motivated interference that hamstrung an undertaking that the governor had publicly vowed would be independent.

The article describe how Gov. Andrew Cuomo's office shut down an effort to subpoena the Real Estate Board of New York, which ultimately provided information voluntarily (though it's not clear how much).

Investigators also discovered "an unusually direct memorandum sent by Steven Spinola, the organization’s president, asking members to donate to Assembly Democrats," and sought to highlight:

discovery of email correspondence from a major New York City builder, Extell Development, about a coming fund-raiser for Mr. Cuomo tied to his birthday. The email discussed what amounted to a perfectly legal sidestepping of campaign-donation limits: funneling money through a series of limited-liability companies.
“As you know,” Ms. Perry wrote, “I strongly believe we should include whichever docs we think will add the most value in the report and include them without fear or favor, as they say.”
The report did recommend closing the limited-liability company loophole. But it omitted any mention of the real estate board, the governor’s birthday party or Extell.

As The Real Deal put it yesterday, REBNY’s influence over Cuomo laid bare, and quoted a critic:

“It certainly makes very explicit what we believe was happening,” said Susan Lerner, director of Common Cause New York, a nonprofit that tracks connections between money and politics. Lerner was referring to an alleged pattern of campaign contributions in which lawmakers receive money from real estate interests shortly before a key policy decision impacting the industry is made.

The Atlantic Yards angle

As I wrote in June 2007, a reform of the state's 421-a tax exemption was amended, at developer Forest City Ratner's request, to exempt Atlantic Yards. The project was announced when the tax break applied to any market-rate construction outside Manhattan.

That tax break was too generous, so it was finally pulled back: the state, at the city's nudge, required affordable housing to get the tax break.

But Forest City had added condo buildings to the 50% affordable/50% market rental buildings. Instead of requiring those three or four towers to include 20 percent affordable units, as the tax break reform would require, the developer would be allowed to spread the affordability over the project as a whole—as long as the project met requirements written just for it.

The New York Observer reported: "Steven Spinola, the president of the Real Estate Board of New York, the leading industry trade group, told The Observer that he lobbied legislators for the special exception."

The bill, as initially written said projects would be “eligible for benefits… if in the aggregate twenty percent of the units in such development are affordable to… families whose incomes at the time of initial occupancy do not exceed 60 percent of the area median incomes [AMI]...” Then the AMI was raised to 70 percent.

Here's the bill:

... if in the aggregate twenty percent of the units in such development are affordable to and occupied or available for occupancy by individuals or families THE AVERAGE OF whose incomes at the time of initial occupancy do not exceed [60] SEVENTY percent of the area median incomes adjusted for family size and the rent for such units does not exceed thirty percent of eighty percent of the area median incomes adjusted for family size.

A lingering question is whether Atlantic Yards will still meet that requirement. For example, in the next two towers, 100% affordable, 35% of the units would meet that average. At the same time, two all-market condo towers are being built.

Average those two buildings together and the percentage of low-income units is under 20%. Presumably Forest City Ratner is keeping watch on the overall numbers.

Ultimately, in 2007, the tax break on the condo buildings was pared back, but the overall carve-out remained.