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May 16, 2009 @ 8:44 pm

Bloomberg and the Boys: Landlords, Politicians & Other Scoundrels

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“What makes me angry is that they are so callous, really callous … When you see uncaring people in high places, everybody should be mad as hell.” William Sloan Coffin

bloomberg-photoThe woman had three kids with her. The oldest was a boy maybe thirteen. He and his mother were walking uptown on Third Avenue. They were struggling with three beat up old suitcases. Everything they owned. The two little girls were trailing along behind. Pigtails and white dresses. They all looked so weary. The boy, just a skinny kid, was lugging the heaviest suitcase trying to look tough. I knew they were heading for some kind of SRO or shelter where he, the man of the family, would have to deal with who knows what kind of evil. It makes me sad to think about that mother and her kids. It makes me mad as hell to think about the callousness of New York’s mayor and political allies — especially the real estate crowd.

Here is how one local politician recently described their role in the life of the city:

The real estate industry controls the agenda in the city. If they don’t want something to happen, it doesn’t happen…It’s just incredible how much influence they have. The direction comes from the mayor, and the mayor’s pro-development.

“Pro-development” is one way to view the mayor’s agenda. He is certainly that. But for the homeless mother and her three kids or for the 1,096,273 low-income households who, once the rent is paid, have about $30 a week per family member for medical, transportation, education, food and all other expenses, the word doesn’t quite capture the cruelty and destructiveness of his policies.

Crudely put, but not less accurate for that, taxpayers have subsidized development projects that generated outsize profits for a small number of real estate operators and their lenders while a growing number of tenants – and New York is a city of tenants – have been forced to pay half their incomes in rent. Many have been put out of their homes. To borrow a phrase from George Bernard Shaw, the run-of-the-mill politicians who have gone along with the mayor and the real estate developers, all the while pretending to support their constituents, work for the tips.

If this strikes the reader as too cynical, I should say that as a counsel to a state senate majority leader and many other politically related jobs, I was an insider of sorts. The money I made and the benefits I enjoyed came from insider relationships. When one dines at the king’s table and then throws the plate at his head from a safe distance, the charge of hypocrisy is legitimately made. I can only plead in mitigation that it wasn’t until he went to prison that Teamster president Jimmy Hoffa became a passionate advocate for prison reform. Similarly, it wasn’t until I became just another tenant-constituent who couldn’t get his phone calls returned that, like Hoffa, I began to understand what being an outsider felt like. It changes everything. It prompted me to write the story of Independence Plaza.

Witold Rybezynski, Wharton professor of urbanism and real estate, pointed up another destructive result of the real estate development agenda, when he observed that

One of the drawbacks of modern cities is their lack of particularity. The combination of housing and offices that are designed according to well-established real estate development formulas produces a homogenous and standardized urban landscape. So do franchised hotels, stores, and restaurants. The gains in convenience and economy may be great, but so are the losses in individual identity.

New York is safer and cleaner since the Koch era when it was known as “Calcutta on the Hudson,” but sixteen years of Republican rule have made it a sterile city, bigger, but not so very different from other cities. Change is an inescapable fact of life, but change driven by real estate development formulas and feckless politicians is a city-killer.

You don’t need an urban planning degree to understand how New York works, but you do have to understand the interplay of real estate and politics. Few New Yorkers do. The machinery is hidden beneath the larger-than-life images of New York’s mayors. Crafted by political managers and amplified by the press, the images and story lines mask the subterranean world of zoning variances, property tax abatements, real estate lobbyists, lawyers, bankers, bundlers of political cash, and the impenetrable bureaucracies who determine what gets built, who pays, who profits and who gets to live and work here.

The popular narrative goes something like this: Ed Koch brought the city back to fiscal health. He fought greedy municipal unions, welfare cheats, and the poverty pimps who thrived during the administrations of limousine liberal John Lindsay and clubhouse politician Abe Beame. Those two came in for much of the blame for the city’s last fiscal crisis in 1975. David Dinkins, the narrative continues, was a nice man. He failed but his tenure was brief and the damage modest. Rudy Giuliani restored order to the city, if not the full measure of civic virtue he demanded of its jaywalking citizens and blaspheming artists.

Real Estate Money and Deceptive Politics Drive the Agenda

The twelve-year mayoral reign of the nominal Democrat Ed Koch ushered in New York’s modern era of big real estate and center-right politics. Since then, the city with its overwhelming Democratic registration advantage, relatively strong municipal unions, a large minority population, and reputed liberal ethos, has had sixteen years of Republican mayors and twelve years of a Republican governor– and the real estate lobby. Almost all New York politicians rely heavily on real estate money to finance their careers.

Republican George Pataki held the governorship for twelve of the Giuliani-Bloomberg years. He and the long-time senate majority leader, the virulently anti-tenant, Joseph Bruno, now under federal indictment, had a powerful adverse impact on New York City, especially on its tenants. Charles A. Gargano, one-time fundraiser for former U.S. senator Alfonse D’Amato, was Pataki’s chief fundraiser. Not coincidentally, he also headed New York State’s Empire State Development Corporation. In his official role Gargano dispensed billions of dollars in the form of tax credits and subsidies to Pataki’s largest real estate contributors. Then, wearing his fundraising hat, Gargano took back a small slice of the real estate profits to finance Pataki’s election campaigns. As we shall see, Ed Koch perfected the pay-to-play game between politicians, landlords and developers.

Michael Bloomberg doesn’t take the real estate money. He doesn’t need it. But he is the chief financier to the Republican Party, which does. The mayor appoints landlord representatives who dominate the city’s rent guidelines board, and he keeps the tax breaks and subsidies flowing to the real estate industry in a zero-sum game: what landlords and developers get, tenants lose.

Adding to the industry’s sway, is the fact that it is a major source of post-government employment for housing bureaucrats who apply their knowledge, exploit their contacts and bring in deals. The private sector, as it is erroneously called, offers rich rewards. Some bureaucrats become developers others become lobbyists. And of course some don’t wait to leave government before they make their deals.

Campaign finance laws are written by the recipients of the cash and enforced by their appointees whose most important qualification is the lack of zeal with which they perform their job. The real estate money can be difficult to trace, and contribution limits are easily evaded. Donald Trump once conceded that he spread his contributions among eighteen subsidiary companies. Friends, family, lawyers, suppliers, employees, and others who owe their economic lives to landlords and developers may not show up as real estate contributors but the recipients always know where the money comes from.

Now we have another story line: “Just Mike” the subway-go-to-work non-politician, a megabillionaire who manages the store and watches the cash register better than anyone, a sober man who rejects the contrivances and image-making of politics. Or so he and his political managers would have us believe. The mayor’s bland public persona and the fact that he doesn’t need the real estate developers to run for office gives the image a patina of truth, but the insiders know it is a shallow truth.

Michael Bloomberg has portrayed himself as a moderate Democrat, a reluctant Republican, an Independent, and now, a born-again Republican. Ironically, the cynicism suggested by these costume changes has worked to his advantage; he is a non-politician. Rather, the mayor is an ideologue, an anti-politician who employs all the familiar tactics of deceptive politics–the push polling, the misleading TV commercials, the fake numbers and false press releases, the arcane election rules, and so on, to pursue an ideology that has much to do with the predicament we are in.

The ideological dimension to the mayor’s thinking is largely ignored, but deregulation and privatization are bedrock Republican doctrines, theologies even. And when it comes to property, the mayor is their relentless champion. Like Nelson Rockefeller, our last billionaire politician, he finances the state’s Republican Party and some of its most conservative candidates.

…the mayor is an ideologue, an anti-politician who employs all the familiar tactics of deceptive politics…

His vast wealth has enabled him to spend north of $150 million to win and hold onto his office, not counting the hundreds of millions of dollars doled out to various civic organizations, at least some of whom would have opposed him. As with his predecessor who sought to cancel the mayoral elections following September 11, Michael Bloomberg considers himself indispensable to the city’s survival.

Mayor Mike and the people who went along with his agenda have dug us as deep a hole as George W. Bush dug for the country. It’s going to take New York a long time to dig out. New Yorkers need to take the shovel out of Mike’s hands.

To be continued.

– Neil Fabricant

Notes

Queens councilman Tony Avella, New York Times December 2, 2008 (Sec. C, p. 5)
Reviewing City Lights: The Seduction of Place: The City in the Twenty-First Century, Joseph Rykwert, the retired Paul Phillipe Cret Professor of Architecture, University of Pennsylvania, for the New York Review of Books, Volume 48, Number 10, June 21, 2001.

For an account of how the mayor has used his philanthropy to ensure support from or intimidate his beneficiaries, see Sam Robers and Jim Rutenberg, “With More Private Giving Bloomberg Forges Ties,” New York Times, 23 May 23 2005.
See From Welfare State to Real Estate, New Press, Kim Moody 2007

Trump testified at the 1988 New York State Commission on Government Integrity hearings.

In an opinion piece coauthored with Senator Charles Schumer shortly before the Wall Street collapse, he said: Growing financial centers across the globe are challenging us in cutting-edge areas, such as derivatives, bond securitization and initial public offerings….we can — and should — increase the efficiency and attractiveness of our markets… Our study found that the American market is harmed by legal and regulatory policies that are too burdensome…Our Economy is at Risk: Laws, Regulations Put Burden on U.S. Firms Trying to Compete. USA Today February 13, 2007.

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