Condos, Campaign Donors and a Mayoral Candidate

Condos, Campaign Donors and a Mayoral Candidate

As chairman of a local public-benefit corporation, New York City mayoral candidate Bill Thompson will cost the city up to $300 million for deals made with two campaign donors — specifically, a big-time condo owner and the developers behind the World Financial Center retail overhaul.

The World FInancial Center in lower Manhattan will get a retail overhaul with millions in aid from the Battery Park City Authority. Credit: Nathaniel Herz

New York City mayoral candidate Bill Thompson voluntarily left his post as chairman of the Battery Park City Authority, a public-benefit corporation, last week — unlike predecessor James Gill, who exited in shame after the public authority spent hundreds of thousands of dollars on parties and meals on his watch.

But Thompson’s stewardship will cost the city much more, thanks to two deals that he and his board of directors approved on behalf of the mayoral candidate’s campaign contributors.

Last year, the board unanimously agreed to roll back a scheduled increase in fees paid by condominium owners in the Battery Park City neighborhood by nearly $280 million.

Developers and condo owners don’t actually own the land that their buildings rest on — the authority charges them rent. Those rent payments go into a fund controlled by the authority, and New York City’s mayor and comptroller, which currently helps pay for the city’s affordable housing programs.

Without a cut, the average monthly rents would have nearly doubled, from about $225 per condominium unit to some $400, with another hike scheduled 15 years down the road.

Condominium owners and State Assembly Speaker Sheldon Silver lobbied to reduce the planned hike, warning that increased fees threatened condo owners there. “By restructuring this payment plan, we will be able to keep more middle-class families in their homes,” Silver said in a statement.

Yet the biggest winner in the deal was billionaire developer Howard Milstein, whose company Milstein Properties owns 585 Battery Park City condos out of the 2,300 that benefited from the Board’s vote. Milstein will save $59 million, as Thompson and the other board members were informed in their briefing on the proposal.

Thompson did not respond to requests to be interviewed for this story.

One source familiar with the negotiations, who asked not to be named because he still does business with government, said authority staff had discussed the possibility of forcing Milstein to pass the savings on to his rental tenants. That didn’t happen.

“The argument was, if you didn’t get relief, you’d lose this middle class element at Battery Park City,” the source said. “In reality, a big chunk of it is going to Milstein, who’s not a middle-income anything. He’s a very rich landlord.”

A spokesman for Milstein declined to comment on the reductions.

Campaign finance records show that Thompson received a $4,950 contribution from Milstein — the maximum allowed by law — dated Jan. 11, 2012. Two more identical donations from Milstein’s wife, Abby, and son, Michael, came on the same day, for a total of $14,850.

The reduction in future rents mean less money will go into the fund for the city’s own use.

“The profit of the authority goes to the city, belongs to the city,” said Charles Urstadt, the Battery Park City Authority’s founding chairman. “If they negotiate a better deal — more rent, that is — the city’s going to get more money. If they negotiate a worse deal, and drop the rent, the city’s going to get less money.”

Board Member David Cornstein defended the reductions, saying that the planned hike in rent rates was “crazy.”

“It was enormous. It wasn’t fair at all,” he said.

As for Milstein, Cornstein said that the developer benefitted only because he had taken the gamble of holding more of his condos than other developers, who had sold them.

“Everybody has the choice, years ago,” Cornstein said. “He chose to keep some himself. That was his risk, and whatever came after that came after that.”

Also taking a bite out of future Battery Park City funding to the city are millions of dollars in rent reductions that Thompson and the board unanimously approved in March to help Brookfield Properties pay for a glitzy overhaul of its retail space at the World Financial Center.

Brookfield is promising a shopper’s paradise that includes high-fashion retailers, a 21-restaurant dining complex and a massive food marketplace — Lower Manhattan’s answer to midtown’s Eataly and Grand Central Market.

The board’s unanimous vote in support of the rent deal came at the recommendation of Horwitz, who was previously Thompson’s chief of staff and a top deputy at the comptroller’s office. It also followed more than $15,000 in contributions to Thompson’s mayoral campaign by lobbyists and others tied to Brookfield Properties.

Horwitz did not respond to an interview request. A Brookfield spokeswoman declined to comment.

Under the deal approved by the Battery Park City Authority board, Brookfield will pay a minimum of $46.7 million to the authority over the next 25 years, $14 million more than under its previous deal.

Mayoral candidate Bill Thompson. Credit: Edwin Martinez/Flickr

But the authority also agreed to lower the rent Brookfield must pay the Battery Park City Authority. Projections provided to Thompson and other authority board members before their vote show $22.3 million in rent breaks.

Cornstein defended the authority’s decision to help bankroll the retail redo, emphasizing that Battery Park City would ultimately see more revenue as a result of the renovations. He said such a subsidy is typical.

“They’re willing to go into their pockets, and the City of New York and the State of New York should be accommodating in a fair and respectful way, so that we increase the pie of what’s down there,” he said. “It’s going to be one hell of an attraction-getter down there. You’re going to have some of the finest retail stores in the city down there. You have to take part in that.”

Thompson was appointed to the Battery Park City Authority board in 2010 by former Gov. David Paterson. Gov. Andrew Cuomo now has the sole authority to appoint or remove members of the authority board.

Brookfield Properties’ lobbyist on its renovation project was an Albany lawyer named Jerry Weiss, whose firm LJM Rad received $90,000 between March and August of last year, for work on issues related to the World Financial Center’s renovations.

Last July, Weiss made a contribution of $4,900 to Thompson’s mayoral campaign. Another LJM Rad lobbyist, Michael McNulty, gave two separate $1,000 contributions to Thompson in July and December, and Henry Nahal, a lawyer at the same Albany law firm where Weiss works as an attorney, chipped in another $1,200. The donations from McNulty and Nahal are the only ones listed for the two men in the city campaign finance board’s database, which dates back more than 20 years.

Weiss was also listed as one of Thompson’s bundlers in an initial disclosure statement filed with the New York City Campaign Finance Board in January. Records showed Weiss as bundling $15,400 from six donors, all on the same day this winter.

But a spokesman for the Campaign Finance Board said that Thompson later changed his filings to strike the affiliations with Weiss, while keeping the cash. Such amendments are permitted if there was a mistake in an initial disclosure, the spokesman said.

Weiss declined to comment. Reached by phone, James Eagan, one of the donors that had been tied to Weiss said that the two were friends, but that the lobbyist hadn’t been the one to solicit the donation, which stemmed from an event.

“It was a little get-together — you have overcooked chicken, you eat it….Was Jerry there? Yeah,” said Eagan, who donated $4,950 to Thompson’s campaign. “He certainly didn’t call me and say, ‘Hey, could you give this guy some money?’”

Thompson’s campaign listed Eagan’s donation — and the five others initially tied to Weiss — as coming on Dec. 5. On that same day, Brookfield chairman John Zuccotti and his wife Susan each gave Thompson their own $4,950 contributions. Three months later, the Battery Park City Authority’s board voted unanimously to approve the resolution to deliver Brookfield its $22.3 million rent break.

Tags: new york cityparksgovernance

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