The campaign finance loophole developers love

Dozens of executives of companies that do business with city government are finding their way around strict limits on campaign contributions, raising nearly $1 million so far on behalf of prospective 2013 candidates for mayor even though they personally would be prohibited from contributing more than a token sum.

A lobbyist for the Related Companies steered more than $27,000 to the mayoral campaign of City Council Speaker Christine Quinn, who provided crucial support for its Hudson Yards development. AP Photo/Visualhouse via Related Companies

They are bundlers, intermediaries who deliver donations from multiple donors to a candidate running for office, and most come from the real estate industry. While the city’s campaign finance rules limit city contractors and lobbyists seeking government business to just $400 in contributions to any one candidate, no such restrictions apply to those who bundle other donors’ contributions.

Among the most active of bundlers who do business with the city is Jay Kriegel of the Related Companies, a registered lobbyist whose company has recently pursued or obtained major development deals with the city, including hotly sought rights to build at Willets Point in Queens.

Like more than 25,000 other individuals who do business with the city, his name appears in a database of executives and lobbyists who have vied for business opportunities with the City of New York.

Kriegel has abided by caps on personal contributions. In March of this year, Kriegel contributed $400 to Christine Quinn’s campaign for mayor. He has also given the same amount to Bill de Blasio, Bill Thompson, and Scott Stringer. That money does not qualify for the city’s matching funds program, under which the first $175 of each eligible contribution to a candidate is matched 6-to-1 with public money.

But meanwhile, data from the New York City Campaign Finance Board shows, between October 2007 and July 2012 Kriegel bundled a combined total of almost $100,000 for the same four candidates. Nearly half of his funds raised so far have gone to Quinn, who as City Council Speaker has heavy influence over land use votes by the Council. One crucial vote for Related, in 2009, allowed the developer to proceed with the western phase of its 12 million-square-foot Hudson Yards complex, to be built in Quinn’s district.

If those candidates choose to opt into the city’s public financing program, some of the donations they receive from bundlers will be matched by public funds. For example, the donations that Kriegel bundled for Quinn included a $4,500 contribution from the spouse of a Related Companies executive. If Quinn chooses to opt into the city’s public financing program, the first $175 of that donation could be matched 6-to-1, turning a $4,500 contribution into a $5,550 contribution.

The New York World analyzed the financial disclosures of six prospective mayoral candidates – Quinn, Stringer, de Blasio, Thompson, John Liu, and Anthony Weiner – and found that all of them received contributions bundled by people listed in the city’s “Doing Business Database.” The database includes the names of lobbyists, as well as the officers, owners, and senior managers of companies and nonprofits that have been awarded or sought procurement contracts, franchises, grants, economic development agreements, pension investment contracts, real estate deals or land use actions from the city. The downloadable version of the Doing Business Database made publicly available by the Mayor’s Office of Contracts provides a snapshot from June 2011; the office was not able to fulfill a request from The New York World for an updated list.

We identified more than 60 bundlers – or “intermediaries” as the city’s Campaign Finance Board calls them – who were also listed in the Doing Business Database. In total, these intermediaries bundled almost $1 million for prospective 2013 mayoral candidates. That’s more than 16 percent of the total amount of bundled contributions that all six candidates have received so far.

We also found that the overwhelming majority of bundlers who were also in the Doing Business Database come from the real estate industry. Either they worked for a management or development company, or they worked for a law firm, or consulting company, or other group that had major real estate clients. Overall, real estate has dominated the mayor’s race money game: The New York World estimates that intermediaries who are in the city’s business database and have significant dealings in real estate bundled almost $800,000 for mayoral candidates. The intermediary who has bundled the most money so far for an individual 2013 candidate is Charles Dorego, a senior vice president at the real estate company Glenwood Management, who channeled almost $150,000 to Scott Stringer.

The total amount of money raised so far by bundlers who do business with the city is likely larger than $1 million since campaigns are not required to disclose which of their bundlers are also on the Doing Business Database, and some intermediaries are listed in campaign finance records under different companies than in the city’s records.

New York City’s campaign finance rules, intended to prevent corruption, are unusually stringent. New York State, for example, does not require any disclosure of bundled contributions.

Still, good-government groups see room for tightening the city rules. “Our recommendation to address this issue is that contributions bundled by lobbyists organizations or lobbyists should not eligible for matching funds,” said Alex Camarda, Director of Public Policy and Advocacy at Citizens Union. “That would be a way to diminish the perceived influence or actual influence of the bundler and still be respectful of their freedom of association and freedom of speech.”

Gene Russianoff, Senior Attorney at the New York Public Interest Research Group, made a similar recommendation to the City Council before the last round of campaign finance reforms, in 2007, but no such provision was included. The loophole to contribution limits remains wide open.

“Money is like water,” said Russianoff. “It will flow where it can.”

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