Real estate big blankets state Senate races with contributions

Companies associated with luxury real estate mogul Leonard Litwin have funneled more than $900,000 into races for the New York State Senate so far this election cycle — mostly to Republicans, who are fighting this fall to hold on to majority control.

These contributions have come through limited liability companies (LLCs) connected to Litwin’s real estate firm, Glenwood Management. Routing contributions through LLCs allows donors to legally circumvent the state’s $150,000 annual political donation limit for individuals and $5,000 cap for corporations.

All it takes to register a limited liability corporation in New York is a three-question form and $200.

The use of LLCs to evade campaign contribution limits has special significance this election year, in which voters will decide who fills every seat in the state Senate and Assembly. Gov. Andrew Cuomo stated during his 2010 campaign that he would be in favor of limiting donations from LLCs, and in his January State of the State address — which called contribution limits “riddled with loopholes” — vowed to enact campaign finance reform this year.

Cuomo himself has been a beneficiary of the LLC loophole: his 2014 campaign has received a quarter million dollars from the holdings of Leonard Litwin, the New York Public Interest Group (NYPIRG) calculated in July.

“He’s definitely become the biggest donor in the state,” said Bill Mahoney, NYPIRG research coordinator, said of Litwin. 

In total, more than 20 LLCs associated with Litwin have funneled about $1.8 million to more than 60 state-level candidates, as well a a few local officials and more than a dozen political committees, since the beginning of 2011.

An analysis by The New York World found that the greatest share of Litwin’s money has gone into races for State Senate, with 83 cents of every dollar spent on those contests — roughly $768,000 in all — going to about 30 Republican candidates and the Senate Republican Campaign Committee. The donations include about $40,000 to Eric Ulrich, who is seeking to unthrone Democratic Senator Joseph Addabbo in Queens, and roughly $55,000 to Bob Cohen, who seeks the seat being vacated by Westchester Senator Suzi Oppenheimer following this year’s redistricting. The outcomes in these battleground districts could decide which party holds the majority in the next session.

Most beneficiaries are incumbents, including Dean Skelos, the Senate majority leader who is running unopposed in his district and has received $45,000 from Litwin. The LLCs also donated about $150,000 to the Senate Republican Campaign Committee.

LLCs associated with Litwin have contributed nearly $100,000 to at least 18 candidates for state Assembly since the start of 2011. More than $4,000 went to now-disgraced Assemblyman Vito Lopez, who until August was the chair of the Assembly’s housing committee.

Litwin is far from the only member of the real estate industry donating to state Senate candidates. The Real Estate Board of New York has contributed roughly $150,000 to Senate contestants, about two-thirds of which went to Republicans. But the donations made through Litwin’s LLCs appear to be the industry’s most prolific political giving.

Owners of New York City residential real estate have a keen interest in housing issues decided by the state legislature. For example, Albany has the power to renew the tax abatements for newly constructed apartment buildings in the city; when this law comes up for renewal the legislature haggles over affordable housing requirements tied to the tax break. The state Senate and Assembly also set the ground rules for rent stabilization in the city and state. When rent laws were set to expire last year, Senate Republicans, like many landlords and property owners, resisted efforts by Democrats in both houses to restore rent restrictions previously rolled back by the legislature.

Under the state’s contribution rules, every LLC is treated like an individual, and has a contribution limit of $150,000.

“It’s a loophole that absolutely should be a high priority if you want to apply meaningful limits on how much you want to donate to candidates,” said Adam Skaggs, Senior Counsel for the Democracy Program at the Brennan Center for Justice.

The process of forming an LLC is simple. Any person or “business entity” can form an LLC by filling out a three-question form, and mailing it to the Department of State along with a $200 check.

“This is just a matter of relatively straightforward paperwork,” said Skaggs, who notes that individuals can use already existent LLCs to make campaign donations or create new LLCs specifically for that purpose. “This just is an invitation to completely circumvent the law.”

Using LLCs to make donations is not only an easy way to evade the state’s contribution limits; it can also disguise the source of contributions. LLCs only have to give the state the name of a “registered agent,” which can be an attorney or a firm that processes corporate registrations.

As a result it can be difficult to determine who is actually using an LLC to donate money to a candidate. The New York World could connect more than 20 LLCs to Litwin because most of these companies share the same address: the New Hyde Park, Long Island, corporate headquarters of Glenwood Management. But no rules obligate a person or a company to register all their LLCs at one site.

This is not the first time that LLCs associated with Litwin have donated large sums to candidates for state office. Two years ago, Litwin donated $25,000 to four of the six candidates running for attorney general, including the eventual winner of the race, Eric Schneiderman. And in the past, he has used LLCs to move hundreds of thousands of dollars to state-level candidates and parties. In 2007, Governor Elliot Spitzer proposed a series of campaign finance reforms, including a ban on contributions from LLCs; the Senate balked.

Cuomo has since tried to lead the charge for campaign finance reform. The governor vowed in his State of the State address to send the legislature a campaign finance reform measure that would include public financing, matching funds and lower contribution limits, which have long been part of city’s campaign finance system. While campaigning he called for contributions from LLCs to “counted as donations from the affiliated parent company so that the limit for corporations of $5,000 per year is meaningful.”

It doesn’t sound like a popular rallying cry. But in July, the governor said he was determined to make campaign finance reform a hot priority for voters — and for the members of the Senate and Assembly they go to the polls to elect.

Said the governor, “When the Assemblyman goes home and when the senator goes home, they’re not hearing enough in the supermarket about, ‘Why didn’t you pass campaign finance?’”

Senate Majority Leader Skelos has already said that the state cannot afford public financing of campaigns, but that he is open to closing loopholes and lowering contribution limits. Earlier this year, Assembly Speaker Sheldon Silver introduced a campaign finance reform bill that would create a voluntary public financing program.

The governor was dismissive of Silver’s bill, and has since said that he would focus on encouraging the public to demand campaign finance reform in order to put pressure on the legislature to act.

Skaggs too believes that legislators may be reluctant to pass meaningful reforms without a push from voters. “I think there’s an incumbency protection instinct among some lawmakers,” he said. “They got there under the rules of the game that apply now, so they’re not interested in changing the rules if it worked for them.”

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