In of itself, the New York Times’ story on Sunday on how Republican Presidential candidate Donald Trump built his real estate empire on tax breaks was an important story about a man who might be the leader of this nation in four months.
But the account of how Trump had reaped at least $855 in tax breaks, grants and other subsidies for luxury apartments, hotels and office buildings was an equally important insight into how the New York State operates today.
As the Times pointed out, Trump pursued every last dime available in assistance from New York State and New York City for his properties but he was far from alone.
In fact, Trump’s story was very familiar one for those who followed the trials of former Assembly Speaker Sheldon Silver and former Senate leader Dean Skelos, both of whom were found guilty of public corruption.
At the center of both those trials was Glenwood Management Corporation, a New Hyde Park-based real estate company.
Like Trump Glenwood owns luxury residential towers and like Trump the company benefitted by receiving tax subsidies for luxury buildings under a real-estate tax abatement called a 421-a, in the case of Glenwood up to $100 million.
Charles Dorego, a Glenwood executive, testified at one trial that the law’s continued renewal was an “absolute necessity” for Glenwood.
Without it, he said, the cost of city real estate taxes — the largest component of a luxury high-rise’s operating budget — would make building such towers unfeasible, in part because lenders would not finance them.
Glenwood also benefited from another state-administered program, using it to obtain more than $1 billion in low-interest, tax-exempt bond financing since 2000, to buy land and construct eight buildings it has put up since 2001, according to testimony at Mr. Silver’s trial.
And Glenwood depended on the governor and the legislative leaders to renew favorable rent regulations that determine when a developer or landlord can shift rent-stabilized apartments to market-rate rentals.
Glenwood and other real estate companies have ensured favorable treatment from the government by using a loophole in the state’s campaign finance laws to make virtually unlimited campaign contributions to those running for the state Legislature and statewide office.
The company, by itself, directly or indirectly made at least 1,834 contributions worth $13.2 million between 2000 and 2014, according to the Gotham Gazette.
Included was $1.1 million to the New York State Senate Republican Campaign Committee and $1 million to Cuomo’s re-election bid. Glenwood was by far the largest donor to the campaigns of Cuomo, state Attorney General Eric Schneiderman and state Comptroller Tom DiNapoli. Locally, Skelos received $110,000 and state Sen. Jack Martins received $45,000.
While overshadowed by the Presidential election, candidates are running this year for the New York State Senate and New York State Assembly who, if elected, could make changes to this system — or not.
With their jobs on the line, there is no better time to ask candidates from both parties whether a system of tax breaks, grants and other subsidies, which go disproportionately to the wealthy and well connected, serves a public service.
Or whether the state and city should be really be subsidizing luxury apartments, hotels and office buildings? With taxpayers picking up the tab.
And what about eliminating the L.LC. loophole?
State law allows an individual to give as much as $60,800 a year to a candidate for statewide office, but caps corporate contribution at $5,000.
But the state Board of Elections ruled in 1991 that L.L.C.’s, limited liability corporations, which are a hybrid between a regular corporation and a partnership, would be treated like people rather than corporations.
This allowed businesses like Glendale Management to make virtually unlimited contributions to state officials by forming as many L.L.C.s as needed.
Gov. Cuomo recently presented — but did little to push — state legislators with eight separate options to reform the L.L.C. loophole during the last legislative session.
The legislators chose none.
Candidates running for office routinely talk about cleaning up the corruption in Albany and looking out for the average taxpayer.
A candidate’s answers to these questions are a good way of determining whether he or she really means it.
