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Category ArchiveMelissa Mark-Viverito

Rent Asunder: City Council Tears Up Tax Bills on Thousands of Small Business Leases

Vacant storefronts have become a persistent Manhattan eyesore in recent years, as ever more window dressings and restaurant menus have given way to “for rent” signs. Blame sky-high rents, a shift away from brick-and-mortar shopping habits or decades-long leases with locked-in rents that leave landlords desperate to secure top-dollar deals today: All contribute to a veritable minefield for mom-and-pop businesses.

However, small-business owners have a shot in the arm coming their way this July when a years-long legislative effort to lower their costs is set to reach the finish line: A revenue-code reform will ease the commercial rent tax, a consistent fly in the soup of a broad cohort of prime Manhattan tenants.

The niche revenue measure, which applies only in Manhattan, to businesses south of 96th Street that earn at least $5 million per year, currently falls on all firms that accrue rents of at least $250,000 annually. (That’s just over $20,000 per month.) The effective tax rate is 3.9 percent, or about $20,000 on a firm that pays $500,000 in rent annually.

Now, City Council Intro 799-B, legislation inked by Mayor Bill de Blasio in December 2017, promises relief, at least to firms at the lower end of the current bracket. The bill raises the minimum rent threshold to $500,000 for fiscal year 2019, a change the mayor’s office said will entirely eliminate the tax for 1,800 small businesses in the city and significantly reduce the outlay for 900 more.

The measure, championed by a city councilmember who has since left office, Dan Garodnick, has won broad political and business-community support. The Manhattan Chamber of Commerce and the Real Estate Board of New York each issued a ringing endorsement of the move, as did a grab bag of lawmakers ranging from incoming City Council Speaker Corey Johnson to his predecessor, Melissa Mark-Viverito, as well as Jerrold Nadler, who represents much of Manhattan and Brooklyn in the House of Representatives.

“With these reforms to the commercial rent tax, the New York City Council is helping breathe new life into local businesses and increase jobs,” Johnson said in an email to Commercial Observer. Johnson’s constituent territory, District 3, encompasses west Soho and Greenwich Village, neighborhoods that have prominently suffered from the blight of higher vacancies.

garodnick Rent Asunder: City Council Tears Up Tax Bills on Thousands of Small Business Leases
Daniel Garodnick. Illustration: Kaitlyn Flannagan

None were more eager to celebrate the legislation’s passage than Garodnick, however, whose victory in shepherding the legislation to de Blasio’s desk at the 11th hour before his term-limit mandated departure last month represented something of a victory lap for the longtime councilmember from Manhattan’s East Side.

“We have a tax here that has the effect of throwing cold water on local economic activity,” said Garodnick, who has lain low since leaving office to spend more time with his family. “We needed to find ways for the city to stop stepping on the necks of small businesses, and this was one.”

Praise for the measure has rained down from industry players as well.

“I think that this is a definite benefit for a sweet spot of people that have smaller and midsize businesses,” said Tom Corrie, the director of accounting firm Friedman LLP’s state and local tax group. “[Those businesses] provide a lot of employment.”

A persistent problem with the tax, several insiders said, had been that a fair number of commercial renters did not even realize they were responsible for it when they signed their leases—although that problem may not alleviate with the new reform.

“Many tenants are not aware when they calculate their costs that there is a requirement to pay commercial rent tax,” Robin Abrams, the vice chairman of Eastern Consolidated’s retail brokerage, said via email. “They often are not represented by brokers who might educate them about this expense and are likely not knowledgeable about these kinds of additional expenses. [Then], they are hit with these costs once committed to the space.”

Corrie provided an illustrative story.

“I just completed an audit where I had a longtime family business that would have fallen within the context of this new change,” Corrie said. “Unfortunately, their previous accounting firm did not advise them correctly. Now, they got caught for an eight-year audit, which cost them a lot of money.”

By removing the tax burden on the smallest businesses it had applied to, Corrie said, the new measure will decrease the likelihood of mistakes by unsophisticated companies.

The accountant also lamented that the rent tax’s incidence falls on a group he sees as an economic engine in the city.

“These folks are not getting wealthy. They’re providing employment for 20 or 30 individuals each,” Corrie said of small business owners.

That logic mirrors the de Blasio administration’s thinking on the subject. Small businesses employ millions of New Yorkers, and nearly half of the companies are owned by immigrants, a spokeswoman for the city’s Small Business Services department said in an email to explain the administration’s emphasis on supporting the sector. Responding to questions about the overall business climate, the spokeswoman pointed out that in addition to the new tax break, the city has tried to lessen the regulatory burden on firms.

Total fines assessed against small businesses have declined 40 percent since 2014, she said, adding that the de Blasio administration has held thousands of free consultations with enterprises to help them avoid incurring costly violations.

Indeed, the reduced tax burden could help promote a more transparent relationship between businesses and the city because businesses sometimes cheated to avoid the rent tax. Some conniving tenants who were aware of the tax had dreamed up inventive schemes to avoid paying up, brokers said.

“We had one guy who asked if we could write him a separate lease, [each] for his store and his basement,” said Rafe Evans of brokerage Walker Malloy & Company, explaining that splitting the space into two separate contracts would have been a dubiously legal end run around paying a commercial rent tax bill. “That was a few years back, and we declined to get involved in shenanigans like that.”

“Tenants don’t want to know [about a tax violation],” the broker added. “There’s some willful blindness.”

Of course, the most seething ire against the tax comes from tenants themselves.

“I think it’s insane,” said Brian Kelly, a client of Evans who leases space for the Japanese restaurant, Kobeyaki, he owns on the Upper East Side. (Kelly declined to name his restaurant for this article.) “Taxing people on paying high rents. It seems kind of crazy to me.”

When Kelly signed a lease on East 86th Street in 2014, Evans said, the rent was in the mid-$20,000s, putting the restaurant squarely in the category of businesses that see their rent tax entirely disappear under 799-B.

The new tax policy would bring immense relief, the restaurant owner said.

“It’s a very big deal,” Kelly said. “I’m very happy they decided to do away with [the tax]. It’s one tiny step by the city of New York to become a friendlier place to do business.”

“We had been looking to get outside the city,” Kelly added.

Between relentless rising rents and mounting transit headaches, looking outside the Big Apple for growth has become an increasingly tempting proposition for businesses and developers of late. With decidedly positive harbingers for the city’s business climate harder to come by, many stakeholders seemed downright bemused by how broadly palatable the tax cut has been.

Indeed, conversations with landlords, politicians, special interest groups and business owners failed to uncover a single constituency that looked askance at the development.

At worst, at least one broker was merely indifferent.

markviverito Rent Asunder: City Council Tears Up Tax Bills on Thousands of Small Business Leases
Melissa Mark-Viverito

“I don’t think [the commercial rent tax] has an impact on anybody anymore,” said Stephen Siegel, the chairman of global brokerage at CBRE. “It’s all part of the expense package. When we do a financial analysis, everything is considered, and as far as the tenant is concerned, if anything is a problem, it’s rising rents.”

“I don’t even think people think about [the commercial rent tax],” he added. (Siegel has personally invested in a number of New York City restaurants, including Sarabeth’s, the Knickerbocker Bar & Grill and P.J. Clarke’s.)

Even if that’s the case, with the city’s climate for small businesses under increased scrutiny from politicians and other commenters, it’s perhaps unsurprising that a deep coalition of politicians was moved to act.

Sal Albanese, who challenged de Blasio in the Democratic mayoral primary last year, emphasized his support of the Small Business Jobs Survival Act during his campaign, a measure that would force landlords to sign more tenant-friendly leases. Although that bill would lead to deeper structural reforms for business owners than the rent-tax change, the current cut represents a broad group of politicians’ acknowledgement of small firms’ struggles to stay in Manhattan.

And Jeremiah Moss, a writer who for years has chronicled small-business closures in Manhattan on a popular but melancholy blog, has argued prominently that city policies are stacked against the beloved restaurants and stores whose shutterings he bemoans. His 2017 book on the subject, Vanishing New York, was widely reviewed in local and national outlets.

But Siegel, for his part, argued that any concerns about small-business viability in New York are decidedly overblown.

“I think there’s a good climate for anything in Manhattan,” Siegel said. “There’s not better labor anywhere in the country, and more and more people want to live in urban areas.

“Is it more expensive than Podunk, Iowa? True,” he added. “But [for people who are] looking to grow their businesses—the access in New York City to people and banking—there’s no better place in the world.”

Source: commercial

Delivering Amazon: This Is What’s Right and Wrong With the City’s Pitches for HQ2

Earlier this week, The Associated Press reported that Amazon received 238 proposals from cities and regions that want to house its second North American headquarters.

Indeed, Amazon has a lot to offer: a promised 50,000 jobs and $5 billion to spend. Everyone—including Gotham—wants in on the action.

In its attempt to lure Jeff Bezos to our city, New York hasn’t shown this much leg since The Deuce era.

More than 70 elected officials—from Public Advocate Letitia James, to Manhattan Borough President Gale Brewer, to City Council Speaker Melissa Mark-Viverito—signed a statement touting New York City’s accessibility to both Boston and Washington, D.C.; its commitment to sustainability; Citi Bike and the largest subway system in the world (wisely, nobody mentioned MTA’s “summer of hell”) and “affordability”—as in, the fact that the administration has promised 200,000 affordable housing units over the next 10 years. (Friendly advice: The word “affordability” isn’t something that really works to New York’s advantage in real estate matters. But too late now.)

“Companies don’t just come to New York,” Mayor Bill de Blasio wrote in his seduction letter. “They become part of New York.”

In its official presentation, the New York City Economic Development Corporation proposed four different neighborhoods that could conceivably do the job: Lower Manhattan, the Far West Side, Long Island City and Downtown Brooklyn.

And while everybody weighs in (Moody’s pegged New York’s chance of landing Amazon as sixth in the country—after Austin, Texas; Atlanta; Philadelphia; Rochester, N.Y.; and Pittsburg—as per a New York Times story), it’s worth considering the four areas up for consideration, what they all have to offer and what the NYCEDC probably won’t mention.—Max Gross

Lower Manhattan

Over the 16 years since the Sept. 11, 2001, World Trade Center attacks, Lower Manhattan has been transformed from a financial district to a commercial and residential hub.

It is this very evolution—plus its transportation network—that makes the neighborhood ideal for Amazon’s second headquarters in North America, Lower Manhattan boosters say.

Amazon wants 500,000 square feet of office space in 2018 with another 7.5 million square feet over time. And Lower Manhattan has the potential for over 8.5 million square feet of space, according to the city’s recent proposal to Amazon.

Granted, Downtown Manhattan would not be the cheapest option nationwide. But, “cost of space should be least of their concerns,” Marty Burger, the chief executive officer of Silverstein Properties, said in a survey for Commercial Observer’s upcoming Owners Magazine. (The landlord owns the majority of the World Trade Center buildings.)

“Most important is access to new talent,” he continued. “You want a place that has A) the best transportation, B) a great pool of people to draw from. When we look at the lower tip of Manhattan, it has the best access to all this talent—Brooklyn, Queens, Staten Island, Jersey City, even Long Island. There are 10 million people to draw that talent from.”

Lower Manhattan has a high concentration of mass transit with 13 subway lines and the PATH train, and those transit hubs have been upgraded with abundant retail and dining options as well as climate-controlled concourses, said John Wheeler, a managing director who runs JLL’s Lower Manhattan office.

Downtown Manhattan boasts access to the waterfront, more than 83 acres of open space and enticing dining options, from food halls like Hudson Eats in Brookfield Place to restaurants helmed by star chefs, like Jean-Georges Vongerichten, Nobuyuki “Nobu” Matsuhisa and Danny Meyer, to fast-casual chains like Chop’t Creative Salad Company and Dig Inn.

Burger has already figured out how to make it work for what’s being called Amazon HQ2.

“We could put together a campus for them,” Burger said. “They could take the top of 3 World Trade Center. We could work with Durst [Organization] to get them the top of 1 World Trade Center. We have a potential to build 2 World Trade Center and 5 World Trade Center. We could put together 7 million square feet.”

But there are also other options for Amazon.

Wheeler noted that, while the World Trade Center would be “part of the solution,” other candidates include Brookfield Place, 28 Liberty Street and Guardian Life Insurance Company of America’s headquarters building at 7 Hanover Square.
Lauren Elkies Schram

Long Island City

Long Island City’s relatively recent transformation from an industrial outpost to Queens waterfront hotspot has been mostly fueled by residential development, with more than 14,000 new units built since 2006 and another 19,000-plus in the pipeline, according to data from the Long Island City Partnership.

As far as commercial development is concerned, however, the neighborhood by most accounts has some way to go. Most of Long Island City’s new office stock has come in the form of repositioning existing warehouse buildings into loft-like spaces mostly of a scale smaller than what Amazon would demand.

But the city is floating LIC as a legitimate option for Amazon, citing the neighborhood’s “creative” appeal as “home to over 150 restaurants, bars and cafés” and more than 40 “arts and cultural institutions” including galleries, museums and theaters, according to the NYCEDC’s proposal.

While the proposal cites “over 13 million square feet of first-class real estate” available in the neighborhood, how much of that qualifies as office space that would suit Amazon’s needs is murkier. Per the LIC Partnership, the area has roughly 7.5 million square feet of existing, nonretail commercial space—which would already fall short of the 8 million that Amazon will eventually require—and another 4.5 million square feet on the way by 2020.

But projects like The Jacx—Tishman Speyer’s two-towered development that promises to bring 1.2 million square feet of Class A office and retail space to Jackson Avenue—hope to further enhance the neighborhood’s office chops. And perhaps the biggest advantage LIC has is its relative affordability compared to the other areas under consideration with the city citing “price points that compare favorably with commercial centers across the five boroughs.”

For developers like TF Cornerstone, which was an early believer in Long Island City and has helped facilitate its transformation via multiple large-scale residential projects, Amazon’s arrival would be a massive boon to the neighborhood’s economy—one that would fuel demand for the thousands of new residential units due to come online, attract needed retail to the area and heighten its profile as an office destination. In turn, LIC’s relatively central location within the five boroughs and robust public transit offerings would give Amazon what it needs for a viable HQ2.

“The north Long Island City waterfront offers the best location for a large user like Amazon,” Jake Elghanayan, a senior vice president at TF Cornerstone, told Commercial Observer in a forthcoming interview for Commercial Observer’s Owners Magazine. Elghanayan cited the neighborhood’s large “contiguous development area” and robust public transit offerings, as well as its proximity to the new Cornell Tech campus on Roosevelt Island.—Rey Mashayekhi

West Side of Manhattan

Those associated with the Hudson Yards megaproject like to say that “a new city” is being built on Manhattan’s Far West Side, and it’s hard to argue with the assessment. With tens of millions of square feet of new commercial space due to come online in the area over the coming years, Hudson Yards would most likely serve as the centerpiece of the city’s effort to get Amazon to commit HQ2 to Manhattan’s West Side.

Besides the sprawling 28-acre development being undertaken by Related Companies and Oxford Properties, there is also Brookfield Property Partners’ Manhattan West project nearby, where Amazon already has a sizable footprint. Last month, the tech giant committed to taking 360,000 square feet of office space at 5 Manhattan West, where it will house 2,000 employees and serve as the primary location for Amazon’s advertising division. (CO first reported that Amazon was in talks for the space in April.)

The city’s proposal for HQ2 also cites the nearby Penn Plaza district, where Vornado Realty Trust—the largest commercial landlord in the area surrounding Penn Station—has in recent years talked up a large-scale repositioning of its assets in a bid to capitalize on the West Side’s newfound appeal as an office destination.

In total, the city says the West Side offers Amazon more than 26 million feet of available office space to build its campus—more than triple the 8 million Amazon will need long term—as well as ample transit options for the company’s sizable workforce: 15 subway lines, plus access to the PATH, the Long Island Rail Road, the Metro-North Railroad and Amtrak, not to mention the Port Authority Bus Terminal and the Hudson River ferry service.

But the West Side could prove cost prohibitive; it is the most expensive of the four New York City submarkets being floated as options for Amazon. With the cost of living and doing business in New York already the biggest drawback in the city’s bid for HQ2, the likes of Related and Brookfield may have to look elsewhere to fill up all that office space.

Such cost concerns aren’t discouraging neighborhood stakeholders, however. “Manhattan’s always been expensive, but it gives you other things,” said Robert Benfatto, the president of the Hudson Yards/Hell’s Kitchen Alliance Business Improvement District. “It has its upsides and downsides, but it tends to be attractive to businesses.”—R.M.

Downtown Brooklyn

Out of the four neighborhoods New York City proposed for Amazon’s second headquarters, the “Brooklyn Tech Triangle” of Dumbo, Downtown Brooklyn and the Navy Yard might hold the most promise. Although the area doesn’t have much office space right now, several large projects are either under construction or in the pipeline. At the Navy Yard, Rudin Management and Boston Properties’ Dock 72 will bring 675,000 square feet of offices—anchored with a 222,000-square-foot WeWork—to a former dry dock on the East River.

Besides Dock 72, landlord Brooklyn Navy Yard Economic Development Corporation is leasing up a newly renovated 1-million-square-foot industrial and office building called Building 77, and there’s available space at Steiner Studios, the film and television production complex on the eastern edge of the yard. The closest subway stations are about a mile away in Dumbo (certainly its biggest drawback), but the yard has begun running shuttle buses that take commuters into Dumbo and Downtown Brooklyn for easy transit access. It’s also about to open a new ferry stop next to Dock 72.

TerraCRG Founder Ofer Cohen dispelled concerns about the Navy Yard’s lack of transit, pointing out that it hasn’t prevented hip companies from setting up shop there. New Lab, an innovative science and tech coworking space, recently opened in Building 128. And Building 77 hosts tenants like startup incubator 1776, a commissary kitchen for small food manufacturers called Tiny Drumsticks and fashion company Lafayette 148. He noted that Dock 72 would probably be the only project large enough to accommodate Amazon’s requirement of 500,000 square feet of office space in 2019.

“Downtown Brooklyn and the Brooklyn Tech Triangle are poised for significant growth,” said Downtown Brooklyn Partnership President Regina Myer. “There’s a huge demand for Class A space in Downtown Brooklyn. We have 1,400 innovative companies in the broader tech triangle. And we have an amazing pipeline of new talent for companies relocating to the tech triangle because we have 10 different colleges.”

Myer pointed to several sites in Downtown Brooklyn that could host Amazon. Rabsky Group could build an office building as large as 770,000 square feet on its vacant parcel at 625 Fulton Street, and RedSky Capital could develop a huge commercial and residential project on its assemblage bounded by Dekalb Avenue, Flatbush Avenue and Fulton Street. And Tishman Speyer is developing the Wheeler, a 10-story office building, on top of the Art Deco Macy’s department store at 422 Fulton Street.

CPEX Real Estate’s Timothy King, the brokerage’s managing partner, pointed out that Amazon would have convenient access to plenty of retail and amenities in Downtown Brooklyn, including hospitals, hotels, shopping, restaurants and bars. And when you consider Atlantic Terminal, the broader tech triangle offers 13 subway lines. “Short of going out in the desert somewhere and building some kind of utopian village,” he said, “I’d be hard pressed to find some place better for Amazon than beautiful Downtown Brooklyn.”—Rebecca Baird-Remba


Source: commercial

City Council Approves Construction Safety Training Bill

The City Council voted unanimously (42-0) in favor of a controversial bill today that will significantly increase the number of safety training hours required for construction workers.  

The legislation, Intro-1447-C, will require workers to have at least 40 hours of safety training on construction sites by September 2020. Today, workers are need to have just 10 hours of safety training. The new law will also create a 14-member task force to oversee that the training hours are met.

The bill has pitted union contractors, who are in support, against a variety of groups such as the Real Estate Board of New York, civic advocates and nonunion contractors. Those groups believe that the legislation will benefit the unions, which already require workers to have 30 hours of training, and have training facilities. And they say, it will force nonunion contractors to pay for more safety training for workers, increasing overall project costs.

During the City Council meeting before the vote, the bill’s co-sponsor, Jumaane Williams, thanked Gary LaBarbera, the president of the Building and Construction Trades Council of Greater New York, and said that REBNY “told untruths.”

He explained that LaBarbera, who represents more than 100,000 union workers, continued to stay at the table even though the bill didn’t have everything the union chief wanted. LaBarbera was pleased with the outcome.

Intro 1447 will be a significant step in the right direction for improving worker safety and standardizing rigorous training in New York City,” LaBarbera said in a statement following the vote. “I want to thank the New York City Council for taking up this important issue and getting the job done with a unanimous vote on behalf of all the hard working construction workers of New York City.”

And while Williams did not explain specifically what he meant when he said REBNY was untruthful, paraphrasing late singer Rick James, he said, “The love of money is a hell of a drug.”

He later added: “This bill is not perfect. I just ask for folks to…focus on things that need to be tweaked.”

REBNY responded via Twitter: “It’s unfortunate that [Williams] resorts to name-calling, and more unfortunate that he can’t answer basic questions about his bill. How will tens of thousands of workers access construction safety training? How will they pay for it? What steps are being taken to curb fraudulent safety cards? Why not subject all workers to Intro. 1447-C’s training requirements?”  

Last week, the City Council’s subcommittee on housing and buildings (for which Williams is the chairperson) voted to approve the bill unanimously, as CO previously reported. The following day two construction workers died while working on separate sites. One worker was a member of a union while the other was not, according to a spokesman for the Buildings and Construction Trades.

Last Thursday, nonunion worker Juan Chohillo, a 43-year-old Queens man, fell in the morning from the construction site at 161 Maiden Lane between South and Front Streets. It is going to be a 670-condominium building called 1 Seaport. Later that day, union laborer Joseph Pacheco, a 45-year-old worker from the Bronx, fell from 1 Manhattan West, also known as 401 Ninth Avenue, according to the New York Police Department.

Because of the recent deaths and others throughout the year, Williams’ colleagues praised his work on the bill and congratulated him and co-sponsor Councilmember Carlos Menchaca.

“Once again this council has demonstrated that we value people over profit,” Councilmember I. Daneek Miller said. “No other industry would have seen the lost of 40 lives over the past year and we would have stood for that.”

The effects of the law will be phased in. If they don’t already have it, workers are expected to get 10 hours of safety training by March 1, 2018. Then they have six months to get at least 20 more hours. After that, the task force will decide if the required hours should be raised to at least 40 and up to 55.

The New York Construction Alliance (NYCA), a group of construction managers that support the open-shop concept (using the best company for a job regardless of union or nonunion affiliation), voiced displeasure for the passing of the bill. The group hopes that it will at least be able to get its nonunion members on the task force. (Members are appointed by Council Speaker Melissa Mark-Viverito and Mayor Bill de Blasio.)

“It would reflect well on the council and mayor’s office in their stated commitment to transparency, deliberation and equity, if some of our members were considered for representation on the task force, in order to provide expert insight and analyses on how to best facilitate the mandates outlined in the bill,” NYCA’s Executive Director Kenneth Thomas, said in a prepared statement.


Source: commercial

Eight Man Race For Speaker of City Council Heats Up

It wasn’t supposed to be this way.

Until a couple of months ago, it seemed like Julissa Ferreras-Copeland, the Corona, Queens, councilwoman, could waltz her way into succeeding City Council Speaker Melissa Mark-Viverito, whose term runs out next year.

Ferreras-Copeland had, after all, the necessary bona fides: She had the backing of the most progressive members of the city council and was an important ally of Mayor Bill de Blasio.

But before the coronation could be finalized, her chief rival, Democratic Chelsea Councilman Corey Johnson, began laying the groundwork for his own shot at the council catbird seat. Johnson has been in regular contact with not only his peers but also council candidates, party bosses, labor unions and, of course, real estate developers about why he was a better choice.

So on June 1, the day before the city reached a budget deal, Ferreras-Copeland revealed that she would not seek re-election and abandon her speaker candidacy.

Leaving politics was a “very personal decision,” and her constant trips out of state to see her husband, who works in Maryland, took its toll, she explained to Politico. 

The news rocked City Hall, surprising even the mayor. The next day, lawmakers gathered in the members’ lounge to hear Ferreras-Copeland summarize the budget agreement and to thank her for her work.

“There wasn’t a dry eye in the house. It was a deeply emotional moment for everyone there, and she received an extended standing ovation,” one member there told the Commercial Observer. (Johnson was conspicuously absent, but he had called several members that weekend to check in, members said.)

The news left one of the most important positions when it comes to some of the issues nearest and dearest to the real estate industry’s heart wide open.

Six weeks later, another veteran council member chose to step away from politics.

Boro Park Councilman David Greenfield announced he was leaving his job to run the Met Council, the largest Jewish charity in the city. Greenfield ran the council’s other top committee, land use, which controls a broad range of planning, zoning and landmark requests citywide. 

It’s a seat the real estate industry is also keeping a close watch on.

Greenfield shepherded the laborious East Midtown rezoning that took nearly five years to cobble together. Half a dozen other neighborhood rezoning plans are coming up the pike including East Harlem, Gowanus, Bushwick, Jerome Avenue in the South Bronx and Staten Island’s north shore.

It would be difficult to overstate just how important the land use chair is to Gotham’s real estate community. Now there is a wide open race to succeed Mark-Viverito (the mayor will almost certainly win re-election), so the city council race just got really interesting.

The Path to the Speakership

This year there are at least eight candidates for speaker who have been politicking their peers, county leaders and the city’s ruling class with varying degrees of intensity.

Aside from Johnson, Harlem Councilman Mark Levine and Far Rockaway Councilman Donovan Richards have nudged ahead of the other hopefuls into the top tier, according to interviews with more than a dozen political consultants, lawmakers and lobbyists. All three are members of the council’s 19-member progressive caucus.

The second tier includes Inwood Councilman Ydanis Rodriguez, Long Island City Councilman Jimmy Van Bramer, Bedford Stuyvesant Councilman Robert Cornegy, Flatbush Councilman Jumaane Williams and Bronx Councilman Ritchie Torres, although the race remains volatile.

“This is three-dimensional chess where the pawns get to make their own deals,” said Ken Fisher, a Cozen O’Connor attorney and former councilman.

Moreover, the City Council will welcome at least 10 new members next year thanks to term-limited departures, retirements and a corruption conviction.

Dozens of candidates are battling for 10 open seats across the city. Another four incumbents—Crown Heights Councilwoman Laurie Cumbo, Sunset Park Councilman Carlos Menchaca, Maspeth Councilwoman Elizabeth Crowley and Bronx Councilman Fernando Cabrera—face highly competitive challenges.

Turnout for the September primary is expected to be dismal, increasing the chances an incumbent could be knocked off or a surprise insurgent could claim an open seat. 

Democratic bosses will look to corral enough votes in exchange for doling out plum leadership posts to members and jobs among the vast council staff. 

The speaker gets to pick who will lead each council committee, although the slots for finance and land use are a key part of any deal with county bosses or coalition leaders for the speakership.

Council members from each borough would vote as a bloc, and when two bosses make a deal to pool their votes while picking up stragglers, such as a Republican or two, they can secure enough votes to win the speakership.

Outside interests, such as real estate developers, business leaders and unions, will also look to ensure candidates friendly to their cause are well funded and in a position to win.

Developers have met with leading candidates but have not picked a favorite. The Real Estate Board of New York’s campaign committee has so far been unwilling to open its coffers on council races after spending on 22 candidates four years ago.  

“My fervent prayer is that the Real Estate Board will endorse the candidate that understands that trickle-down economics works, that development and commerce are so important to the city, and if you ever want affordable housing and universal pre-K, that comes from for-profit projects,” said Meridian Capital Group broker David Schechtman.

But many of the other real estate pros Commercial Observer contacted chose to play their cards close to the vest.

Democratic county chairmen have the most influential role in the process, and no county leader in modern history has played this game better than House Democratic Caucus Chairman Joe Crowley, the county’s powerful party leader, who formed alliances with other leaders in past City Council elections to whip enough votes for Manhattanites Gifford Miller and Christine Quinn to each be named speaker. In exchange, Crowley ensured that Queens council members would run land use and majority of the committee chairmanships in those deals.

Crowley thought he had another arrangement in place in 2013, but de Blasio and the progressive caucus, a citywide bloc of left-leaning members independent of county leadership, joined Brooklyn Democratic Chairman Frank Seddio and outmaneuvered Crowley to pick Mark-Viverito as speaker in 2014. (It helps explain Crowley’s lack of enthusiasm for Ferreras-Copeland who bucked his choice for speaker, Dan Garodnick.)

“The mayor got what he wanted last time,” Fisher said. “I think the mayor took a lot of people by surprise with how aggressive he was getting into the mix.”

Many observers believe the easiest path to winning the speakership is securing support from Crowley, Bronx Democratic leader Marcos Crespo and Carl Heastie, who has become even more powerful in his role as Assembly speaker. Both Queens and the Bronx are more unified than Brooklyn and Manhattan and more likely to hold onto a group of votes, sources said. 

Of course, there is another path to securing the speakership that is similar to the one Mark-Viverito took—assembling a coalition of progressive votes in Brooklyn and Manhattan with a push from the mayor.

But the idea that a coalition of progressives could name a speaker also has its share of flaws.

Several members of the progressive caucus are actively seeking the speakership, diminishing their power as a bloc. And their relationship with Brooklyn leaders, whom they made a deal in 2013, has been strained. Plus, the fact that the most visible progressive in local politics—de Blasio—no longer has his preferred candidate in the running makes him a lot less relevant.

“The mayor is a lame duck after he wins; he doesn’t have as much clout as he had four years ago,” said George Artz, a political consultant who advises Brooklyn Democratic Party leader Frank Seddio. “He could dangle any number of goodies—maybe it’s funding for projects that someone urgently needs or maybe it’s something council person wants to kill.”

“The weird coalition of the Brooklyn organization and progressives is hard to sustain,” one Queens political insider close to Crowley said. “Progressives got their start opposing the Brooklyn organization specifically.”

A third approach is some type of consensus between the two camps, but no one yet knows what that would look like. 

“It is hard to see a scenario where Queens and Brooklyn are aligned, but Crowley is a pragmatist at heart,” said one real estate consultant who works with county leaders. “If he takes his share of the spoils is he better off doing that with a combination of Bronx and Manhattan or some combination of Brooklyn with or without Manhattan?”

Council members may also want a speaker who will challenge de Blasio—especially if his poll numbers begin to sink. Some members viewed Mark-Viverito as too close to the mayor in the first two years of her term, but at the same time, she earned praise for pushing him to ease penalties on low-level offenses, close Rikers and increase legal aid funding for immigrants accused of violent crimes.

The Eligibles

The unpredictability of the contest has led the city’s kingmakers to scope out the candidates for speaker this summer.

Johnson, Levine and Richards have already met with REBNY to make their case, sources said. REBNY’s campaign committee spent nearly $5 million on nearly two dozen races in 2013, although some candidates, including Levine, denounced the industry’s attempt to sway council races with their hefty donations.  

A REBNY spokesman declined to comment, only offering, “We like everybody.”

But this might just be a dodge: Some real estate insiders think Johnson holds a slight edge over the others.

“Corey Johnson is a guy that REBNY is going to push for,” said one Manhattan real estate developer connected to Democratic politics. “Johnson’s district has a lot of development such as areas near the High Line, West Midtown, Hudson Yards and several new hotels.”

But developers may defer to Crowley with whom the industry has had a close relationship and who may have the best shot at naming the next land use committee leader. 

“I think they want the organizations to be able to control it with the idea that whoever the organizations pick has to be friendly to the business community,” the Queens source said.

Crowley and Bronx leaders are likely to throw in their support for one of the three, multiple sources said, but they have not revealed who they favor.

One political source asserts one deal has already been struck between Crowley and Rep. Nydia Velazquez. Two progressive council members would pledge their votes to Crowley in exchange for his support in their primary contests, according to the source, who is familiar with the Queens county leader’s decision. 

“Nydia and Crowley cut a deal with Menchaca and Reynoso,” the source said. “They’ll support who Crowley wants in exchange for Crowley making phone calls to unions and helping the two guys to raise money.” The source refused to say who they would support.

Johnson has been campaigning for the speakership the longest and is viewed by political insiders as someone Queens and Bronx leaders favor despite being a progressive caucus member. He called the council a “force for tremendous good in the world” and promised to continue its work in a statement to the Commercial Observer.

But his enthusiasm for the post could turn off his peers, insiders say.

“Corey is working harder than everybody, and there are people who wonder whether he is working too hard,” said one former council member, pointing to an episode where Johnson visited council candidate Bronx Sen. Ruben Diaz Sr. in the hospital last year while Diaz Sr. was recovering from surgery. Diaz Sr., a Democrat, is opposed to abortion and gay marriage but is heavily favored to win an open Bronx council seat.

“The perception is that Johnson will do anything to get elected,” the former member said. “Some find that a good quality, and others think that’s a turn off.”

Levine and Richards have tried to appeal to their colleagues and county leaders as consensus choices. 

Levine is enormously well liked by his colleagues and has been making inroads with labor unions, but some question whether he will stand up to the mayor as aggressively as Johnson would. Levine said he would ensure the council remains “strong, united and independent” but would not pick unnecessary fights with the mayor.

“I am not the person who is going to be throwing verbal bombs from the steps of City Hall,” Levine told the Commercial Observer. “I am going to build coalitions because I think that’s the most effective form of leadership.”

Richards is also popular with other members and has seen his support grow not just among progressives but also union leaders and minority- and women-owned businesses.

Council members may push for the speaker to be a person of color, giving Richards, who is African-American, an advantage. Richards also touted his knowledge of land use matters and said he would strongly engage on planning matters before the City Council if he wins.

“I am someone who understands the diversity of the city, and we have to make sure that all interests and constituencies have a seat at the table,” he told CO. “How do you build more sustainable communities and foster civil rights? Planningthis is where it’s done.”

Richards may also emerge as a mayoral favorite. He was one of seven council members who endorsed de Blasio’s re-election last year—but that could hurt Richards among other colleagues and county leaders.

“Richards tries to play well in the sandbox but people know who he is,” said one source close to the Bronx leaders. “He tries to dance in between all the camps.”

Perhaps the key question is whether the city’s still-powerful county leaders can trust any of the top-tier candidates to build a coalition around them.

“It doesn’t have to be someone they love to hang out with, but it has to be somebody they can work with and trust,” Fisher said.


Source: commercial