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NYC Campaign Finance IE Reform Package Brad Lander

NYC Campaign Finance IE Reform Package Brad Lander

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Published by ahawkins8223
NYC Campaign Finance IE Reform Package Brad Lander
NYC Campaign Finance IE Reform Package Brad Lander

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Published by: ahawkins8223 on Aug 26, 2013
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09/02/2013

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Summary
New York City’s strong campaign finance system is under threat from a floodof corporate cash through “independent expenditures.” (IEs). While moreattention has been paid to IEs at the citywide level, they are especiallydangerous in the City Council, where they can more easily overwhelm allother spending by candidates, and become the majority of informationavailable to most voters. This is becoming clear in the 2013 election cycle,especially in the case of the “Jobs for NY” IE created by the Real Estate Boardof NY (REBNY), which has raised over $6 million in large contributions fromreal estate corporations that do frequent business with the City, and is nowengaged in massive expenditures in City Council races, including numerousnegative mailings. While IEs are legal under the Supreme Court’s CitizensUnited decision, the City Council can take meaningful action throughlegislation:
Close the “LLC loophole” (which allows corporations to exceedcorporate limits)
Require the disclosure of top donors on communications
Require stronger language on IE communications
Background
New York City has one of the strongest campaign finance programs in thecountry. According to the Brennan Center for Justice:
 “New York City’s … system has benefits beyond simply limiting thesize of campaign contributions and expenditures … [It] changes howcandidates campaign—in a way that betters democracy. Candidateshave a much greater incentive to reach out to ordinary voters,everyday New Yorkers without deep pockets. In turn, being asked tocontribute—even small amounts—increases citizen interest and participation in elections.” 
1
 By combining a small donor public matching program, voluntary campaignspending limits, contribution limits, and restrictions on donors “doingbusiness” with the City (in real estate development, contracts, etc), NYChas dramatically reduced “pay-to-play” contributions.Unfortunately, the NYC campaign finance system is under existentialthreat from Independent Expenditures (IEs), which are flooding vastamounts of corporate cash into City campaigns. While IEs are takingplace in citywide races as well, they are especially dangerous in the CityCouncil. Candidates who participate in the NYC campaign matchingsystem are limited to spending $168,000 in their elections. But this year,a PAC backed by the real estate industry is on track to spend three to fivetimes more than what candidates are allowed to spend. In these down-ballot, lower-information races, where name recognition through mailingsand paid canvassers matters a great deal, this is about as close to buyingraces as you can get.
1
Angela Migally and Susan Liss (2012), Small Donor Matching Funds: The NYCElection Experience, Brennan Center for Justice.
 
REBNY’s “Jobs for New York” PAC
 The PAC created by REBNY (the Real Estate Board of New York),deceptively titled “Jobs for New York,” reveals the dangers presented byIEs, and some of the particular flaws in the current regulations:
REBNY is taking huge advantage of the LLC loophole
. Under NYS law,individuals can give up to $150,000 in annual aggregate to politicalcommittees, but corporations are supposed to be capped at $5,000.However, LLCs (the form for many real estate corporations) are treatedas individuals, and so can give up to $150,000. And an individual canfunnel money through multiple LLCs. This is NOT true under the CFB'srules for contributions to candidates (LLC contributions are prohibitedentirely), but we have not yet fixed this for IEs in local or state law.
The vast majority of the $6 million that they've raised comes from realestate corporations and LLCs
, most of it in large contributions of $50,000- $100,000. Many of these are from entities that "do business" with theCity (the donor limit to candidates is $2,750, but for people "doingbusiness" with the City, just $250 in order to reduce pay-to-play).
Even though Jobs for NY seeks to appear as a broader business andlabor PAC, all five of their board members are REBNY officers or leaders.
Pay-to-play” is a clear and present danger 
: At the same time, well-connected developers (who are REBNY members) are underinvestigation by the Moreland Commission for large politicalcontributions to legislators and the governor just before the Legislaturepassed and the governor signed a law allowing 5 developments to gainspecial access to a “421-a” property tax break worth tens of millions of dollars. According to a recent analysis by Common Cause, “from 2011to July 2013, over 70% of REBNY contributions to State Senatecandidates went to districts outside of NYC in return for tax breaks andlax regulations.”
2
 Because of the weakness in current IE disclosure rules, REBNY is able to hidewho’s behind their mailing to mislead voters:
None mention REBNY, or say anything real about who "Jobs for NewYork" is
. Their use of endorser logos and pictures makes it look like abroad, pro-good-jobs, pro-affordable-housing PAC with labor and electedofficial support, rather than an entity entirely controlled by REBNY, andfunded with large contributions from real estate LLCs.
They have mailed multiple negative mail-pieces
, which amount toanonymous hit-jobs on candidates who are participating in the campaignfinance system.
 At least one Jobs for NY mailing engages in ethnically divisive practices
, letting voters in a largely Puerto Rican and African-Americandistrict (with a growing immigrant population) know that the candidate
2
 
"Moreland Monday" Analysis of REBNY Contributions Raises Serious Issues forCommission to Consider, August 5, 2013
 
they opposed is from “El Paso, TX” as a clear (if subtle) reminder thanhe is of Mexican descent.
Taking Action: New York City Council Legislative Package
While IEs are permissible under the United States Supreme Court’s decisionin
Citizens United,
the City Council can take the meaningful steps to reducethe harm. Together with several of my colleagues (including somecandidates running for reelection who are themselves supported by Jobs forNY), I am therefore introducing a package of legislation that will:1.
Close the LLC loophole for IEs
. Under New York State election law,individuals can give up to $150,000 annually to all registered politicalcommittees. However, corporations are limited to $5,000 annually.Unfortunately, under a 1996 NYS Board of Elections opinion, LLCs areconsidered individuals, so a single firm can funnel $150,000 througheach of it LLCs. And real estate corporations often set up an LLC foreach property they own.NYC’s Campaign Finance Law addresses this issue for directcontributions to candidates, by banning LLC contributions entirely.However, it is currently silent on LLC contributions to IEs. Since theCampaign Finance Act already regulates LLCs separately, we believe itwould be legally permissible for the NYC law to treat LLCs ascorporations, for contributions to IEs in NYC elections. There are legalchallenges underway to New York State’s contributions limits regardingIEs. However, as long as those limits stand, New York City could closethe LLC loophole. 2.
Require any IE mailings and communications to list the identityof the top five donors
to the political committee, so voters will knowsomething about who's behind them. Both California and Connecticuthave laws in place that require this. Connecticut’s recent law, PublicAct 13-180, which Governor Molloy signed into law earlier this year,also includes additional reporting requirements on transfers andpayments into IE accounts, in order to prevent individuals from hidingbehind corporate shells.3.
Requiring a warning
on each IE mail piece:
This “Independent Expenditure” mailing is toxic to democracy.*
*Or, since that likely won’t pass Constitutional muster, maybesomething more like:
This mailing is funded by an Independent Expenditure, paid for by [top 5 donors], and is not subject to the contribution and expenditurelimits of the NYC Campaign Finance Board, which were designed to

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