It was probably one of the few bad times during the Bloomberg administration to be a developer. One morning in early February, about a dozen of New York’s finest and wealthiest real-estate leaders convened to eat breakfast and hear why they should contribute to the World Trade Center Memorial Foundation.
The place was Gracie Mansion. And the speaker was the man who, indirectly or directly, determines how high they can build and where—and, on certain city-led projects, whether they can build at all: Mayor Mike Bloomberg.
He wanted $5 million from each of them.
How could they afford to give that much? On the other hand, how could they afford not to?
“When the mayor of the city in which you are doing business asks you for money, it is almost impossible for you to say no,” said one real-estate insider familiar with the breakfast. As for the possibility that the Mayor would somehow retaliate against those who did not give, the insider added, “I don’t believe that he would ever do that. But I wouldn’t want to find out that he did.”
Is it worth $5 million so that you never have to find out?
When Mr. Bloomberg became chairman of the World Trade Center Memorial Foundation last October, the city sighed with relief. Thank goodness! A high-profile, no-nonsense businessman rich enough to donate $10 million to the cause straight off! The New York Times editorial board praised the Mayor’s “long track record in finding solutions to difficult and contentious public matters,” while Governor George Pataki cited his “proven success” in philanthropy.
By the end of January, Mr. Bloomberg had almost doubled the kitty to $253 million. All he needed were 20 Wall Street giants, or media barons—wait! How about real-estate developers?—to chip in $5 million each and he would surpass the $350 million fund-raising target.
City Hall maintains that the breakfast posed no conflict of interest because the Mayor got clearance to fund-raise for the memorial before assuming the chairmanship of the foundation last October.
“The Conflicts of Interest Board determined that the W.T.C. memorial is a city-affiliated not-for-profit and the guidance provided was strictly followed,” a Mayoral spokesman, John Gallagher, said in an e-mail.
Wayne Hawley, general counsel for the Conflicts of Interest Board, said the board doesn’t comment unless a complaint is filed or a person whose integrity is in question requests a ruling. The ruling from October, however, stipulates that no prospective donor may be approached who “has a specific matter either currently pending or about to be pending before the city official.”
TAKE A GROUP OF 12 DEVELOPERS TOGETHER, throw a dart, and see what you hit. The guy who submitted a bid to the Economic Development Corporation on converting a city-owned armory to a shopping center? Who will ask the Department of Housing Preservation and Development for a piece of Queens West? Who is trying to get the Department of City Planning to expedite an application to rezone his plot of land?
The heads of all of these agencies are appointed by the Mayor.
“It’s touchy ground,” said Andrew White, the director of the Center for New York City Affairs at the New School. “It does point directly to the question of whether the Mayor is the right person to ask for this money—even though these are the people who should be contributing to this memorial.”
John Zuccotti, a developer himself and a member of the memorial foundation’s board, came up with the names of a couple of dozen fellow real-estaters to invite to the breakfast. Mr. Zuccotti told The Observer that he gave the list to the mayor’s office.
It was unclear whether the Mayor vetted the list to weed out developers who might have “a specific matter either currently pending or about to be pending before the city official.” Mr. Zuccotti said he was unaware of the potential for a conflict of interest.
“I think the idea is absurd,” Mr. Zuccotti said, “because the memorial is something different.”
The official reaction from the association of developers played down any controversy.
“For him to say, ‘Hey, guys, you are making a lot of money in the city of New York—how about writing a check for this cause?’, I don’t think that has anything to do with projects that might be happening,” said Steven Spinola, president of the Real Estate Board of New York, who didn’t attend the breakfast, although members of his trade group did. “Nobody viewed this as a strong-arm by the Mayor. It was a legitimate request for help.”
Joseph Daniels, the president and chief executive of the memorial foundation, said that the Gracie breakfast is the first in a series of industry-specific events that the Mayor is planning to hold. Previously, Mr. Bloomberg had met one on one with some business leaders, Mr. Daniels said.
As for the $5 million ask, hopefully the guests took that with a grain of, um, salt.
“What the Mayor set forth was an aspirational target for contributions from this group. As any fund-raiser knows, you aim high,” Mr. Daniels said. “I will tell you, the breakfast was successful. The contributions we received have ranged from $5 million to far less than $5 million, and every one of those contributions was deeply appreciated.”
Mr. Daniels wouldn’t release the names of the donors or be specific about the amount raised. He did say that the Mayor was aware or would become aware of who gave, although he denied that they would be given special treatment.
HOWEVER, ACCORDING TO AN EARLIER CONFLICTS-BOARD ruling on a different matter, public officials who solicit for nonprofits have to release the names, twice a year, of those who gave more than $5,000, as well as the approximate amount of their donations.
Mr. Zuccotti’s company, Brookfield Properties, had pledged between $1 million and $4.99 million well before the breakfast, according to the foundation, as had Tishman Speyer and the Rudin family.
One government watchdog said Mr. Bloomberg’s potential conflict was mitigated by his public-spiritedness.
“The reality is, you have this hole in the ground at Ground Zero, and you have a Mayor who is willing to do the heavy lifting,” said Gene Russianoff, an attorney at the New York Public Interest Research Group. “What’s the Mayor getting out of it? There is a city purpose to it all, not a Mike Bloomberg purpose.”
Well, no Mike Bloomberg purpose, perhaps, but maybe a Mike Bloomberg ’08 purpose?
Oddly enough, the Conflicts of Interest Board, in a 2003 ruling on a different matter, speculated that the whole point of asking public officials to lead charitable drives was their powers of persuasion. “Likely donors find it easy to ignore both non-targeted appeals and targeted solicitations from low-level officials,” the opinion stated, concluding that “it remains the board’s view that targeted appeals by public officials are effective precisely because they are inherently coercive.”
Public officials must strike a “balance,” the opinion continues, between coercion and effective fund-raising.
You can’t twist somebody’s arm, but you can pinch it.