Bronx BP Allocated $1.4 Million for Developer Connected to $100,000 in Donations

Borough President Ruben Diaz Jr. received nearly $100,000 from a developer that he later allocated $1.4 million in capital budget funds.

Bronx Borough President Ruben Diaz Jr. in the Mall At Bay Plaza in the Baychester section of the Bronx.
Bronx Borough President Ruben Diaz Jr. in the Mall At Bay Plaza in the Baychester section of the Bronx.

As Mayor Bill de Blasio heads into 2017, he is battling subpoena-fueled criticism for accepting donations to his political non-profit from developers and others with business interests before the city—sure to be a storyline in a Democratic primary or a re-election bid.

But if that challenge comes from Bronx Borough President Ruben Diaz Jr., the mayor won’t be the only candidate who has accepted cash from people who would go on to seek his office’s blessing or generosity in dealings with the city.

Diaz Jr.—a frequent critic of the mayor who is oft-cited as a potential primary challenger—received nearly $100,000 in donations connected to a Queens-based construction company that went on to be awarded $1.4 million from Diaz Jr.’s fiscal year 2011 capital budget to build an apartment building on vacant land on Pelham Parkway. (The company, MJM Construction, never received the money because the apartments were never built, and they no longer own the land, which is still slated for housing development.)

Diaz Jr.’s office said the capital budget money, which is controlled entirely by the borough president’s office, was allocated to MJM because they proposed a project—middle-income units, a spokesman said—in line with the office’s goals, and said the developer was vetted by the Department of Housing Preservation and Development.

“Campaign finance doesn’t dictate what we do in the office, and it doesn’t affect our decisions or considerations,” John DeSio, a spokesman for Diaz Jr., said in a phone interview with the Observer. “They had some record of development, they brought a project to us that was exactly the kind of project that we are into supporting, and we went to HPD and HPD agreed.”

While there’s no evidence the donations and the capital allocation were connected, it’s a stark example of what seems to be a universal truth of politics: many of those who donate to a politician will also seek approvals, money or contracts from those politicians once they’re in office.

“Campaign contributions have to come from somewhere—American democracy rests on private donations,” Blair Horner, legislative director of the New York Public Interest Research Group, told the Observer over the phone. “And the people who have the resources and the interest in making the donations usually have interests before the government.”

Indeed, most elected official who raise significant money in the city—including those being named as potential mayoral contenders—have taken money from developers who depend on the city for approvals, or lobbyists who draw the ire of the public. Scott Stringer, the comptroller and another potential primary contender, received tens of thousands of dollars in real estate donations, including money bundled by employee of Durst Organization and Two Trees, while serving as borough president and having a vote in the Uniformed Land Use Review Procedure that was vital to getting their projects passed. More recently, lobbyist James Capalino, who has been embroiled in the Rivington House debacle that has dogged the de Blasio Administration, bundled $16,800 in contributions for his 2017 election (for an as-yet-undeclared-with-the-CFB office). Brooklyn Borough President Eric Adams recently came under fire for operating his  own political non-profit. (None are facing investigations on nearly the same scale as de Blasio.)

In the case of the $99,118 in donations Diaz received, the money was tied to a comparatively small outfit, MJM Construction—not exactly as bold-faced a firm as those that made eye-brow-raising cameos in corruption trials of former elected officials like Dean Skelos and Sheldon Silver.

The principal of the firm, David Herrera, bundled $57,005 for Diaz Jr. between 2009 and 2011. In addition, Diaz Jr. received another $42,113 from donors who listed either MJM Construction or a related company, Masonry Services Inc., as their employer.

The $1.4 million for MJM to build the Pelham Parkway housing development was allocated in Diaz Jr’s 2011 fiscal year budget. But the project eventually fell through, DeSio said, before MJM drew down any of the money. The developers, DeSio said, asked to make “significant changes” to the project and still keep the budget money, and Diaz Jr.’s office told them no, he said.

“The borough president holds himself to the highest ethical and legal standards, and when you do that, questions like these are easy to answer,” DeSio said.

Campaign Finance Board audits found Diaz Jr.’s campaign in compliance with its rules for those election cycles.

Attempts to reach David Herrera, including two messages left at a cell number believed to be his, were unsuccessful. The phone number listed for MJM Construction was answered by a man who said he’d inherited the number from the company and added that “they don’t exist anymore.” A message left with a woman who answered the phone at Masonry Services Inc. in an effort to reach David Herrera or his relatives who are listed as registered agents of Masonry Services Inc. was not returned.

David Herrera is not listed under his Bayside, Queens, address as having donated to any other political candidate, though a listing for a David Herrera, founder of MJM Construction, with an address in California made a $1,000 donation to Queens councilwoman Helen Foster in 2009. Herrera did not bundle for or donate to Diaz Jr. again after 2011.

What exactly happened to scuttle MJM’s plans for developing the site is unclear. MJM Construction’s website is no longer online, but an archived version described their plans for the property: a 91-unit “affordable housing complex” in a seven-story elevator building. A 2011 Department of Buildings permit for work at the site listed its owner as Emanuel Kanaris, who is identified in a letter about environmental remediation from the state as part of MJM.

In 2012, David Herrera told DNAinfo that the project had been stopped due to financing issues, and that he’d seek to either develop market-rate housing instead of affordable, or sell the property.

The property is now owned by the Stagg Group—another well-connected real estate firm that employs former Bronx Borough President Adolfo Carrion. It, too, has plans to build housing there—though it also ran into obstacles, in the form of a man squatting in old horse stables on the property.

The Campaign Finance Board does have different, lower contribution limits for individuals who are categorized by them as doing business with the city—registered lobbyists, those applying for land use actions, grants or contracts—but neither Herrera nor his relatives who worked at MJM or Masonry were categorized as such.

The two companies, which are named as connected in several court cases and appear together on at least one building permit application, have run into trouble in recent years.

Masonry Services Inc. and its owners James Herrera and Jaime Herrera—who have both donated to Diaz Jr.—agreed to pay $600,000 in back wages and costs after Attorney General Eric Schneiderman investigated them for cheating workers out of the same sum on a taxpayer-funded affordable housing project for seniors in Brooklyn.

In 2014, a Daily News investigation found that MJM Construction was one of 11 companies subject to an “enhanced review procedure” for doing business with the city, because it was “linked to a firm barred from city business because of wage-cheating issues.”

Bronx BP Allocated $1.4 Million for Developer Connected to $100,000 in Donations