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The Week Ahead in New York Politics, May 31


New York City Hall

New York City Hall


What to watch for this week in New York politics:

This week we're continuing to look for developments in the investigations into Mayor Bill de Blasio, his administration and allies and into Governor Andrew Cuomo's economic development programs, his administration and allies.

Meanwhile, there are nine legislative session days left in Albany, if lawmakers use them all, including this week’s Wednesday and Thursday meetings. Mayoral control of New York City schools must be dealt with - it is due to expire at the end of June. There are a variety of other high-profile issues that may see legislation, like changes to the state's laws around child sex abuse and daily fantasy sports betting, as well as government ethics reforms like limiting the LLC loophole or modifying pension forfeiture laws; but lawmakers may do very little and get out of town. All 213 seats in the Assembly (150) and Senate (63) are up for election this fall and legislators may be eager to devote their full attention to their home districts, campaign fundraising, and re-election efforts.

And as we hit June, it's also crunch time in city budget season, so we're following the final negotiations between Mayor de Blasio and the City Council. It has been a fairly quiet budget season, though the Council is pushing for several additions to funding before a final budget is adopted by the July 1 start of the new fiscal year. Those items include additional funding for arts programs, summer camps, and summer youth employment.

While it is a fairly quiet post-holiday week in terms of events, there are several hearings at the Council and more to be aware of - see our day-by-day rundown below.

***Do you have events or topics for us to include in an upcoming Week Ahead in New York Politics?
e-mail Gotham Gazette editor Ben Max: This email address is being protected from spambots. You need JavaScript enabled to view it.***

The run of the week in detail:

Monday - Memorial Day

Tuesday
Mayor de Blasio has no public events scheduled Tuesday. The same goes for Gov. Cuomo.

On Tuesday at 9 a.m. at Fordham University, schools Chancellor Carmen Fariña “will deliver brief remarks at a professional development for bilingual educators, hosted by the DOE's Division of English Language Learners and Student Support.”

At the City Council on Tuesday: at 1 p.m., the Committee on Environmental Protection will hold an oversight hearing on facilitating solar energy production in the city.

At 1 p.m. Tuesday at the David Dinkins Municipal Building, there will be a Gun Violence Awareness Month press conference. Public Advocate Letitia James, Comptroller Scott Stringer, City Council Speaker Melissa Mark-Viverito, Council Members Jumaane Williams, Vanessa Gibson, and Laurie Cumbo; representatives from the de Blasio administration; and leading community activists will speak.

Wednesday
Both houses of the state Legislature are in session on Wednesday in Albany.

On Wednesday at 10 a.m. in Albany, the Senate Standing Committee on Banks will hold a hearing examining credit and capital access for Minority and Women Owned Businesses.

On Wednesday, The Fund for the City of New York will announce the recipients of the 2016 Sloan Public Service Awards, the leading independent honor for City employees given each year to those who have built long careers serving New Yorkers. This year’s recipients—who have worked for the City for a combined 200 years—include longtime employees of the NYPD, MTA, Human Resources Administration, Department of Health and Hospitals, Department of Environmental Protection, and Department for the Aging.

On Wednesday evening, "Bronx Borough President Ruben Diaz Jr., together with Council Members Ritchie Torres and James Vacca, will co-host the borough’s sixth annual LGBTQ & Allies Pride Awards Ceremony."

Thursday
Both houses of the state Legislature are in session on Thursday in Albany.

On Thursday City Council Member Andy King will hold a “Wear Orange/National Gun Violence Awareness Day” press conference at 7 a.m. in front of PS 111..."Dedicating themselves to reducing the deadly crisis of gun violence, more than 100 public school students will be dressed in orange -- the official color of National Gun Violence Awareness Month -- to speak out against gun violence." Then, at 8 a.m., Council Member King "and the Justice League NYC will kick off the “March4Ramarley” March...at 749 E. 229th St...The group will march 17 miles from the home of the slain Bronx teen Ramarley Graham, to 1 Police Plaza, Manhattan, calling on Mayor de Blasio and Commissioner Bratton to fire all the NYPD officers involved in the killing of Graham."

At 6:30 p.m. Thursday, New York State Senator Jesse Hamilton will highlight improvements the community has made over the last year and present his policy priorities for 2016 and beyond at his State of the District Address, to be delivered in conjunction with a Community Resource Fair.

At the City Council on Thursday:

  • 9:30 a.m., the Subcommittee on Zoning and Franchises will meet.
  • 10 a.m., the Committee on Women’s Issues will hold a hearing on three bills that would require free feminine hygiene products be provided to inmates at the Department of Correction, supplied by the Department of Health and Mental Hygiene at temporary shelters, and supplied by DOHMH to all schools. [Read more about the bills and what to expect at the hearing: Council to Hear Bills on Providing Tampons at Prisons, Shelters & Schools]
  • 11 a.m., the Subcommittee on Landmarks, Public Siting and Maritime Uses will meet.

Friday and the weekend
At the City Council on Friday at 10 a.m., the Committee on Recovery and Resiliency will hold an oversight hearing on the financing of the city’s recovery from Hurricane Sandy.

***
Have events or topics for us to include in an upcoming Week Ahead in New York Politics? E-mail Gotham Gazette executive editor Ben Max any time: This email address is being protected from spambots. You need JavaScript enabled to view it. (please use "For Week Ahead" as email subject).

***
by Aaron Holmes and Ben Max
@GothamGazette

Role of Cuomo’s ‘Independent Investigator’ Remains Unclear


cuomo purple tie

Gov. Cuomo (photo: Kevin P. Coughlin, Governor's Office)


In trying to stifle the blaze that has become U.S. Attorney Preet Bharara’s investigation into the Buffalo Billion economic development program, Governor Andrew Cuomo has repeatedly invoked the name of Bart Schwartz, a former federal prosecutor the administration has retained (or is in the process of retaining) to carry out an “independent” review of the project.

In acknowledging that people close to him were being investigated in relation to the Buffalo Billion, Cuomo announced Schwartz’s hire on April 29.

When the Public Authorities Control Board met this week and approved without debate another $485 million for a key Buffalo Billion project, the administration quickly reminded reporters that Schwartz would now provide another layer of oversight by considering approval of disbursement of the funds.

The day before, Cuomo told reporters he had yet to finalize Schwartz’s contract. The governor also appeared unsure whether Schwartz would make his findings public. Administration officials later clarified Schwartz would release his findings as long as doing so wouldn’t interfere with Bharara’s investigation, which appears to be focused on bid-rigging and a web of relationships among private and public entities.

Even as Schwartz’s presence is held up as a measure of confidence in the Cuomo administration and the state’s vast economic development apparatus, several questions about Schwartz’s role and power remain. These include whether Schwartz has already started his work; when his contract will be available to the public; if his efforts are duplicative of the U.S. attorney’s office’s; and what authority Schwartz will invoke to audit the nonprofits that oversee the Buffalo Billion, which are said to be independent from the Governor’s Office.

Both the Cuomo administration and Schwartz’s recently-hired public relations firm failed to respond to Gotham Gazette’s questions about Schwartz’s role.

“In the real world someone doesn’t start work before they have a contract,” said Blair Horner of The New York Public Interest Research Group.

In conjunction with Cuomo's office, Schwartz issued a statement April 29 detailing some of his plans and saying he would begin immediately.

“The state has reason to believe that in certain programs and regulatory approvals they may have been defrauded by improper bidding and failures to disclose potential conflicts of interest by lobbyists and former state employees,” Schwartz wrote, in apparent reference to Cuomo associates Joseph Percoco and Todd Howe.

“As the state needs to continue operating these important programs, they have asked me to commence an immediate review of all grants and approvals – past, current and future – in certain programs and operations including the Buffalo Billion/Nano Economic Development Program,” Schwartz wrote.

It remains unclear exactly what Schwartz will be reviewing and how he will conduct his work. Part of the uncertainty and unease around Schwartz’s role held by some stems from Cuomo’s messaging around the investigation and various long-standing concerns about the Buffalo Billion.

There are three major questions about the Buffalo Billion raised by watchdogs and, it seems, Bharara’s office: Was the contracting process designed to benefit Cuomo campaign donors? Did Cuomo loyalists use their connections to play both sides of the contracting process? Are SUNY Polytechnic, the college that oversees the distribution of Buffalo Billion funds, and its associated nonprofits doing enough to make sure corporations like SolarCIty make good on their jobs promises and other deliverables. SolarCity recently appeared to revise the number of jobs it expects to host in its Buffalo Billion-funded factory and pushed back the factory’s open date.

Cuomo himself appears to have introduced a fourth question, which goes something like: Did someone steal money? It's a question watchdogs see as misdirection given that many of them doubt any money was actually secretly taken by lobbyists or contractors - they are more concerned about contracts being awarded improperly.

While Cuomo is calling it a measure to ensure integrity, Schwartz’s appointment is seen as a smokescreen by many legislators and watchdogs who are concerned about the Buffalo Billion. The governor has continued to tell the press that the investigations by Bharara and Schwartz will examine the possible wrongdoing of “one or two” individuals while analysts say Bharara’s subpoenas indicate an investigation into systemic corruption.

“This is a major effort the state is running that is working extraordinarily well and is vitally important to upstate New York,” Cuomo told reporters in Syracuse on Wednesday of the Buffalo Billion. “There is no reason to stop investing in upstate New York, to hurt the upstate economy, because a couple of people may or may not have done something wrong.” He went on to say: “You have questions raised about the conduct of several individuals. That’s now being investigated by the U.S. attorney. We also started our own internal investigation by a former prosecutor.”

Cuomo has also said he will “throw the book” at anyone found to have violated the public trust, and that he holds every Buffalo Billion dollar as “sacred.”

Without seeing Schwartz’s contract it won’t be possible to ascertain what Cuomo has actually tasked him with investigating. It also won’t be clear what the public is actually paying him to investigate a project that watchdogs say should have already been monitored by the state Comptroller.

“It’s ironic that [Cuomo] has gone out and hired someone who apparently will have access to contracts and information that the Comptroller of New York, who is independent, doesn’t have access to,” said E.J. McMahon, president of the Empire Center for Public Policy. McMahon did note that Schwartz isn’t “political” or “one of the governor’s people,” though.

When Schwartz’s role was first announced on April 29, Cuomo Counsel Alphonso David said of the Buffalo Billion, “Any grants made by this program will be thoroughly scrutinized – past, current or future.” David’s statement accompanied Schwartz’s in the same release to the media.

Schwartz may indeed be performing duties that once belonged to the Comptroller, Thomas DiNapoli, who was formerly allowed to review SUNY and CUNY contracts. That ability was stripped by Cuomo and the Legislature in 2011. SUNY Polytechnic has created two nonprofits to distribute state cash to various economic development projects across New York.

John Kaehny of Reinvent Albany, a group that has been closely tracking the Buffalo Billion, said that it is unclear to him what problems the governor has asked Schwartz to examine, especially because Schwartz’s contract has yet to be made public. “Where is his contract? Exactly what does it say?” Kaehny asked, wondering whether Schwartz is focused on everyday expenditures or aspects of possible pay-to-play and conflict of interest in the awarding of contracts.

After news broke this month that Bharara had subpoenaed Cuomo’s office, DiNapoli unveiled a series of reform proposals that watchdogs say would upend how the Buffalo Billion is administered and overseen by the state. His plan would ban lump sum appropriations, create a council to plan capital spending, and require economic development program proposals to be scored and ranked in a public database.

“Public authorities are not subject to the same checks and balances that apply to state agencies, resulting in hundreds of millions of dollars being spent annually with limited oversight,” reads a release from DiNapoli’s office detailing the reforms. “DiNapoli’s proposal would require state-funded public authority projects to be scored and ranked using measurable and objective criteria. His proposal also requires more disclosure of public authorities’ spending and financing activities.”

DiNapoli also recently indicated that he may investigate parts of the Buffalo Billion.

“Why, other than Cuomo saying so and Schwartz saying so, is there any reason to think that Schwartz is completely independent of the governor's office?” asked Kaehny. “Schwartz is not a court appointed monitor, nor is he reporting to a board of directors. He is effectively reporting to a CEO with no board whose top associates are under federal investigation.”

Dick Dadey, executive director of government reform group Citizens Union, said it is critical for the integrity of Schwartz’s work to make the terms of his employment clear. “If this investigation is about transparency it should start by making this contract public to reassure people that there will not be a repeat of the Moreland Commission where the governor promised independence but abruptly shuttered it.”

Cuomo told reporters on Tuesday “We're doing a contract that's being finalized now. When it's finalized we’ll give it to you.” He added negotiations were about “the dollars.”

The use of nonprofits to disburse government funds has led many to question the application of state procurement rules requiring an open request for proposals process. The RFPs for two major Buffalo Billion projects appeared tailored for the two firms that won them, both of which donated generously to Cuomo.

Kaehny, in a press release, asked members of the Public Authorities Control Board, a five-member group appointed by the governor, four of whom are recommended by heads of the Legislature’s majority and minority conferences, that is tasked with approving funding for state economic development projects, to pose that very question in their meeting on Wednesday. It was not asked.

However, the Assembly Democrats' representative on the board said she was voting for disbursing the funds with several conditions of more transparency and oversight.

SUNY Poly has previously insisted that the nonprofits do abide by those rules.

“SUNY Poly and our related entities follow New York state government’s well-established and legally defined procurement procedures — to the letter,” David Doyle, a spokesman for SUNY Poly, told the Times Union in a September letter.

State Attorney General Eric Schneiderman’s office declined to comment on whether the office believes the law actually applies to the nonprofits.

For the first time, on Wednesday Cuomo denied having influenced the contracting process for the Buffalo Billion. “The way it worked...the state didn't do any of the contracts," Cuomo was quoted as saying by The Post Standard. "It's all done through SUNY, the state university system. They are the ones that actually managed the contracting process. They are the ones who ran the contracts, ran the competitions, made the selections," he said. "I had absolutely nothing to do with that. It was done by SUNY.”

However, as Cuomo distances himself from SUNY Poly and its decisions in contracting, his appointment of Schwartz brings into question just how much control the governor does have over the SUNY nonprofits. It appears, in a sense, by hiring Schwartz Cuomo is saying he has direct authority over all the entities involved despite legal and rhetorical framework painting them as independent.

Kaehny said he doesn’t believe Cuomo has “the legal authority” to direct the Empire State Development Corporation or SUNY’s nonprofits to allow Schwartz to review their contracts or approve them. “ESDC is a public authority with a legally independent board and the nonprofits also have legally independent boards,” said Kaehny. “If they want to vote to subject themselves to control by Schwartz, they could do that, but that would be abdicating their fiduciary duty to a consultant to the governor, which raises questions of separation of powers. Are these entities independent of the governor or not? If they are not, then why are they exempt from state contracting and conflict of interest rules?”

SUNY Poly and a representative of Fort Schuyler Management, one of SUNY Poly’s nonprofits that administers the Buffalo Billion, failed to return requests for comment on whether Schwartz had begun his work and whether the boards of Fort Schuyler Management and Fuller Road Management had decided to give Schwartz access to their decision making processes.

On Tuesday Cuomo was asked about the scrutiny of his use of nonprofits and whether he would consider changing the process. “What's interesting is that all predated me, right?” Cuomo said to reporters. “That went back to Governor Pataki, who was a saint. That was all in place and we used the existing mechanism; we did not design that mechanism.”

Watchdogs say this is another misdirection by Cuomo as the particular system he has used to expedite Buffalo Billion was pioneered by SUNY Poly head Alain Kaloyeros during Cuomo’s time in office.

“The governor said the structure was here when he got here,” said McMahon of the Empire Center. “That isn’t true. It was set up by a very ambitious college president [Kaloyeros] who wanted to expedite the construction of his empire. The governor has used it because he can get done what he wants to get done faster. It avoids the niceties that usually go into spending public money.”

Dadey said there should be no mistake that Schwartz’s full task is to examine systemic issues in the Buffalo Billion and not just look for possible wrongdoing. “The SUNY cartel is hard to follow and that is a problem. Bart Schwartz's task is not just to find out if someone did something wrong, but to examine this opaque system and suggest ways to improve it, so voters can have faith in it.”

***
by David King, Albany editor, Gotham Gazette
     

Read more by this writer.

Note: Gotham Gazette is an independent publication of Citizens Union Foundation, sister organization of Citizens Union.

IBM Hired Influential Lobbyist Months Before Securing Buffalo Billion Deal


IBM sign

IBM (photo: Patrick via Flickr)


International Business Machines (IBM) has a long history in New York - its headquarters is located on the New York-Connecticut border in Armonk; it used to be one of the largest employers in the state; and it was part of a 2011 deal to bring $4.4 billion in investments to upstate New York through the creation of a high-tech computer chip manufacturing plant. The success of the company and the overall state economy have travelled similar paths, both flourishing at times, but when IBM laid off scores of employees, the state suffered.

Given its massive business interests it isn’t surprising that the company contracts with a host of New York-based lobbying firms. But IBM’s choice of a new firm in 2013 is raising eyebrows.

That year, as Gov. Andrew Cuomo ramped up his Buffalo Billion economic development program, IBM retained Whiteman Osterman & Hanna LLP. A few months later, IBM was part of a September 2013 Buffalo Billion deal that saw the state pledge $55 million to create information technology infrastructure in the beleaguered western New York city Cuomo had targeted for roughly a billion dollars of investment. In turn, IBM pledged to bring 500 information technology jobs to the area.

Whiteman Osterman & Hanna is one of Albany’s largest firms, with 75 attorneys, a wide variety of service offerings, and a location across the street from the state capitol. The firm has been influential in securing development deals with SUNY Polytechnic and its nonprofits that oversee the distribution of Buffalo Billion funds.

The Washington, D.C. subsidiary of Whiteman Osterman & Hanna, formerly run by lobbyist Todd Howe, is a target of the federal probe into the Buffalo Billion by the office of U.S. Attorney Preet Bharara, and the Cuomo administration has banned state employees from interacting with that subsidiary, WOH Government Solutions.

Whiteman, Osterman & Hanna is deeply involved in a web of relationships surrounding the Buffalo Billion program. Hiring the company is an apparent gateway to major business with state entities.

IBM retained WOH for the first time in early 2013, according to filings with the Joint Commission on Public Ethics (JCOPE), a state regulatory body that tracks lobbying. In September of that year SUNY Poly entered into a deal with IBM, which would see the state invest $55 million into the Buffalo Information Technologies Innovation and Commercialization Hub. The hub is being designed and built by the state and IBM, other information technologies firms will have access to its resources. Cuomo announced the project in February 2014.

IBM promised in return to bring the 500 new information technology jobs to Buffalo by September of 2020. Company officials have stressed that not all of the jobs will be IBM employees - they expect some to be provided by firms that deliver services to the technology center.

Essentially, the state funded the creation of a ready-to-use research center and has handed it over to IBM while expecting other businesses and state agencies to also utilize the infrastructure.

“New York State will commit, through CNSE (College of Nanoscale Science and Engineering), $55 million, which includes $25 million to establish an open innovation facility and $30 million to purchase IT equipment and software to be used at the Buffalo Information Technologies Innovation and Commercialization Hub,” reads a February 2014 announcement from the Cuomo administration. “The Hub will be owned by New York State with IBM as the first anchor tenant and made available to all IT units at all state agencies. The facility will open in early 2015 in downtown Buffalo.”

Jerry Gretzinger, spokesperson for SUNY Polytechnic, said that funding for the project is going towards purchase of the building, infrastructure, equipment, and installation. “IBM has taken up residence in Buffalo with hundreds of employees working in Key Tower. The company is receiving no funding, which is consistent with the state's economic development model,” Gretzinger told Gotham Gazette.

The federal probe into the Buffalo Billion appears to be examining possible bid rigging around the construction contracts for both the SolarCity project and the information technology innovation center. There are concerns the requests for proposals (RFPs) for both projects were designed specifically for large Cuomo donors to win. McGuire development, winner of the information technology innovation center contract, donated $35,500 to Cuomo from December 27, 2013 to October 12, 2014. The project was announced in February 2014. The largest single donation from McGuire Development, $25,000, came in May of 2014.

McGuire development wasn't the only major Cuomo donor to benefit from IBM's participation in the Buffalo Billion. The New York Times reported on Tuesday that Ciminelli Real Estate lost a major tenant at its property, The Key Tower, in 2013 - IBM has since moved in to the tower as part of its deal with the state. Paul Ciminelli, head of Ciminelli Real Estate, has donated $9,000 to Cuomo. His brother Louis Ciminelli, head of LPCiminelli, donated $29,200 to Cuomo in January 2014, just before the firm was awarded a contract, now reported to be under federal investigation, to develop parts of the Buffalo Billion. The Times found that the Ciminellis and their associates have donated $150,000 to Cuomo's various campaigns.

Recent subpoenas appear to target the relationship between former Cuomo aides Todd Howe, the aforementioned lobbyist, and Joe Percoco and work they did lobbying for clients to win Buffalo Billion contracts. No one, including IBM, has been charged with any wrongdoing.

Three sources familiar with the workings of the Buffalo Billion program say that WOH and Howe’s D.C. subsidiary were seen as critical in getting the attention of the Cuomo administration on Buffalo Billion projects. IBM did not return requests for comment, neither did WOH. WOH’s website advertised Howe and the services he could provide for New York clients until the page was removed after news broke of Bharara’s probe into Howe’s relationships and dealings.

JCOPE filings show IBM paid WOH a combined $240,000 in 2013 and 2014 and $120,000 in 2015. WOH was the only new New York-based lobbying firm IBM hired in 2013. The filings do not list any lobbying activity by WOH on behalf of IBM on any specific legislation or issue. However, the WOH employee listed on the disclosure, Richard Leckerling, a partner at WOH specializing in government contracts and government relations, is listed as managing the account. Another WOH lobbyist listed on the disclosure, William Crowell, is shown to have the sole area of practice as government relations according to the firm’s site. Leckerling did not respond to requests for comment.

Leckerling also serves on the board of the SUNY Poly’s children’s museum along with three members of SUNY Poly.

The Investigative Post has detailed Leckerling’s involvement with the two nonprofits that SUNY uses to funnel money to Buffalo Billion projects.

Fuller Road Management Corporation, one of Suny Poly’s nonprofits, paid $330,000 in legal fees to WOH from 2012 to 2014, according to The Investigative Post. Meanwhile, Leckerling has attended meetings of SUNY Poly’s other nonprofit, Fort Schuyler Management Corp.

Robert Samson, former head of IBM’s global public sector, serves on the board of Fort Schuyler Management Corp. Samson has served as a technology advisor to Cuomo and has donated to Cuomo’s campaigns. He joined the Fort Schuyler board in 2014.

The Whiteman Osterman & Hanna website advertises its government affairs work and ability to help clients land government business. “Whiteman Osterman & Hanna’s focus on matters at the intersection of the private and public sectors has led to the natural development of a vibrant practice of advising and assisting commercial enterprises and public entities through the state and municipal procurement processes. Based in Albany, New York, the Firm has represented commercial enterprises in a wide range of commodity and service procurements, including telecommunications, information technology, industrial supplies, food commodities, and environmental and financial services,” reads the firm’s site.

State law bans lobbying on procurement after the state issues requests for proposals, but IBM’s residency in the technology center did not come about as the result of an RFP. Like a host of other subsidy projects aimed at large corporations, negotiations around IBM’s involvement in the Buffalo Billion appear not to have taken place in public or through a public process.

SUNY Polytechnic reported doing business with WOH in 2015 for $2,056. The work is listed as lobbying related to “higher education” and involving the Assembly, Senate and executive branch. SUNY Poly’s founding president and chief operating officer, Dr. Alain Kaloyeros, is also a target of the U.S. Attorney’s investigation.

As the Buffalo Billion probe has ramped up and become more public, Whiteman Osterman & Hanna fired Todd Howe, a Cuomo family confidante who worked on at least one of Andrew Cuomo’s campaigns. Howe worked with SUNY Polytechnic as well as a number of firms with business before the state that won contracts with the Buffalo Billion while he ran the WOH subsidiary in D.C.

Howe worked for former Governor Mario Cuomo for a decade and is reported to have been a key member of the Cuomo clan. He worked for Andrew Cuomo during his time at HUD and on his reelection campaign and has done fundraising work for him. Howe landed major clients as a lobbyist because of his status as a Cuomo insider. At the same time, a recent New York Times profile painted a picture of someone struggling to hide a serious personal financial crisis while maintaining the image of a successful lobbyist. The Cuomo administration issued statements acknowledging there may have been improper lobbying involving Howe and Percoco, who was a long-time aide to Andrew Cuomo.

Cuomo has sought to distance himself from Howe. “I wouldn’t call us close friends,” the governor told reporters earlier this month. “He worked for the state for a number of years, but I had no knowledge of his personal situation.”

***
by David King, Albany editor, Gotham Gazette
     

Read more by this writer.



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