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De Blasio Faces Local Questions About ‘Mansion Tax’ Plan


de Blasio speech dining room gracie

Mayor de Blasio (photo: Edwin J. Torres/ Mayor's Office)


A report released by the city Independent Budget Office has raised questions about the potential effects of the so-called “mansion tax,” a proposed part of Mayor Bill de Blasio’s affordable housing strategy that would levy a 2.5 percent surcharge on the sale price over a threshold of $2 million for residential properties.

De Blasio put forward a version of the mansion tax proposal, which requires approval by the State Legislature and Governor Andrew Cuomo, in mid-2015. It failed to gain traction then. The mayor presented the current updated form at an Albany legislative state budget hearing in late January and reiterated it at his State of the City address February 13.

The mayor has said that he hopes the revenues from the tax, estimated by his Office of Management and Budget at $336 million in fiscal year 2018, will be used to subsidize rents for seniors.

The IBO report shows that about 8 percent of citywide home sales between 2014 and 2016 carried price tags of $2 million or more; and of those sales, 86 percent were for properties in Manhattan.

Manhattan Borough President Gale Brewer had requested that IBO examine the impact the tax would have on her constituency. Often in agreement with de Blasio, a fellow Democrat, Brewer told Gotham Gazette that she is opposed to the mayor’s mansion tax proposal.

“Manhattan should not be the cash cow for the rest of the boroughs,” Brewer said during a phone interview, adding that she would be “much more comfortable with [a threshold of] $5 million and not $2 million.”

At the State of the City speech, the mayor told his constituents to “ask [state legislators] if you think someone selling a home for more than $2 million can afford a little bit for senior citizens.” The tax would be paid by the buyer, according to de Blasio’s plan.

Brewer also raised concerns that mansion tax revenues would not be guaranteed to go to rent subsidies. “Any tax that has been enacted then has to be allocated. It could go to seniors, or it could go to homeless services, or it could go to anything,” she said.

Asked if she would publicly oppose and testify against the tax if given the opportunity, Brewer said she would. She said she had not been in touch with the mayor or his staff about the mansion tax specifically, but had heard from constituents concerned about the measure’s effects.

In emailed comments expanding on the report, IBO Chief of Staff Doug Turetsky said there were arguments for and against the tax. A possible issue is the specter of a price cliff: “suddenly you will probably have a lot of sales priced just under the threshold for the mansion tax.”

However, he touted the proposal’s potential to level the playing field, as both co-ops and high-end residential sales paid in cash or with foreign financing are not subject to the city’s existing mortgage recording tax. “As a result, purchasers of a comparatively moderate priced home will likely pay both the city’s mortgage recording tax and real property transfer tax, while many buyers of the city’s most expensive residential properties will only pay the transfer tax,” he said.

Along with skepticism from Brewer, de Blasio is facing a long road to mansion tax passage in Albany, where both Cuomo, a fellow Democrat, and the state Senate Republican majority are philosophically opposed to new taxes. Senate Majority Leader John Flanagan has said his conference is interested in cutting taxes, and he is facing a Cuomo proposal to extend the state’s “millionaire’s tax.”

De Blasio has said that recent progressive victories indicate nothing is impossible to see through Albany if there is enough support. The mayor also argues the city needs the mansion tax revenue to bolster his affordable housing plan, especially for seniors, though the city has been rapidly adding to its budget under the mayor without additional taxes, given revenues have been strong amid a booming city economy.

“I don’t think the mayor has thus far made the case why the tax is needed for any particular agenda he wants to pursue,” said Carol Kellerman, president of the Citizens Budget Commission, adding that “it would seem to us that the mayor and the [City] Council are able to fund anything they need $330 million for” out of the already expanded, $84.7 billion budget the mayor has proposed for fiscal year 2018.

Melissa Grace, a spokesperson for the mayor’s office, dismissed the idea of a price cliff, arguing that, since the tax would only apply for the price over $2 million, “that’s not going to affect any buyer or seller’s behavior.” She also pointed out that the average home purchase affected by the tax would be $4.5 million, an argument the mayor also raised at an unrelated press conference this week when Gotham Gazette asked about his tax plan.

In response to Brewer’s concern of the money being used for other purposes, Grace said that according to the city’s proposal, the funds would go specifically to the recently announced Elder Rent Assistance program and could not be used for anything else.

Asked at a Tuesday press conference about previous statements that the mansion tax was justifiable given tax cuts for the wealthy the mayor is anticipating from Washington, D.C., the mayor said that President Donald Trump “has been salivating for the opportunity to reduce corporate taxes and taxes on the wealthy...So I think it’s a really, really good betting assumption there will be tax cuts for the wealthy and the corporations.”

The mayor added that, even if a federal tax cut does not materialize, “I still think the mansion tax makes sense...Someone who’s buying a $4.5 million home can afford to spend a little bit more.”

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by Felipe De La Hoz, Gotham Gazette
     

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Pointing to Progress, Deputy Mayor Says City Hears Nonprofit Funding Concerns


Deputy Mayor Richard Buery speaking Medgar Evers

Deputy Mayor Richard Buery (photo: Medgar Evers College)


As city-contracted nonprofit organizations continue to call for funding increases from the de Blasio administration, Deputy Mayor Richard Buery insists that the administration is “sympathetic” to those concerns and is doing everything in its power to ensure a “strong and robust” nonprofit sector.

Nonprofits in the city that provide a range of contracted services, from mental health care and early childhood education to homelessness prevention, say they are facing a crisis of financial instability brought on by decades of underinvestment by successive administrations. As their costs soar and contracts remain relatively flat, many are cutting staff or whittling down their services to remain afloat. Nearly one in five are insolvent.

“There really has been absolutely a history of disinvestment in the sector which makes their work harder,” said Buery, who heads strategic policy initiatives for the administration, in an interview at City Hall. “I think under our administration, there’s really been an acknowledgement of that and I really do believe a real effort to address it.”

Under Mayor Bill de Blasio, a first term Democrat, there have been incremental efforts to buoy the sector and those who work in it, particularly by providing salary increases for employees at city-contracted nonprofits. Two years ago, the city gave 2.5 percent cost of living raises to human services nonprofits. The city subsequently announced a $15 minimum wage for all city-contracted nonprofit personnel and, in the mayor's recently-released fiscal year 2018 budget plan, is proposing 2 percent raises annually for three years for the 90,000 employees of human services nonprofits.

The city also established a Nonprofit Resiliency Committee last year, to examine structural problems in the sector and “streamline some of the bureaucratic challenges which wind up having a dollar impact, a financial impact on nonprofits that try to get work done,” Buery said.

Still, nonprofit groups argue that salary increases, though laudable, are not sufficient in the face of rising costs for insurance, rent, infrastructure, and more. “I think it doesn’t get to the heart of the problem,” said Allison Sesso, executive director of the Human Services Council. “The institution itself is financially struggling,” she said, separating the questions of employee wages and organizational solvency.

Sesso is one of nearly 200 human services nonprofit leaders who wrote to Mayor de Blasio in December, calling for a 12 percent increase in contracts across the board at an estimated $500 million price tag. “You count on us each day to ensure the wellbeing, safety, and security of our fellow New Yorkers,” the letter reads. “We fully embrace your equity agenda, but are compromised in our ability to help achieve it given the years of City neglect of our work. You inherited this situation, but it has continued to worsen and we need bold leadership now to fix it.”

Deputy Mayor Buery stressed that the city is committed to those fixes and is engaged in constant dialogue with the nonprofit sector, but change doesn’t happen overnight. “I think everybody understands that...problems that have taken decades to create, are not gonna be solved in one budget cycle, or two budget cycles,” he said, pointing out that the challenges faced by the sector aren’t a problem specific to the de Blasio administration but one faced by city government at large.

Buery also said that the services provided by these nonprofits are particularly critical at a “vulnerable” time for the city, facing a period of economic slowdown and potential federal budget cuts.

That vulnerability and uncertainty about the future is precisely why Sesso from HSC said the city needs to invest in nonprofits now, to shore up a sector that serves the city’s neediest population. And while she agrees that the crisis can’t be solved immediately, “It’s important they make a substantial move forward this year,” she said.

Sesso commended the administration for creating the Nonprofit Resiliency Committee and ensuring ongoing conversations with nonprofits. But, she said, “As an advocate, until I see the money in the budget, I’m not satisfied. You can’t solve the problem through efficiencies alone.”

The city budget cycle recently began with de Blasio’s presentation of his preliminary budget. It will continue with a round of City Council hearings, behind-the-scenes negotiation and lobbying, de Blasio’s executive budget, more hearings and negotiations, and a budget deal between the mayor and the Council by the July 1 start of the new fiscal year.

The Federation of Protestant Welfare Agencies, one of New York’s largest nonprofit service providers, has been pushing for increased funding not only in the city but also at the state level. And while the state has yet to engage with their efforts, the city’s initiatives are encouraging. “We’re seeing some evidence of interest in addressing the issue,” said Emily Miles, director of policy, advocacy and research for FPWA. Miles cited the minimum wage increase and the cost of living adjustment. “But there’s some ways to go,” she said.

Miles and her colleague, policy analyst Carlyn Cowen, praised the administration for tackling structural issues and soliciting feedback from organizations through the Nonprofit Resiliency Committee, something prior administrations ignored. “Having everybody at the table is pretty unprecedented,” said Cowen. But they emphasized the pressing need to strengthen human services nonprofits, echoing Sesso’s warning of how federal policies may impact New Yorkers.

For the administration, the fact that nonprofits are voicing their concerns is a badge of honor, Buery said. “The light that’s being shined on the problem is a good thing,” the deputy mayor told Gotham Gazette, “but it is in part a reaction to an administration which has been willing to shine that light and open that conversation.”

Buery expects that dialogue will continue through the budget process as the city assesses revenue, and analyzes where best to allocate spending. “The mayor’s really shown his commitment to putting his money where his mouth is and so we intend to move forward with this sector to make sure we continue to do so,” he said.

With the city economy humming, and jobs and tourism at record highs, de Blasio has rapidly increased the city budget over his three years as mayor. He has continued to announce new funding initiatives already this year.

Asked at a news conference on Tuesday about the funding for nonprofits in his latest budget, Mayor de Blasio said, “I think the issue of how to make sure each preventive service organization does their job as best as possible is a broader qualitative question and to make sure we have enough of these services available when we need them for families in immediate need...we have to make sure the quantity and the quality is right. In the meantime we’re certainly looking for every opportunity to improve the dynamics for those workers and the compensation they get.”

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by Samar Khurshid, senior reporter, Gotham Gazette
     

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Focused on De Blasio Investigations, Massey Makes City Hall Campaign Debut


Massey City Hall presser BdB

Paul Massey (photo: Samar Khurshid/Gotham Gazette)


Republican mayoral candidate Paul Massey took his campaign to Mayor Bill de Blasio’s home turf Tuesday, hosting a news conference at the steps of City Hall to criticize the mayor’s record and the ongoing legal investigations into de Blasio’s campaign and government behavior.

Massey, a millionaire real estate executive, has centered his early campaign on attacking de Blasio as corrupt and incompetent. In what was his first official news conference as a mayoral candidate, Massey was short on policy pronouncements but focused on the federal and state investigations into de Blasio’s administration and fundraising practices.

“Bill de Blasio is so distracted with corruption charges that he has no time to actually run this city,” Massey said. The mayor himself does not face any charges stemming from the investigations and none of his associates have been officially accused of wrongdoing. However, de Blasio has met with Manhattan District Attorney’s office and is set to meet with federal prosecutors soon as grand juries are reportedly hearing evidence in two separate cases.

Massey also claimed, as have many of the mayor’s critics, that quality of life in the city is getting worse, though statistics show crime at historically low levels and the city economy flourishing.

The news conference was an unofficial kickoff for Massey’s fledgling campaign that has quickly ramped up fundraising and expenditure in the last few months, setting him up as the likely frontrunner for the Republican nomination. Multiple potentially-formidable Republican candidates have yet to declare a run, including City Council Member Eric Ulrich and businessman John Catsimatidis. In the effort to beat de Blasio, some Republican leaders are looking to avoid a contentious primary and rally behind one mayoral candidate early.

While he has made numerous speaking appearances in recent weeks, Massey has not held press briefings or outlined any elements of a policy agenda. Massey has raised $1.6 million, personally loaned his campaign another $1.2 million, and spent about $1.96 million in total, leaving him a balance of about $937,000.

Standing in front of large charts listing details of the six agency probes into the mayor and his associates, and the more than $11 million dedicated to the administration’s legal defense, Massey called for a seventh investigation, claiming that the mayor’s agreement with a law firm for his personal defense is unethical and illegal. De Blasio has retained the firm Kramer Levin to defend himself and has said he will pay the firm with funds raised through outside sources, which he will disclose. Other government employees involved in the probes have received government-funded legal defense, which de Blasio said he is not taking advantage of himself.

The mayor has yet to provide details of the fund or the legal agreement, saying again on Tuesday at his own unrelated news conference that he and his team are in the process of figuring out the model they will use.

“Somehow this mayor has reached a point where he’s embracing corruption just to defend himself from corruption,” Massey said, revealing that he wrote to the Manhattan District Attorney’s office and to the office of the U.S. Attorney for the Southern District of New York calling for scrutiny of the agreement.

Insisting that the mayor is beholden to special interests, Massey compared him to infamous former Mayor Jimmy Walker, who served between 1926 and 1932 during the Tammany Hall era. In contrast, Massey sought to set himself up as a Republican in the Michael Bloomberg model, who would be able to make independent decisions in office. He pledged that, if elected, he would not award city contracts to campaign donors or use taxpayer money for possible legal defense against corruption in City Hall. He then called on the mayor to make the same promise.

De Blasio’s administration is being investigated for whether donors to the mayor’s political nonprofit, The Campaign for One New York, received government favors. He and his team are also being investigated for fundraising practices used in a 2014 effort to flip the state Senate into Democratic hands. De Blasio has insisted that he and his associates carefully followed legal guidance and broke no laws.

Massey’s criticism didn’t stop at the mayor’s legal troubles as he took swipes at everything from the mayor’s habit of showing up to City Hall late in the work day after the gym to his handling of the homelessness crisis, which has become a major challenge for de Blasio.

But Massey seemed unprepared to offer any substantive policy solutions or his vision for the city. He did not propose a plan to tackle homelessness, simply saying he would “put a team in place” prior to taking office that would “make a difference almost immediately.”

When asked, Massey also refused to say whether he supports or opposes President Donald Trump’s proposed policies on health care and criminal justice. “I think the mayor would like it if we made this a referendum about the president and I’m not gonna do that,” Massey said. On the issue of expanding stop-and-frisk policing, he told a reporter, “I haven’t established an answer.”

Mayor de Blasio responded to a few of Massey’s critiques, relayed by reporters in real time as he held a news conference across town to announce his new commissioner of the Administration for Children Services. Remarking on Massey’s lack of an answer on stop-and-frisk, de Blasio said sarcastically, “The issue really hasn’t been in the news the last few years, so who could blame him.”

He added, “Yeah, I would suggest you need to have an answer on that one. This was one of the dominant issues of the 2013...campaign. I was sitting at Hofstra University when Donald Trump and Hillary Clinton personally debated it on national television. We’ve made announcement after announcement, first with Commissioner Bratton then Commissioner O’Neill about the reduction in stop-and-frisk over the last three years...constant reduction in crime simultaneously. Those are the facts someone who wants to be mayor of New York City really should know.”

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by Samar Khurshid, senior reporter, Gotham Gazette
     

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