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A Sheldon Silver Mystery: Did He Betray New York Renters?

Prosecutors allege the state Assembly speaker made changes to rent regulation on behalf of a developer.

When New York enacted a major rent regulation law in 2011, Assembly Speaker Sheldon Silver celebrated the passage of the legislation as a victory over real estate interests.

"Despite fierce and well-financed opposition to working families in New York City, we were able to secure important victories for tenants," he said at the time.

But the bribery case against Silver unveiled by prosecutors last week raises questions about whether Silver pulled his punches in negotiations on that 2011 bill, potentially at the expense of hundreds of thousands of New Yorkers who live in rent stabilized apartments.

A little-scrutinized section of the criminal complaint alleges a luxury developer implicated in the Silver bribery scheme requested changes to the law. The changes were ultimately adopted.

The complaint has tenant advocates who lobbied on the bill, known as the Rent Act of 2011, wondering what really happened. For now, it's a mystery: U.S. Attorney Preet Bharara hasn't specified what change Silver made on behalf of a developer who was part of the alleged bribery scheme.

"It's hugely important," says Benjamin Dulchin of the Association for Neighborhood and Housing Development. "I hope Preet Bharara tells us someday."

The complaint itself provides only a bit of detail.

With the legislation pending, it says, "the Lobbyists met, on behalf of Developer 1, with Silver in his State office to advocate for certain proposed terms for the new Real Estate Legislation. The legislation that was enacted included Developer 1's recommendations in substantial part."

"Developer 1" is widely reported to be Glenwood Management, the politically influential firm of centenarian developer Leonard Litwin

So what might Glenwood have wanted out of the legislation?

The heart of the fight that year centered on rent regulation, which limits rent increases on about a million units in New York City, including some of Glenwood's. The state law governing rent regulation comes up for renewal periodically.

Landlords can deregulate apartments and begin charging market-rate rents under certain circumstances, such as when an apartment becomes vacant and its rent passes a threshold, at the time $2,000. As a result, over 200,000 units have become deregulated over the past 30 years. In the 2011 negotiations, tenant advocates wanted to stem the flow of units out of the program by tightening the rules. Another focal point was the formula that governs how much landlords can raise rent on regulated apartments when they invest money in improvements.

There were other matters the legislation dealt with that could have been of interest to Glenwood Management, including tax exemptions for new development. The firm did not respond to a request for comment.

Silver has said he will be vindicated when the case is aired in court. His lawyers did not respond to a request for comment. 

The ultimate rent deal struck in 2011 among Silver, Gov. Andrew Cuomo, and the state Senate did not please tenant advocates.

"Both Cuomo and Silver tried to spin the 2011 bill as a great victory for tenants when in fact there were very minor improvements," says Michael McKee, the treasurer of the Tenants Political Action Committee, who lobbied on the bill.

He says even at the time – long before the alleged bribery scheme between Silver and the developer was known — it wasn't clear where exactly Silver stood.

"Silver was not forthcoming about what he was working to achieve," McKee says. "Silver always presented himself as pro-tenant, but who knows what happened behind closed doors?"

While Silver is seen as more pro-tenant than many others in Albany, including Republicans in the state Senate, tenant advocates have long viewed him as an unreliableally.

The New York Times story reporting the eleventh hour deal on the 2011 law noted that it fell "well short of what many Democrats and tenant activists had hoped for." Silver was also quoted saying it was time to stop fighting for a stronger package. "I think the days of pushing are over," Silver said.

In last week's criminal complaint, prosecutors also quote an internal memo from an unnamed real estate developer association.  The memo concluded "in connection with the 2011 rent regulation reauthorization that Silver was considerably more favorable to the real estate industry than expected." The memo said that "though he may never be the owners advocate, given that the Governor wanted [certain proposals] off the table and wanted to restore his reputation with tenants, it would appear that he (Silver) could have successfully pushed for more."

If the Silver case goes to trial, prosecutors will likely have to flesh out the episode.

"Some more favorable treatment specifically by Mr. Silver towards the developers in question will have to be proven, something more concrete than speculation that he was less unfavorable towards the real estate industry in general than he could have been," says Robert Walker, a government ethics law specialist at Wiley Rein.

Have information about this story or a tip? Email me at [email protected].

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