In July, the Brooklyn Democratic Party disclosed its spending and contributions for the first half of 2020. This data gives a sense of who and what the Party prioritizes and gives cause for concern: It shows that the Party puts its thumb on the scale in primaries, it relies on funding from special interests, it is in significant debt to former County Chair and District Leader Frank Seddio, and it continues to spend money on consultants whose purpose is unclear.
An introduction to financial disclosure
Under New York State law, all political fundraising committees must disclose their spending and contributions at least twice a year. This includes not just candidate-specific committees, but also PACs (political action committees, like New Kings Democrats) and “party and constituted committees” — the accounts of county parties like the Brooklyn Democratic Party (formally known as the Kings County Democratic County Committee).
The Brooklyn Democratic Party has two accounts: a Campaign account and a Housekeeping account. Here’s what that means:
- The Campaign account is the account the Party may use for promoting candidates.
- The Housekeeping account is supposed to be used “to maintain a permanent headquarters and staff and carry on ordinary activities which are not for the express purpose of promoting the candidacy of specific candidates”, according to NYS Election Law §14-124 (3).
Despite the existence of these two accounts, the Party does not always record its spending correctly, or at all. As we wrote in June, the Party does not appear to have disclosed its spending on candidates in its Campaign account filing this election cycle. It is unclear whether they disclosed this spending in its Housekeeping account filing, as the descriptions of many of its expenses are vague.
The law around housekeeping accounts (also known as the “soft money” accounts) is much more lax than the law around campaign accounts. The Party is allowed to receive unlimited contributions to its Housekeeping account, and can use the account’s “ordinary activities” like vendor contracts and hiring to dole out favors and patronage.
The Party has a new benefactor
The most immediately noticeable feature of the July filing is that the Party raised an impressive $321,241.16 for its Housekeeping account (the “soft money” account) in the span of six months. Less impressive, but notable: County raised $35,000 for its Campaign account in the same time period.
This was not a small-dollar-donor operation.
Over a quarter of the Party’s fundraising haul for its Housekeeping account came from a single donor, the PAC of charter-school/education reform group New Yorkers for Putting Students First, in two donations amounting to $85,000.
Students First also contributed to the Campaign account, donating right before the reporting deadline. At $20,000, this contribution made up over half of that account’s total haul for the first half of 2020.
The Brooklyn Democratic Party was the largest single recipient of the group’s statewide spending spree, receiving three-quarters of its donations in this period. Other recipients included the Queens County Democratic Party and the Arturo Schomburg Democratic Club of Harlem and the Upper East Side.
Students First’s burst of interest in Brooklyn politics may be the group laying groundwork for the education reform and charter school advocacy’s group’s next big hurdle: the 2022 renegotiation of mayoral control over NYC schools. With an open-seat Mayoral election in 2021 and no Republican-IDC majority, the group is likely trying to make new friends.
Alternatively, the group’s contributions may be a sign of another attempt by Wal-Mart to open a store in New York City. Wal-Mart heir Alice Walton is one of Students First’s largest benefactors. Brooklyn’s Democratic politicians, including the late District Leader Lew Fidler, have long resisted the supermarket chain’s entrance to New York, citing its poor labor record and the threat to small business. Perhaps the company is making another go at it.
Whatever Students First’s motivations are, it is troubling that the Party is relying so heavily on a single funder. Any contributor that makes up such a large portion of the Party’s contributions is bound to have undue influence on the Party’s actions.
Real estate is digging in
At his February 2019 visit to an NKD general membership meeting, then-Party Chair Frank Seddio blamed the Party’s poor financial state on progressive pressure to refuse real estate money. However, the July 2020 housekeeping account filing indicates that the Party welcomes donations from the real estate industry.
During the first half of this year, it raked in thousands of dollars in such donations, including from major players like Two Trees and Cornel Realty. A few of the Party’s notable real estate donors include:
- Peter Rebenwurzel, whose Coney Realty Group has been identified as one of the City’s worst predatory equity landlords by the group Stabilizing NYC, and was in the news last year for neglecting low-income tenants in its mixed income buildings
- Cammeby’s International executive Avi Schron, whose Alliance for Rental Excellence NY helped lead the unsuccessful fight against the rent regulations that passed through the State legislature in 2019, and who earlier this year threatened (again unsuccessfully) to dismantle Democratic control of the New York State Senate
- Construction industry trade group New York Building Congress; this donation is notable because it came a couple of months after Party Chair Bichotte named the group’s President and CEO Carlo Scissura Chair of the Party’s County Committee
The Brooklyn Democratic Party should be taking a stand to support tenants’ rights, not opening itself up to the influence of predatory real estate companies.
The Party’s financial position is improving, but there is a hangover from the Seddio era
Despite the major influx of donations from special interests, the Party remains in significant debt. The Board of Elections Financial Disclosure System provides a simplified readout (“Periodic Summary”) of a fundraising committee’s fundraising and spending as well as its ongoing balance. In the case of the Brooklyn Democratic Party’s Housekeeping account, this readout shows improvements in the Party’s financial position since Assembly Member Bichotte took over within the period captured by the July 2020 disclosure:
The release of the January and July 2019 Periodic reports caused alarm among NKD and other Democratic clubs and District Leaders because of their low closing balances, and prompted passage of a rare floor resolution initiated by County Committee members to request a report on the Party’s financial standing. (The resolution later provoked the Party’s Executive Committee to ban resolutions on internal Party matters.)
The January 2019 report captured the dramatic 2018 primary season during which the Party put its resources into helping its aligned incumbents, State Senators Jesse Hamilton and Martin Dilan, on their way to defeat. The July 2019 disclosure reflected an increase in spending by the Party.
This spending only added to the party’s significant debt, which has reached alarming levels. In July 2019, the Party listed over $146,983.87 in various debts. This debt ballooned to $226,584.74 by January 2020.
To demonstrate the dangers of the Party operating at such a high level of debt, here are the closing balances for the same time periods listed against debts. “Debt ratio” is a measure of how much of an entity’s operations are subsidized by debt. In the private sector, debt ratio is one measure used to rate a corporation’s risk; a higher debt ratio indicates more risk.
Ongoing Liability / Loans
Just on the numbers, it could be said that District Leader Seddio was courting risk by embracing a very high debt ratio, and it could generously be said that at least Assembly Member Bichotte’s fundraising is mitigating that risk by building up the assets side of the balance sheet.
But more than financial measures, what is notable is to whom the Party owes money, and the effects of that debt.
- $28,000 in transfers (through loans) from the Party’s Campaign account: As described above, the law around housekeeping accounts is more lax than the law around campaign accounts, so by transferring that money to the Housekeeping account, the Party now has more leeway with how to use this money.
- $50,000 in loans from Friends of Frank Seddio, the account for Frank Seddio’s District Leader campaign
- $136,584.74 owed to the law firm of Morvillo Abramowitz Grand Iason & Anello PC. The Morvillo firm was retained in the successful defense of a lawsuit against the Party by former Supreme Court Judge Jacobson, who accused the Party of finding her unqualified to serve another term as a Supreme Court Justice because she had acted independently of the Party while on the judiciary.
Comparing the mid-January 2020 disclosure (the last under then-Chair Seddio) and the mid-July 2020 disclosure (first under now-Chair Bichotte),it appears there has been no progress made in the repayment of these debts.
The debt owed to Seddio, who remains District Leader in Brooklyn’s 59th Assembly District, is most concerning: he may continue to exert influence above his present position simply by holding a large IOU. If District Leader Seddio’s financial position does give him continued influence, this is unacceptable. A Party that makes its political decisions based on its financial commitments rather than its values is not a Party that can be trusted to speak on behalf of its constituents.
The Party hired more consultants and has not let go of its old ones (yet)
Despite the Party’s remaining debts, it continues to retain the services of not one, but two consulting firms. Soon after the Party’s Executive Committee elected Assembly Member Rodneyse Bichotte as the new Party Chair in January 2020, the Party issued several press releases with the public relations firm Berlin Rosen listed as the spokespeople. This followed criticism by press and reformers about George Arzt, whom the Party had previously paid generously, with no visible results, to influence media accounts about the Brooklyn Democratic Party and its allies.
The Party’s hiring of Berlin Rosen was confirmed in the Party’s books — with three payments totaling $23,026.08 made in mid-June. The Party did not disclose a purpose for those payments.
But rumors of George Arzt’s removal may have been exaggerated. Payments to his firm continued into July. The firm received $6,000 from January through July of 2020.
Despite spending nearly $30,000 on PR consultants this year, the impact of that spending, or its benefit to everyday Brooklynites, is unclear. Meanwhile, the Party did not spend any money organizing Brooklyn Democrats around policy initiatives or the Census, which is crucial to determining the resources the borough receives from the federal government in the future.
The Party did, however, find the funds to send out thousands of mailers on behalf of its preferred candidates in the primary election.
In the past, Party leadership has chided NKD members who have expressed concern over the Party’s poor financial state, suggesting that if we are concerned, we should be providing financial support ourselves. But it is not simply the balance in the bank account that is concerning — it’s the financial decisions the Party is making, and their motivations for making them.
Brooklyn Democrats cannot be expected to give funds to a party that continues to prioritize protecting incumbents over the interests of everyday Brooklynites.
County Committee members attempted to bring more voices to the Party’s financial decision-making by introducing a resolution at the September 2019 County Committee meeting requiring the Party to establish a Finance Committee. All interested County Committee members were to be considered for membership — but those who submitted their names for consideration were never contacted, and only District Leaders were appointed as members.
Until the Brooklyn Democratic Party stops spending party money to help those currently in power stay in power, and becomes a Party that stands up for the rights of everyday people, it will have a long way to go to earn their trust and their donations.