The million dollar deadbeat

THE CITY 

 As he hints at running for governor, lame duck mayor Bill de Blasio has racked up nearly $1 million in debts to lawyers, campaign consultants and taxpayers that records indicate he currently can’t pay.

The mayor owes one of the city’s biggest lobbyist law firms upwards of $435,000. On Thursday, the city’s Department of Investigation commissioner informed him he must reimburse taxpayers nearly $320,000 for his use of an NYPD securing detail during his failed 2019 cross-country presidential campaign.

Meanwhile, the latest filings for his various campaign and political action committees reveal he’s got more than $182,500 in outstanding campaign debts — and only about $11,800 cash on hand.

Between all of this, he owes upwards of $929,000, THE CITY found.

Danielle Filson, a spokesperson for de Blasio, declined to respond to nearly all of THE CITY’s questions, stating only that he was awaiting his appeal on NYPD reimbursement.

“Once that decision is made, the mayor will of course proceed accordingly,” she wrote.

But Filson would not discuss his modest cash reserve or any of his debts, including his biggest unpaid bill: the $435,000 he owes Kramer Levin & Naftalis — a firm that regularly lobbies City Hall on behalf of real estate developers seeking favors from the mayor’s administration such as zoning changes and city permits.

Between 2015 and 2017, the firm represented de Blasio personally during multiple investigations of his fundraising tactics. As of Tuesday, he had yet to pay a dime of his long-outstanding bill. And at least for the moment, the firm — which has sued other clients for non-payment — has given the mayor a pass.

De Blasio hired Kramer Levin in 2015 after he began getting inquiries from law enforcement and ethics entities regarding his fundraising tactics. The firm then represented him for two years. By the time its services were no longer needed in 2017, Kramer Levin had billed him for some $300,000.

But he likely owes even more due to interest on the initial bill accumulating over the last four years.

According to court papers the firm has filed accusing other clients of non-payment, Kramer Levin starts charging interest after 30 days of missed payment. The papers state that their protocol is to charge a per annum rate of 9%, which would bring de Blasio’s unpaid bill up to $435,000.

In the last year, Kramer Levin has filed lawsuits against a Diamond District dealer for $1.2 million in allegedly unpaid bills, and two hotel developers for $4.7 million. Both suits are pending.

As of last week, the law firm had taken no such action against de Blasio, even though the bills he owes are now overdue by four years.

Creditors are still harassing people over their debts despite the inability to pay during the pandemic

THE CITY

Gov. Andrew Cuomo has paused the collection of medical and student debt owed to New York State, ordered evictions halted and put a 90-day stay on mortgage payments and foreclosures for owners facing financial hardship.

But one key function of the legal system is chugging along unabated amid the coronavirus crisis: the collection of private debts through New York’s courts.

This week, as the governor ordered most court operations to stop, creditors of all kinds kept filing actions against people and businesses, court records show.

In New York County alone, the docket between Monday and Friday shows dozens of debt cases.

Among them: a debt buyer seeking a $35,826.73 judgment against a Manhattan man, a bank going after a $110,000 loan to a Little Italy pharmacy and a request to enforce a confession of judgment on a $96,247.56 cash advance to a Bronx medical case management group.

Sarah Ludwig, co-director of the New Economy Project, said her group has been flooded with calls to its legal hotline from New Yorkers getting hit with cases even as the city all but shuts down.

“Clearly, this is not the moment to be depriving people of their funds and subjecting them to a situation where their bank accounts are frozen,” she said.

Some of those she’s heard from “can’t get at their money to pay for food and medicine and all of the things we [all] desperately need to protect ourselves.”

The issue led her group to sign a letter with more than 60 other organizations — from racial and economic justice outfits to labor organizations to community activists — asking Cuomo and Chief Judge Janet DiFiore for an emergency moratorium on all debt collection in the state.

That would include an end to enforcement of judgments, a pause on all garnishments and levies, and stopping attorneys from serving debt collection orders.

We need an emergency moratorium on debt collection in NY!

Today, we sent this letter signed by 63 civil rights, racial/economic justice, labor, & community groups to @NYGovCuomo @NYSCourtsNews@SenKevinThomas + 16 more NYS Senators sent one too

We need action to protect NYers! pic.twitter.com/IHcwzI3zE3

— New Economy Project (@NewEconomyNYC) March 20, 2020

Blackstone is buying up debt-ridden public and private properties

Crains New York

Blackstone Group LP is seeking $5 billion for its latest fund that invests in real estate debt, according to a person familiar with the matter.

The vehicle, Blackstone Real Estate Debt Strategies IV, will focus on property-related wagers in public and private debt globally, according to an investor presentation seen by Bloomberg. The pool will have an emphasis on the U.S.

The firm is tapping into sustained interest in private real estate debt as investors search for yield. In 2018, $26 billion was raised by funds dedicated to real estate debt, on the heels of a record $33 billion the year prior, according to data from Preqin. Roughly 40% of the assets in real estate debt vehicles have yet to be invested, an effect of the strategy’s relatively recent growth, the data provider said.

Paula Chirhart, a spokeswoman for New York-based Blackstone, declined to comment.

Blackstone’s new fund scored a commitment of up to $100 million from the $42.7 billion Illinois Municipal Retirement Fund, the pension disclosed last week on its website. Management fees will be waived for four months for investors in the first close, saving the pension as much as $500,000 based on its commitment.

The fund is charging a 15% incentive fee with a performance hurdle -- the return rate it is required to meet to receive carried interest -- of 6%. It will charge 1.25% management fees per year on invested capital for commitments of at least $400 million, and 1.5% for those below that level.

In debt up to our eyeballs

From the Observer:

New York State has the second-highest debt total in the United States, and it’s expected to grow in the coming years, according to state Comptroller Thomas DiNapoli.

New York’s state-funded debt is expected to reach $63.7 billion at the end of the current fiscal year and increase over the following four years to $71.8 billion, according to a report released by DiNapoli on Thursday morning. New York’s current total state debt is second only to California’s, which is at $87 billion.

The average amount of debt for every man, woman and child in the state is $3,116, three times the median for all states, the report found. And the annual debt service payments — the amount of money needed to reimburse debts over a period of time — are projected to surpass $8.2 billion by the end of state fiscal year 2021-2022.

NY in poor financial shape

From the Daily News:

New York ranks as one of the least fiscally sound states in the nation — but at least we’re not Illinois.

The Empire State ranked 46th among the states for its overall fiscal health, according to a study by George Mason University’s Mercatus Center.

“With barely sufficient cash to cover short-term spending, New York’s fiscal position showed several areas of stress,” wrote study author Eileen Norcross.

Only Connecticut, Massachusetts, New Jersey and Illinois ranked lower.

Norcross cited New York’s unfunded pension liability of $30.8 billion and more than $57 billion in total debt as reasons for the state’s poor showing.

Hiram pleads poverty

From the Daily News:

Poor Hiram Monserrate.

The disgraced former state senator lost his bid to get his corruption conviction tossed Thursday, while court filings reveal that he's deeply in the red.

Monserrate, a once powerful Queens pol, claims in papers filed with the Second Circuit Court of Appeals that "I am currently in great debt" and only has $220 in his bank account.

"I owe approximately 35,000 to the IRS, another 79,000 in restitution and 11,000 student loans and approx. another 15,000 in credit card debt," says his filing, which he wrote out by hand.

He says he's been eking buy on $1,120 a month from his job working for a law firm on Court Street in Brooklyn, plus another $2,270 a month from pension and other benefits - and $1,100 of that money goes to paying alimony and restitution.

Monserrate - who was expelled from the State Senate in 2010 for attacking his girlfriend - bared his expenses to get out of paying filing fees for his hoped-for appeal of his 2012 federal corruption conviction.

Public authorities spend like mad

From Capital New York:

New York’s largest public authorities have increased their spending by $3.5 billion since 2013 and their combined debt has grown to more than a quarter of a trillion dollars, according to a new report released by state Comptroller Tom DiNapoli.

DiNapoli’s report found that 95 percent of the state’s public debt has been issued by public authorities, much of it through debt issued without ever being approved by voters—a process critics have dubbed “backdoor borrowing."

And the cost increases at state authorities, whose spending isn’t accounted for in the state’s budget, are being used to disguise hundreds of millions of dollars in extra state spending, DiNapoli's report shows.

The 1,180 state and local authorities employ 153,578 people, costing the state $10 billion a year in personnel charges and salaries, with nearly 13 percent of those employees earning more than $100,000 annually. By contrast, less than 8.7 percent of state employees, and 14.7 percent of New York residents earn that much.

But the authorities’ spending is also subject to fewer oversight and accountability measures, despite repeated audits showing failures among authorities to adhere to contracting rules and rein in improper spending.

CitiBike owes a $1M parking fee

From the Wall Street Journal:

The operator of New York City's bicycle-sharing program faces another hurdle as it tries to find a successful financial formula for the popular program—the city wants it to pay up for lost parking revenue.

A little-noticed provision of a contract with Citi Bike's operator, Alta Bicycle Share Inc., requires the company to reimburse the city for parking revenue, since some of the docking stations for the system's bikes take up former parking spots.

The city says Alta owes about $1 million in lost revenue through 2013, according to people familiar with the matter.

Alta, a Portland, Ore.-based company that runs Citi Bike through its subsidiary NYC Bike Share, has been in negotiations with New York City transportation officials and an outside investor, REQX Ventures, whose capital infusion would fuel an expansion of the program.

REQX Ventures and Alta have been seeking to remove the parking-revenue provision from the Citi Bike operator's contract with the city, according to a person familiar with the matter.

Parking revenue has emerged as a bargaining chip in the negotiations, but it is unclear whether the city would let Alta off the hook and remove the requirement in a reworked contract.

God bless America!

From the NY Post:

Two City Council members have been in public service for so long, they’re collecting government pay from three sources — salary, pension and Social Security, according to newly released financial-disclosure forms.

Oliver Koppell (D-Bronx) — one of the wealthiest members of the City Council — and Karen Koslowitz (D-Queens) each collected income on top of their $122,500 council salaries.

Koppell took in as much as $60,000 in pension from his longtime gig as a state assemblyman, and between $5,000 and $44,000 in Social Security.

Koslowitz took in between $60,000 and $100,000 in pension payouts last year for working a previous stint on the council and as Queens Deputy Borough President until she rejoined the council in 2010.

Koslowitz also earned between $5,000 and $44,000 in Social Security last year and has between $10,000 and $88,000 in credit card debt.

Johnny's last campaign being audited

From NY1:

City Comptroller John Liu may be limiting campaign contributions to $800 for his 2013 campaign, but that definitely is not the case for his 2009 campaign account.

Since taking office almost two years ago, Liu has raised more than $250,000 to pay off debt from his run for comptroller.

As a result, he has accepted thousands of dollars in contributions that are over the legal limit set by the city's Campaign Finance Board.

The firefighters' union gave nearly $10,000, twice the limit, as did the plumbers' union and a state construction union.

The general manager at SMC Stone, a Brooklyn contractor, gave Liu nearly $7,400, more than $2,000 over the limit. The president of the company did the same thing.

Candidates often keep old campaign accounts open, as the finance board audits them. It sometimes takes years to retire a debt; Liu's 2009 account is nearly $8,000 in the hole.

Using his old account, Liu bought an airline ticket to a speaking event in Texas last year. He has paid his campaign consultant Chung Seto, spent thousands on a volunteer dinner, and bought print ads.

Some government watchdogs say the spending is questionable.

Hey, no problem! Now that he's been caught, Johnny says he'll give back the shady donations.

And he's lifted the $800 limit on his campaign contributions, no doubt so he can go after big developer money.

Meeks' disclosure under scrutiny

From the NY Post:

Queens Rep. Gregory Meeks disposed of a $15,000 personal loan he owed last year -- despite declaring no assets whatsoever, his mandatory House financial disclosure revealed.

Meeks, whose financial dealings are the target of a House Ethics Committee probe, yesterday did not respond to The Post's questions about how he settled the debt.

For the second consecutive year, the Democrat also didn't report any extra income other than the salary of his wife, a community outreach director at New York Academy of Medicine.

Halloran a big spender

From the Times Ledger:

Even as City Councilman Dan Halloran (R-Whitestone) testified before a federal grand jury Monday about his claims that city Sanitation Department workers in northeast Queens engaged in a deliberate work slowdown in the aftermath of the Dec. 26 blizzard, he was still fighting the financial battles of his 2009 campaign.

The freshman legislator has not paid tens of thousands of dollars in debts owed for services rendered by at least three vendors — including two campaign consulting firms — during the hard-fought race, which ended 15 months ago, the two firms said Monday.

As of Tuesday, Halloran owed The Traz Group, of Marlton, N.J., more than $50,000, according to Ed Traz, the company’s president. Halloran owes Advantage Inc., of Arlington, Va., $10,688.45, according to the company’s vice president, Aris McMahon. Both consulting firms are preparing to sue Halloran, Traz said, though several other vendors said his campaign had settled debts with them in full.

What's with Halloran these days?

From the NY Times:

But the more that investigators look into Mr. Halloran’s story, the more mystifying it becomes.

Mr. Halloran said he had been visited by two supervisors in the Transportation Department and three workers in the Sanitation Department. But the two transportation supervisors did not back up his story in interviews with investigators, according to two people briefed on the inquiries. And Mr. Halloran has steadfastly refused to reveal the names of the sanitation workers.

...in the days since Mr. Halloran first made his explosive accusations, he has revised his account.

In an article that appeared in The New York Post on Dec. 30, he said the workers had been told “to take off routes” and “not do the plowing of some of the major arteries in a timely manner.”

“They were told to make the mayor pay,” Mr. Halloran said in the article, “for the layoffs, the reductions in rank of the supervisors, shrinking the rolls of the rank and file.”

More recently, the councilman has said the workers were not explicitly told to take part in a slowdown, but were subtly informed there was no need to rush while clearing the snow.

In a letter published in The Chief-Leader, which focuses on municipal labor issues, Mr. Halloran seemed to feel conflicted about all the uproar. In the letter he defended his original assertions about the slowdown, but also suggested it might have been small in scope, involving “a few bad apples.”

If your story changes, then you're probably not being honest. Then there's this:

In 2008, Mr. Halloran sternly criticized the city’s Buildings Department after it cited him for building a bathroom in the basement of his home without obtaining the required permits...

Then, last month, he requested a building permit for a $60,000 project to add a second floor onto his Cape Cod-style home. On Jan. 3, the Buildings Department denied the request, saying it would make the house too big for the area’s zoning.

The timing of the permit was unusual, given the recent financial difficulties faced by Mr. Halloran and his wife, Cynthia.

In January 2010, Wells Fargo began foreclosure proceedings on their home. In November, Ms. Halloran, a registered nurse, filed for Chapter 7 bankruptcy, seeking to wipe away $116,521 in credit card debt, while retaining a 2005 Jaguar and their home.

Her debts include $14,777 owed to Home Depot, $29,000 on three Chase credit cards and $58,000 on two American Express cards. The couple has an annual salary of $166,660, according to bankruptcy records and Council salary rules.

Mr. Halloran’s spokesman, Steven Stites, said that the couple was in the process of a divorce, though no public court records have been filed, and that they planned to sell their house.

Bottom line is if you're going to shoot your mouth off making accusations, you better not have an army of skeletons in your closet.

They had fun while it lasted

From the Daily News:

Spend-happy Senate Democrats leave their two years in the majority in the same shape they helped leave the state - deep in debt.

The Senate Democratic conference exceeded its $29 million legislative budget by a whopping $7 million, or 24%, Senate sources said.

Salaries for Democratic staffers are now being paid with money left over from unspent money from previous budgets, they concede.

Sen. Martin Golden (R-Brooklyn) called the excessive payouts "the height of irresponsibility" at a time the state is dealing with one of its worst fiscal crises ever.

"It goes along with the [billions of dollars] in new spending, taxes and fees they agreed to in the budget," Golden said. "The last two years they've spent like drunken sailors."

Senate Republicans, conversely, came in $2 million under the $23 million they had been allocated, sources said.

Senate Democratic officials confirmed the budget numbers, but had no comment.

Insiders say much of the Democratic overspending traces back to the leadership coup that paralyzed the House for a month last year.

After the Republicans claimed to have retaken the chamber, the Democrats wrested control back through a series of costly agreements.

Bombers' garage debacle is a Bronx bummer

From A Walk in the Park:

The Bloomberg and Pataki administrations allowed 25.3 acres of public parkland to be seized in the South Bronx in order to accommodate the building of a new stadium for the New York Yankees, including the building of thousands of additional parking spaces in the asthma capital of America. As predicted the Yankee organization's insistence of building more parking is turning into a nightmare for the city. The developer warned bondholders in an Aug. 18 letter that it currently has "insufficient funds" from operations to pay a $6.8 million interest bill due Oct. 1, and another $6.8 million due next April. Bronx Parking has failed for three years to pay its annual rent tab of $3.2 million to the city. It also has yet to pay any property taxes for the 21 acres of publicly owned land it is leasing to operate the parking system. The Bloomberg administration selected Bronx Parking in 2007 to build and run the garages after the Yankees demanded a minimum of 9,000 spaces to stay in the Bronx.

Adding insult to injury, Bronx Borough President Ruben Diaz Jr. is floating a plan to convert Parks Department managed parking lots into additional development instead of public parkland.

Public housing residents behind on their rent

From the NY Times:

In a sign of the toll the dismal economy has taken on working families in New York, more than 1 in 10 households living in public housing owe at least one month in back rent, a rise of nearly 50 percent over the past year.

Though the city has always had to deal with a number of public housing tenants who are chronically late with their rent, housing officials are now confronting a significant rise in longtime tenants who never before missed a payment but are falling behind, in many cases because they have lost their jobs.

Across the city, tenants of nearly 22,000 public housing apartments, or about 12 percent of the total, owed back rent as of Aug. 31, according to the New York City Housing Authority, which runs the largest public housing system in the United States. The comparable figure in August 2009 was about 15,200.

“When you have, like any landlord, a laser-beam focus on rent collection, you sometimes miss the bigger picture,” said John B. Rhea, the housing authority’s chairman. “What’s happening is that we’re seeing substantial increases in the number of people not paying their rent on time.”

The problem is the worst in Queens, where the number of households owing back rent increased nearly 70 percent between August 2009 and last month, to 2,424 from 1,431. In six of the public housing developments in the western part of the borough, more tenants missed payments than anyplace else in the city, according to Housing Authority statistics. At the Astoria Houses, for example, the number more than doubled, to 157 households from 64; the latest number is 14 percent of the development’s 1,103 apartments.

Distressed properties to get assessments

From Crains:

The City Council launched a new program Thursday to give tenants in certain dilapidated properties a new weapon in their battle to improve building conditions. The initiative will focus on properties where excessive debt burdens taken on by the owners have severely limited their financial ability to make necessary repairs.

Engineers and architects, working on a pro-bono basis, will survey such buildings across the five boroughs and produce detailed reports on how extensive the damage is, what repairs are needed and how much those repairs will cost.

"This new program will help level the playing field,” said Maggie Russell-Ciardi, executive director of the advocacy group Tenants and Neighbors. “It will arm tenants with the information they need to determine what a truly supportable mortgage or sale price for their buildings would be. And it will help tenants refute false claims by owners and lenders that everything is fine in buildings that are heading rapidly towards financial failure."

The citywide program is an expansion of a pilot in which New York City-based Baer Architecture Group produced a detailed report on 10 foreclosed-upon Bronx buildings that argues the properties need up to $26.6 million in repairs, more than five times an earlier estimate by the properties' current overseer. The $35 million loan on the buildings—part of a portfolio bought by Los Angeles-based Milbank Real Estate at the height of the housing boom in 2007—is expected to be transferred to a new, undisclosed buyer next week.

Concern is high among elected officials, tenants and housing activists who worry that the properties—which are saddled with 3,261 code violations—will likely deteriorate further because the new owner is paying too much for the portfolio and won't be able to make needed repairs.

Christine Quinn: tenant advocate!

From the NY Times:

“Bronx portfolio,” the Web posting read. “These distressed properties fetches prices that are much below its market value.”

The grammatically sloppy advertisement for 10 troubled buildings in the Bronx appeared this spring on eBay classifieds, a forum not known for attracting the kinds of investors who can afford to rescue the properties, which are plagued with crumbling ceilings, roaches and unsustainable debt piled on during the speculative boom of the previous decade.

But with scores of such buildings in foreclosure and many others in disrepair, city officials and housing advocates say a new wave of investors has already begun to swoop in. And the actions of some of the new buyers — one was recently jailed for contempt of court, another has already clashed with tenants — have raised fears that conditions in timeworn buildings could get even worse.

Rafael E. Cestero, the commissioner of the city’s Department of Housing Preservation and Development, said he had seen a number of distressed properties sold to buyers who were not acting “in the best interests of the city, the neighborhood or tenants.”

Mr. Cestero said that city officials, seeking ways to intervene, had little recourse, since most of the deals were private. “This is probably the most difficult thing we’re doing at H.P.D. right now,” he said. “We don’t have a clear and obvious way to insert ourselves.”

And from the Huffington Post:

At a tenant rally, City Council Speaker Christine Quinn warned that an unnamed buyer planning to step in and take over the 10 disintegrating properties is agreeing to a deal that could only lead to profit if tenants are left in abhorrent conditions.

"None of the debt on these buildings is being reduced in this sale," Quinn said. "Unless the purchaser is some philanthropic billionaire who is going to put his or her last penny into these buildings, I don't see how we can have any hope ... that the buildings are going to get any better."

The deal, which Quinn said is far overvalued and worth more than $35 million, would require the new landlord to make such large interest payments that there's no way it could afford to make the necessary repairs on the crumbling properties, she said.

P.S. Sam Suzuki denies being a slumlord.

State is broke and city is owed millions

From the NY Post:

State government ended the quarter in deficit for only the second time in modern history last month and could go broke again before the summer's over, state Comptroller Thomas DiNapoli warned yesterday.

The state's general fund ended June more than $87 million short despite improved tax collections, DiNapoli said in his monthly cash report.

The comptroller traced the gap to the Legislature's failure to pass a complete budget and Gov. Paterson's decision to carry $2.9 billion in delayed payments into this fiscal year.

"There are fiscal storm clouds rolling in," DiNapoli said in a statement.

"The next school aid payments are due in September, and New York's cash umbrella may not be big enough. The state could, once again, be seriously in the red."

A general fund shortfall of $87 million will have little practical effect on the $134.4 billion-a-year government because officials can shift money from other accounts, but it demonstrates the severity of the state's financial woes.

The general fund slipped into the red for the first time ever in December and could face another cash crunch in September, when the state's on the hook to pay the estimated $2.8 billion in school aid.

Paterson has threatened to call lawmakers back for a summer session if they don't act on a budget soon.

The state's rapidly approaching its Aug. 11 record for the latest budget in its history.

And on the city level, from Crains:

Mayor Michael Bloomberg wants you—to pay up.

As part of plans unveiled Monday by the city to save $500 million over the next four years, the mayor wants to step up pressure on delinquent debtors.

Mr. Bloomberg says he has instructed the Department of Finance to report debtors to credit reporting agencies, hire more outside debt collectors and make it easier for New Yorkers to pay the city what they owe.

The plans are part of an overall strategy to improve the efficiency and reduce the size and waste of city government that could produce long-term annual savings of $500 million a year.

Public authorities are mostly wasteful

From the NY Times:

Last December, the State Legislature passed a new law aimed at making the long inscrutable agencies more transparent and reining in their spending. Now, a state office given more power to oversee the authorities has issued its first report.

And the results do not seem all that encouraging — at least to New York taxpayers.

New York’s public authorities racked up more than $17 billion in new debt in 2009 and many failed to comply with the reforms contained in the new law, according to the report released this month by the Independent Authorities Budget Office.

The $17 billion in new debt brings the total debt accrued by authorities to $133 billion, the report states. The largest contributors to the total debt are the Dormitory Authority, which accounted for more than $38 billion, and the Metropolitan Transportation Authority, which contributed more than $28 billion.

More than 140 authorities failed to provide budget reports to the Independent Authorities Budget Office and 175 did not provide annual reports, the report said.