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City Council Passes Legislation to End Political Nonprofit 'Loophole'

By Jeff Mays | December 16, 2016 8:46am
 The City Council passed a package of campaign finance reform bills Thursday, including one piece of legislation that would limit the amount of money that companies or individuals with business before the city could give to political nonprofits.
The City Council passed a package of campaign finance reform bills Thursday, including one piece of legislation that would limit the amount of money that companies or individuals with business before the city could give to political nonprofits.
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Ed Reed/Mayoral Photography Office

NEW YORK CITY — The City Council passed a package of campaign finance reform bills Thursday, including one piece of legislation that would limit the amount of money that companies or individuals with business before the city could give to political nonprofits.

The new law, which Mayor Bill de Blasio has said he would sign, comes after the mayor created a political nonprofit, the Campaign for One New York, which collected millions of dollars from individuals and companies with business before the city.

The donations were legal because the nonprofit lay outside of the city's campaign finance rules. But de Blasio's fundraising is being investigated by federal and state agencies, including U.S. Attorney Preet Bharara, who is trying to determine if donors received anything for their donation.

READ MORE: Here's What We Know About the Probe Into Mayor Bill de Blasio's Fundraising

The mayor has maintained that the now-shuttered nonprofit was designed to help accomplish political goals that benefit New Yorkers such as affordable housing and universal pre-K and that he sought legal opinions on the group and did nothing wrong.

The new legislation — sponsored by Council Speaker Melissa Mark-Viverito, council members Dan Garodnick, Elizabeth Crowley and Brad Lander — limits to $400 per year the amount of money that lobbyists, people with city contracts or who do business with the city can donate to "non-governmental organizations controlled by a local elected official or their staff."

The entities are also now required to disclose their donors. The Campaign for One New York disclosed its donations and expenditures only to journalists upon request and not the general public.

DNAinfo New York also discovered that the Campaign for One New York had withheld from public disclosure a $20,000 donation from a developer who had business before the city.

READ MORE: De Blasio Didn't — And Won't — Disclose All Who Donated to His Nonprofit

The group had cashed the $20,000 check from developer Don Peebles but returned it upon his request a few months later. The group refused to disclose to DNAinfo New York any other similarly returned donations.

Susan Lerner, executive director for good government group Common Cause, said the episode showed why political nonprofits such as the Campaign for One New York needed to fall under city campaign finance laws.

"When an organization is voluntarily disclosing things they get to make up the rules," she said at the time.

Mark-Viverito said the legislation was necessary.

"There was a loophole here," Mark-Viverito said Thursday during a City Hall press conference.

"Any entity that is affiliated with an elected official has to abide by the same rules as an elected official," she added.

Lander said the bill will help stop money from "corrupting our politics."

De Blasio said his support of the legislation is not an admission of any wrongdoing.

"I’m only acknowledging that it became a big distraction even though everything was done properly, and even though we achieved the goals we set out to achieve, which were the pre-K plan and the affordable housing plans," said de Blasio.

"I have eyes to see. If something becomes too much of a distraction, you move on and you do other things," the mayor added.

Other pieces of legislation in the campaign finance reform package include:

► Eliminating from the campaign-matching program donations from a bundler who is doing business with the city.

► Allowing a small amount of matching campaign funds to go out during the petitioning period.

► Prohibiting candidates participating in the matching funds program from accepting money from political committees not registered with the Campaign Finance Board.

► Requiring people with a 10 percent or more interest in an entity doing business with the city be disclosed in the "doing business database."

► Allowing non-matching campaign funds to be used "in the execution or performance of the duties of public office," such as notifying constituents of a town hall meeting.

► Preventing Campaign Finance Board staff from being present during executive session portions of the meeting where a candidate violation is being discussed. The board would be able to hire a professional counsel not supervised by a staff member to advise them during those portions of a meeting.

Three good government groups, Reinvent Albany, Citizens Union and Common Cause NY, praised two pieces of the legislative package.

"The ban on public matching funds for bundled contributions will curb the use of leveraging organized money from those who do business with the city," the groups wrote.

"The needed regulation of elected official formed or affiliated nonprofit organizations clips the wings of a reemerging 'pay-to-play' culture within City Hall that would have harmed our heralded campaign finance program," they continued.

But other pieces of legislation in the package were rushed through without proper input from the public or the Campaign Finance Board, they said. Some required a last-minute push for changes, they added.

Dick Dadey, executive director of Citizens Union, said some of the bills are "posing as solutions to problems that have not been articulated and stand to undermine the CFB’s enforcement power.”