This Bill Would Do Wonders For New York Renters — But Will State Politicians Have The Guts To Pass It?

ALBANY, NY — A tiny miracle was born in the State Capitol this week. It's called the "LLC Transparency Bill," and — although it's still in its infancy — it has the potential to upend a culture of almost total impunity for landlords and developers that has plagued New York renters for decades. (One that, Patch found in a recent investigation, has only gotten worse under current Gov. Andrew Cuomo.)

Only problem is, these same landlords and developers happen to be the No. 1 source of campaign funds for the politicians who would need to sign off on the bill, according to the National Institute on Money in State Politics.

The LLC Transparency Bill was proposed Monday by State Sen. Brad Hoylman, an energetic Greenwich Village dad who represents parts of the Upper West Side, Hell's Kitchen, Chelsea and the Villages.

“LLCs have operated in near total darkness for too long, and my legislation would shine a badly needed light on them," Hoylman said.

The senator's new bill, which he plans to introduce during the next legislative session in January, would require anybody creating a limited liability company, or LLC, to provide a legit name and address for themselves and all the other "beneficial owners" of their LLC. This info would then be vetted by the New York State Department and posted online. Non-compliers could be heavily fined or jailed.

Hoylman said his bill was inspired by a similar proposal at the federal level by his district-mate, U.S. Rep. Carolyn Maloney.

"It's kind of surprising" that a rule like this isn't already in place, the senator said in a phone interview Monday. "It would bring a lot of really important information to the surface."

Hoylman is relatively green as a politician: He first stepped foot in Albany just five years ago, after a decade or so working as a nonprofit housing lawyer and serving on neighborhood councils in NYC.

His latest legislation is just as bright-eyed — or, some might say, naive. Requiring LLC owners to identify themselves may sound like a no-brainer, but it's a far cry from current practice. And its implications for the housing system would be vast.

Each year, thousands more NYC landlords and developers are listing their buildings' official owners as LLCs. Creating a new LLC is as simple as filling out a 5-minute form online. And throughout the entire process, building owners never have to disclose their real name or address. (Well, technically they do. But many give a bogus name, a P.O. box, etc.)

This makes it almost impossible for tenants — and government officials — to track many landlords down. And when they can't be tracked down, even the most basic methods of accountability become gridlocked.

For instance: Prospective renters can't look up a landlord's record before signing a lease. Tenants often have nowhere to turn when basic services deteriorate in their building. The city can't figure how to punish many NYC building owners for quality-of-life violations or collect resulting fines. (In less than a decade, around $1 billion in fines have gone unpaid, city records show.) Prosecution is almost impossible — making it easy for "slumlords" like these guys to get away with tenant neglect and harassment.

LLCs are also a great way to mask unlimited donations to state politicians.

This "LLC Loophole," as it's called, allows the booming New York real estate industry to funnel cash to elected officials in return for political favors — as detailed in a sweeping, joint analysis of campaign donations and voting records by ProPublica and The Real Deal.

Previous attempts at closing the LLC Loophole have been blocked by the same elected officials who benefit from it most, the analysis showed. Not just Republicans — Democrats, too. And while Cuomo, reportedly the No. 1 recipient of real estate donations in Albany, has badmouthed the loophole plenty, he hasn't found a way to close it.

Needless to say, Hoylman's new bill faces a steep uphill battle.

Neither Cuomo nor the powerful Real Estate Board of New York responded to requests for comment from Patch this week on whether they plan to back the LLC Transparency Bill.

"It's going to take a lot of education," Hoylman admitted in a phone interview. "But I do think these types of issues shouldn't be partisan."

To those ends, the Manhattan senator has been strategically pitching his bill, in concert with U.S. Rep. Maloney, on the backs of two more universally unpopular users of LLCs: 1) international crime networks, and 2) U.S. President Donald Trump.

"Anonymous shell companies have become the preferred vehicle for money launderers, criminal organizations, and terrorist groups because they can’t be traced back to their true owners," Maloney said in a press release issued by Hoylman this week. She previously cited a recent watchdog report on drug cartels, human traffickers, credit card scammers, tax evaders, etc. who use LLCs to "skirt U.S. laws and launder money through our financial system."

And as for the president: "USA Today reported that, since clinching the Republican nomination, 70 percent of buyers of Trump properties were LLCs," Hoylman's office said in his press release — "potentially opening him to influence from corporations or foreign actors that the American people have no way of identifying."

The senator added, "It’s critical that we untangle the secret web of Trump’s hidden business interests. This legislation will help accomplish that goal.”

The LLC Transparency Bill will first have to pass through the Senate before making its way to the Assembly and, if it's approved there, to the desk of the governor. Feel strongly about the bill either way? Here's how to contact your local senator.

Pictured at top: The tenants of 80 New York Ave. in Crown Heights, Brooklyn, haven't had heat for two winters and counting. Their landlord is protected by an LLC. Read their story here. Photo courtesy of Naomi Dann