The Paladino Problem

Introduction

At a June 2015 political rally, Buffalo developer and school board member Carl Paladino made a series of racist and xenophobic remarks. Paladino complained about “non-Americans” at the University at Buffalo campus and the “huge population of foreigners.” In comments to a group of reporters, Paladino blamed “those damn Asians coming here to go to school” for keeping local students from educational opportunities. Since then, the University at Buffalo and local media outlets have debunked his assertions, in addition to highlighting the racist nature of his remarks.

This is just the latest in a long line of outbursts from Paladino, whose tendency to make racist, sexist, and homophobic remarks earned him a national media profile during his failed campaign for governor in 2010.

Despite these views, Paladino continues to enjoy considerable influence in Buffalo. He is one of the city’s wealthiest developers, with personal wealth of $150 million and a real estate empire worth $500 million, according to a New York Times estimate from 2010. He is one of the region’s highest profile media figures. He is a significant beneficiary of government subsidies and leases, and one of the region’s most prolific political donors. And in 2013, he won a seat on the Buffalo school board, a frequent target of his criticism.

This report, which will be released in parts, reviews Paladino’s history of making hateful statements and examines the web of relationships that help him maintain a prominent place in Buffalo’s power structure. Part I, which covers his history of racism, sexism, and homophobia, and which includes a video of some of his most troubling remarks, is below. Part II takes a closer look at Paladino’s political network, and specifically at which elected officials accept significant funding from him.

I. Paladino’s history of racism, sexism, and homophobia

In addition to his recent remarks about Asian UB students, Carl Paladino has a long history of making racist, sexist, and homophobic remarks. These statements have drawn some criticism, especially when he was in the national spotlight as the Republican gubernatorial candidate in New York. But they have not diminished Paladino’s local influence, and few political, business, and media leaders in the region have criticized him or cut ties with him, as local media outlets have recently noted.

Below, a compilation of some of Paladino’s most egregious remarks…

     …about black leaders in Buffalo:

• Paladino described former Buffalo Common Council President James Pitts as “a shadow mayor in more ways than one.” [Buffalo News]
• Paladino reportedly said that some black Common Council members were better suited to clean council chambers, rather than serve in office there, though he denies saying this. [Buffalo News]
• Paladino told an audience at a Niagara Frontier Industry Education Council breakfast in 2008 that former Buffalo schools superintendent James Williams was only hired “because he was black.” [Buffalo News via archive.org]
• In June 2013, Paladino distributed a memo claiming that former superintendent Pamela Brown was hired because “The BOE wanted a weak African-American Superintendent from out of State who they could control to protect their influence over the bloated budget and jobs.” [WGRZ]
• Paladino referred to black female school board members as the “parasitic black sisterhood” and continues to refer to them as the “black sisterhood.” [Huffington Post]
• In March 2015, Paladino posted a racist screed to Facebook, which he said was authored by an African-American supporter named Herman. The post read, in part: “We (Blacks) don’t understand capitalism, economics, or investments. We are selfish, and have [no] intention of taking responibility [sic] for our self. All we want is to have things given to us. Affirmative action, quota system and twenty points afforded to us is the result of what you are dealing with when it comes to the miniority [sic] school board members (Ignorance). You are an intellegent [sic] man, but you will never come across to those idiots. This is why, we are at the bottom of the food chain.”
    

  Paladino replied by adding, in the comments, “Wow, Herman that was inspiring.” [B-Lo Ed Scene / Barbara Seals Nevergold accounts of Paladino’s Facebook post, which appears to have been taken down]

     …about welfare recipients:

• During his 2010 gubernatorial campaign, Paladino proposed housing inner city welfare recipients in prison dorms. He said: “Instead of handing out the welfare checks, we’ll teach people how to earn their check. We’ll teach them personal hygiene…the personal things they don’t get when they come from dysfunctional homes…You have to teach them basic things – taking care of themselves, physical fitness. In their dysfunctional environment, they never learned these things.” [Huffington Post]

     …about women:

• At a campaign rally in October 2010, Paladino called New York’s junior Senator Kirsten Gillibrand “[Senior Senator Chuck] Schumer’s little girl.” [New York Times]
• Also, see Paladino’s “black sisterhood” remarks above and his general conduct at school board meetings, and the incident at Roxy’s described below. [WKBW]

     …about LGBTQ people:

• In October 2010 when courting Orthodox Jewish leaders in Brooklyn, Paladino said: “We must stop pandering to the pornographers and the perverts, who seek to target our children and destroy their lives. I didn’t march in the gay parade this year — the gay pride parade this year. My opponent did, and that’s not the example we should be showing our children.” [NPR]
• Paladino also said: “I just think my children and your children would be much better off and much more successful getting married and raising a family, and I don’t want them brainwashed into thinking that homosexuality is an equally valid and successful option — it isn’t.”
• According to local comedian Kristen Becker, a drunk Paladino was kicked out of the lesbian bar Roxy’s for shouting “Show me your p—y!” at a dancer and then telling Becker, who intervened, to “shut up, you f—–g dyke.” PAI has independently corroborated Becker’s account with another person who was present. [Artvoice]

     …about Muslims:

• While running for governor in 2010, Paladino proposed using eminent domain to prevent the construction of a proposed Islamic community center in lower Manhattan. Of the group who planned the center, Paladino said: “Those who propose this mosque belong to a sect of Islam which requires all who don’t prescribe to this religion, be killed.”[Examiner]

     …and most recently, about Asian students at UB:

• At a protest against Olean State Senator Cathy Young, Paladino complained about “non-Americans” at the University at Buffalo campus and the “huge population of foreigners.” To reporters, Paladino blamed “those damn Asians coming here to go to school” for keeping local students from educational opportunities. [Olean Times Herald]

During his 2010 campaign, WNY Media released a large number of racist and sexist emails that had been sent and circulated by Paladino. Those emails included a photo of Barack and Michelle Obama edited to appear as if they were a pimp and prostitute from 70s-era exploitation films, a video of a tribal dance in Africa titled “Obama Inauguration Rehearsal,” a video of monkeys dancing a jig titled “Proof the Irish discovered Africa,” and a photograph of an airplane landing directly behind a group of African men captioned “Holy S—. Run n—–s, run!” The emails also included several hardcore pornographic photos and videos.

II. Paladino’s political network

posted 6/18/15

While Part I of this report reviewed Buffalo developer and school board member Carl Paladino’s long history of racist, sexist, and homophobic comments, Part II examines Paladino’s political network. We look specifically at the politicians who accept significant sums of Paladino’s money – and help protect his influence.

Paladino has protected his interests and maintained his influence by donating heavily to politicians, be it individually, through his PAC, or through the dozens of LLC subsidiaries of his company, Ellicott Development. PAI found that Paladino has made nearly $3 million in campaign contributions since 2000, mostly to his own unsuccessful run for governor, and otherwise primarily to other white male candidates. Though he is a Republican and frequently attacks Republican supporters of Democratic candidates (what he calls “RINOs,” Republicans in Name Only), Paladino appears to split his political donations along racial, rather than party lines. For example, we found that Paladino has donated to every white member of the entirely Democratic Buffalo Common Council, but we have not been able to identify contributions to any of the black legislators.

Some key findings:

• The top ten recipients of Paladino’s campaign donations are all white men
• Paladino has given to the vast majority of federal, state, and local politicians representing Buffalo/Erie County – a total of $260,499 to 35 out of 41 elected officials
• Paladino has contributed to every white Buffalo councilmember and Erie County legislator, but PAI has not been able to identify Paladino contributions to the five Erie County legislators and Buffalo councilmembers who are black

(above image includes only elected officials currently representing WNY)

Methodology

PAI analyzed data from the New York State Board of Elections and the Center for Responsive Politics to find campaign contributions made by Paladino, his Turning Albany Upside Down PAC, and by Ellicott Development and its myriad subsidiary LLCs. As Paladino’s influence is centered in Western New York, our analysis is focused on his donations to elected officials and candidates from this region, and specifically legislative and executive branch officials representing Buffalo and Erie County. Paladino’s donations to various PACs and party committees are also omitted for the purposes of this analysis, as are contributions from Paladino family members.

We aggregated Paladino’s donations from 2000 through 2015, and report contributions both since 2011 and since 2000 to show how Paladino’s relationships have developed and broken off through time.

Carl Paladino has given a total of $260,499 to 35 out of 41 federal, state, and local politicians representing Western New York

Of the nearly $3 million Paladino has donated since 2000, he has given $260,499 directly to the politicians representing Erie County at the federal, state, and local levels. This largesse has garnered Paladino considerable influence with local policymakers – 35 of 41 elected officials from the City of Buffalo, Erie County, New York State Legislature, and in the House of Representatives have taken Paladino’s money.

The top ten recipients of Paladino’s campaign donations are all white men

Table 1 below shows Paladino’s top ten all-time political donation recipients. All ten recipients are white males and, as can be seen in this and in subsequent tables, come from both major political parties. Despite routinely attacking Republicans who support Democratic candidates, Paladino does not discriminate based on party when it comes to securing influence via political donations.

Table 1. Top 10 Recipients of Paladino’s campaign contributions

Tables 2 through 4 show Paladino’s campaign contributions to politicians representing Western New York in the City of Buffalo, Erie County, and New York State governments.

Table 2. City of Buffalo recipients of Paladino campaign contributions

Table 3. Erie County recipients of Paladino’s campaign contributions

Table 4. New York State recipients of Paladino’s campaign contributions

PAI has not been able to find any contributions to black members of the Buffalo and Erie County legislative bodies

The tables of donations show that Paladino has not donated to any current black members of the Buffalo Common Council or the Erie County Legislature, though he has donated to every non-black member of each legislative body. Paladino has donated in the past to current Assemblywoman Crystal Peoples-Stokes, though he made all of these donations from 2000 through 2002, when he was a registered Democrat. Apart from Peoples-Stokes, the only black Western New York representative that Paladino has donated to is Buffalo Mayor Byron Brown, who has received just $450 from Paladino since 2000, and just $100 from him since 2011.

Notably, Assemblyman Sean Ryan, the only white elected official in our analysis who appears not to have received contributions from Carl Paladino, his network of LLCs, or his PACs, received a $500 donation from Paladino’s son William.

While it is possible that we missed some contributions, it is clear that Paladino gives very little to black elected officials, while donating heavily to white elected officials.

III. Subsidizing Paladino

Despite his animus towards what he inaccurately characterized as the state “subsidizing Asians” and other “non-Americans” going to school at the University at Buffalo, developer and school board member Carl Paladino himself accepts substantial public subsidies to run and expand his real estate business, which he estimates is worth $500 million.

This heavy reliance on tax dollars emerges as a clear theme in a review of the business relationships behind Paladino’s fortune.

Paladino is the founder, chairman, and former CEO of Ellicott Development, the largest private landlord in the City of Buffalo. In addition to the historic Ellicott Square Building on Buffalo’s Main Street, Ellicott Development and its myriad subsidiaries manage “over 2 million square feet of office, retail, and residential space,” according to the Ellicott Development website.

Much of this space is leased to government tenants, and Paladino’s company has also received considerable subsidies and development incentives over the years. In 2010, the Buffalo News reported that Paladino collected $10.1 million in rent from local, state, and federal tenants in 2010 and had received $12 million in tax breaks between 2003 and 2010. Since 2010, PAI found that Paladino has received more than $1.8 million in tax breaks from the Erie County Industrial Development Agency (ECIDA).

This strong dependence on government largesse is especially remarkable in light of Paladino’s substantial political contributions, detailed in part II of this report, to local government officials who oversee these subsidies and leases.

Part III of this report examines the business relationships behind Carl Paladino’s fortune, including his government leases and subsidies, financing arrangements with regional banks, and positions on key local boards.

Some key findings:

• Paladino earns millions annually from government and charter school leases
• Paladino has received at least $13.8 million in taxpayer subsidies since 2003
• M&T, First Niagara, and Northwest Savings Bank are among Paladino’s top financiers

Landlord to government

Paladino’s taxpayer revenue streams first came into wide discussion during his 2010 run for governor. That year, the Buffalo News reported that Paladino would collect $10.1 million in rent from federal, state, and local government agencies that leased space from him. Among Paladino’s government tenants are the Buffalo branch of the FBI, the NYS Department of Public Service, the NYS Department of Transportation, the Erie County Water Authority, and the Erie County Fiscal Stability Authority.

The Buffalo News found that in 2010, the FBI paid Paladino $1.5 million to rent its office on Elmwood Avenue behind City Hall.

The Buffalo News also reported that 14 government tenants, 12 of which were affiliated with the state government, leased space in the Ellicott Square Building, generating another $1.5 million in rent for Paladino in 2010. The two local government tenants in the Ellicott Square Building are the Erie County Water Authority and the Erie County Fiscal Stability Authority, the control board established by the state to manage the county’s finances in 2005.

Further, according to a Buffalo News report from 2014, Paladino brings in more than $195,000 per month in lease payments from six Buffalo charter schools in which Ellicott Development is the sole or partial investor. These schools, though privately operated by nonprofit corporations, received public funding.

Millions in tax breaks

According to PAI’s review of recent Erie County Industrial Development Agency awards and a Buffalo News analysis from 2010, Paladino has received at least $13.8 million in tax incentives for his various real estate projects since 2003. Public subsidies have gone toward building charter schools that funnel local education dollars to Paladino’s bank account as well as low-wage dollar stores.

Investigative Post’s Jim Heaney, then with the Buffalo News, reported in 2010 that Carl Paladino had received tax breaks totaling at least $12 million for 20 of his properties since 2003. These incentives came largely through the state’s Empire Zone program, which was “initially designed to promote investment and job creation in economically distressed areas” according to Heaney’s article. The $12 million also included inducements for six projects from the Erie County Industrial Development Agency (ECIDA), including $324,000 in tax breaks to develop Tapestry Charter School in North Buffalo and $300,000 to build a Family Dollar store on Niagara Street.

Since 2010, ECIDA has awarded six additional incentive packages to Paladino worth $1.8 million in tax breaks. The richest of these is the $834,000 in tax abatements awarded in May 2013 for the adaptive reuse of the long-vacant Fairmont Creamery building downtown.

Paladino has also received $361,000 to develop two charter schools, Health Sciences Charter School and West Buffalo Charter School, since 2010.

Other incentive packages include $339,000 to develop a Busti Ave warehouse into commercial and residential space, $212,900 to rehabilitate the Graystone Building on Johnson Park, and $65,800 to develop apartments and offices on Elm St downtown.

It is important to note that $1.8 million since 2010 is a conservative estimate, only taking into account tax breaks Paladino has received through the ECIDA since 2010. Incentives and subsidies awarded through other programs could put that number much higher.

Paladino’s financiers

Paladino’s ventures enjoy the backing of major banks in the region.

PAI found that M&T Bank makes the most loans to Paladino’s myriad LLCs, based on a review of 221 Uniform Commercial Code (UCC) filings for 59 companies associated with Paladino. Among other projects, M&T has provided financing for Paladino’s $14.7 million redevelopment of the Fairmont Creamery building.

HSBC is Paladino’s second largest lender, followed by First Niagara Bank, Jamestown-based Northwest Savings Bank, and GE Capital.

Local boards of directors

As the biggest real estate developer in Buffalo, Paladino enjoys considerable influence over local policy. He sits, or has sat, on the boards of numerous local institutions, most notably the Buffalo Board of Education, which governs the Buffalo Public School system.

In addition to his BPS board seat, Paladino currently sits on the boards of Buffalo Place, a downtown quasi-governmental business improvement district, and Bishop Timon / St Jude High School, a Catholic high school in South Buffalo.

Until 2014, Paladino was a director of Buffalo Civic Auto Ramps, a private non-profit that manages downtown parking facilities owned by the City of Buffalo. His spot on the Buffalo Civic Auto Ramps was recently taken over by his son William, the current CEO of Ellicott Development.

In the past, Paladino has been a trustee of St. Bonaventure University, his alma mater, and a member of advisory boards to D’Youville College on Buffalo’s West Side and Erie Community College.

Paladino also sat on the Horizons Waterfront Commission, a “superagency” established by Governor Mario Cuomo in the late 1980s to coordinate planning and development of Erie County’s waterfront and disbanded in 1995 amid a political power shift.