Marte's rent-free campaign headquarters may violate campaign finance rules

New York City Council candidate Christopher Marte’s campaign headquarters at 230 Elizabeth St. is being leased to his campaign for free, his campaign manager told City & State.

The arrangement may run afoul of a city campaign finance law that prohibits any campaign contributions from limited liability corporations. If the lease was between the LLC that owns the building – Hamilton & Church LLC – and Marte’s campaign, it could be illegal.

“It is illegal to accept a contribution from an LLC – even a $5 contribution from an LLC,” said Leo Glickman, a New York City civil rights and election lawyer.

The law also bans individual contributions over $2,750 for city council candidates. If the lease is in fact between an individual building owner and the campaign, the campaign must argue the deal for free office space in the tony neighborhood is valued at $250 or less.

“This in-kind contribution puts him over the limit as an individual contributor,” Glickman said. He later added, “It’s hard to imagine a scenario where it’s not coming from both (the LLC and the building owner) under New York City law.”

The campaign has been holding events in the small retail location since at least September, but the New York City Campaign Finance Board has no record of office rent or in-kind contributions for that location in previous filing periods, which are current as of Oct. 23.

“The campaign has not broken any campaign finance laws,” the campaign wrote in an emailed statement on Monday evening. “We have run a campaign on transparency and good governance and have always remained true to these values.”

Votes are being cast Tuesday as Marte challenges New York City Councilwoman Margaret Chin in District 1, which covers much of lower Manhattan. Chin is one of the few sitting council members with a serious general election challenge. A razor-thin margin of victory – just 222 votes – separated Chin from defeat in September’s Democratic primary. Now, Marte is back on the ballot in the general election on the Independence Party line.

The Marte campaign insists its free-of-charge headquarters leasing agreement is legal.

“We have a signed agreement with the owner of the space. They don’t charge the office for nonprofits and since we’re not profiting off of it, we made an agreement with the owner,” Caitlin Kelmar, Marte’s campaign manager, said in an interview earlier on Monday. There is no nonprofit involved in the rental agreement, she added. The lease, Kelmar said, is directly between the owner and the Marte campaign.

This #SundayMorning in #NYC might be rainy but you can always stop by our office for a ray of ?? & say ???? at 230 Elizabeth Street! #District1 pic.twitter.com/aTiJu9Ul2l

— Christopher Marte (@ChrisMarteNYC) October 8, 2017

A court record shows Adam Woodward is the sole member of Hamilton & Church LLC, making him the building’s owner. Woodward initially declined to comment on the arrangement and directed questions to the campaign on Monday.

When reached for comment on Tuesday morning, Woodward said there was no rent-free deal and did not understand why the Marte campaign thought there was one.

The inconsistencies in the accounts of Marte’s camp and the building owner potentially raises further issues, lawyers consulted by City & State said.

It’s possible that the Marte campaign plans to pay rent after the election.

Before repeatedly asserting that her campaign would pay no rent under the campaign office lease agreement, Caitlin Kelmar, Marte’s campaign manager, had told City & State, “We’ve only been here for a couple of weeks. We haven’t had to pay rent yet.”

Even if the campaign had some deferred payment deal, it would break the law, Glickman said.

“Even if (the building owner) expects to be paid and even if the campaign pays him back at some juncture down the road, it would still be considered an over-the-limit contribution, because it’s an outstanding loan as of election day,” Glickman explained. “No matter how you slice it, there’s a contribution limit violation.”

Woodward is married to Ilaria Fusina, who has contributed the $2,750 maximum campaign contribution to Marte’s campaign and is a board member of the 501(c)(3) Friends of Elizabeth Street Garden, a nonprofit group which City & State previously reported appears to have morphed into a political action group. The nonprofit’s advocacy for Marte, experts said, may be in violation of federal, state and local laws barring campaign activity and substantial lobbying by tax-exempt nonprofits.

Woodward has already contributed $2,500 to Marte’s campaign – just $250 shy of the maximum contribution limit. If the lease is through Woodward as an individual and not through his LLC, the Marte campaign would have to argue that the total value of the retail space on 230 Elizabeth St. for the time Marte uses it is $250 or less in order to stay within city campaign finance rules.

But several real estate brokers consulted by City & State who lease property in the area estimate that the monthly rent would be valued at $5,000 on the low end and perhaps as high as $11,000 for the space. A larger restaurant space next door is renting for $18,500 a month at $252 per square foot.

Even a pro-rated price on the retail space for a few days would likely exceed the contribution limits.

On Sept. 11, the day before the primary election, the Marte campaign hosted an phonebanking event at the 230 Elizabeth St. location. Pro-rated rent for that day alone, extrapolating from the real estate broker estimates, would run at least $166 and perhaps $366, since properties are often leased at a premium for pop-up events.

“We had the space for the last week of the (primary) election,” Kelmar said, adding that they mostly used the location as a “pop up staging location” until a few weeks ago, when the Elizabeth Street location became their primary headquarters.

The Marte campaign’s filings with the city campaign finance board show they have paid office rent in two other locations, at 356 Broadway and 447 Broadway. The campaign also uses space at 90 Rivington St., according to Bowery Boogie, a local blog. The broker for that space told City & State that it can be rented for $6,250 per month, but could not say what the current agreement is with the Marte campaign.

The New York City Campaign Finance Board declined to comment on the specifics of the Marte campaign’s leasing arrangements.

“The CFB conducts full and complete post-election audits for every campaign,” a spokesperson for the New York City Campaign Finance Board said. “That includes ensuring that campaigns use those public funds according to the law.”

Woodward, the building owner, lives in the building above the campaign office, in what was described as a “comfortable, if eccentric, home” that he bought in 2004 for $2.64 million, according to a New York Times’ Home & Garden article from 2014.

The campaign office is a one-minute walk from the Elizabeth Street Garden.

-Additional reporting by Jeff Coltin