“TIE” Breaker: Incumbent City Councilwoman Exploits Transition Funds

New York City Councilwoman Margaret Chin, elected in November to a second term representing lower Manhattan, raised more than $30,000 for her inauguration expenses, which she appears to have used to pay bonuses to her campaign staff and for an elaborate “fundraiser.”

Former mayor David Dinkins’ 1989 inauguration was funded by massive private donations far in excess of what campaign finance laws allow for electoral contributions. His successor, Rudy Giuliani, adopted voluntary limits on what his inaugural committees would accept, and eventually the city established caps and restrictions on contributions and expenditures associated with “transition and inauguration” for all municipal elected officials.

A number of incoming City Council members have established “TIE” funds to collect funds to cover the cost of entering office. These costs can include fundraising for an inaugural reception, renting a hall and catering an inaugural party, hiring “transition consultants” and various other expenses associated with making the transition into elected office. By law, these funds can only be raised following Election Day, are completely segregated from campaign expenses and may only cover expenses incurred through Jan. 31.

Only newly elected Council members usually bother to establish TIE committees. The law clearly states that incumbents “shall be presumed to have no transition expenses,” and a second- or third-term Council member typically forgoes a big inaugural party. Councilwoman Chin and Council Speaker Melissa Mark-Viverito are the only two incumbents to have established such committees, and the Speaker’s is nominal, with only a few hundred dollars.  Of the 20 freshman Council members, only 11 have raised any TIE funds, and the average amount raised is around $6,000.

It is odd, then, that Chin not only has a TIE committee, but so far has raised $32,213, far more than any of her colleagues. Chin has even outpaced every borough president except Manhattan Borough President Gale Brewer in raising TIE money, and the councilwoman’s expenses exceed those of Public Advocate Letitia James, who is entering a citywide office.

Chin has taken Transition and Inauguration contributions from more than 200 individual donors, most of whom gave in the $100 range. However, Chin received two $1,000 contributions and one $100 contribution from executives of the First American International Bank, a Chinese-American bank whose employees contributed heavily to Chin’s 2013 electoral campaign. First American International was the owner of 135 Bowery, a landmarked Federal-era wood framed building which was demolished after Chin had its landmark designation removed.

Chin has defended the demolition of the historic structure on the grounds that it would be replaced by “affordable office space.”  Affordable housing is a term of art that is legally defined and restricted to people within certain income brackets: there is no equivalent category for commercial real estate, and Chin has never explained what she meant by her claim.

The councilwoman’s office refused to respond to questions regarding her TIE funds.

Chin’s reported expenditures from her TIE committee are somewhat puzzling as well. She reports having spent $10,125 for “fundraising expenses” at Delight 28 restaurant and banquet hall on Pell Street. Yet TIE fundraising can only can only be used for transition and inaugural activities, not for future elections or to pay for election expenses that were already incurred. So Chin spent over $10,000—more than any other Council member has even raised for their total transition and inaugural funds—to raise money for … what?  She doesn’t need to transition anywhere, and her actual inaugural celebration appears to have been rather modest, based on reports from social media.

Furthermore, Chin appears to have violated the law in payments she made to her campaign manager and another campaign staffer, out of her TIE committee account. According to Chin’s last campaign filings, campaign manager Yuan (Trip) Yang was paid $3,500 as his final month’s salary covering the period ending Nov. 15, 2013. Campaign worker Francisco Bravo was likewise paid $1,250 for his work for the biweekly period ending Nov. 15. All this money was disbursed appropriately from Chin’s 2013 political committee funds.

Yang and Bravo then received $5,500 and $4,000, respectively, on Dec. 15 from Chin’s Transition and Inauguration committee funds. These items are listed as Yang’s “Campaign Wrkrs $$/Monthly Salary” and Bravo’s “Campaign Consuls./TIE Salary.” However, Campaign Finance Board rules explicitly state that TIE committees may not “make expenditures for purposes other than transition or inauguration into office” [Rule 11-04 (b)(4)], so the payment to Yang as a campaign worker is impermissible; the Board also specifies that incumbents have no transition expenses, so it is unclear what Bravo did to merit a pay raise after the election.

It is not uncommon for elected officials to pay campaign staffers a bonus for their work, and Yang and Bravo certainly deserve what appear to have been bonuses for their dedicated efforts to get Chin re-elected in a tough campaign. The problem is that Chin did not have enough money left over in her political committee accounts to pay her workers bonuses in the legitimate manner: even though she raised more than $150,000 for her reelection, she spent almost all of that plus the $92,400 she got from the CFB, and has only $4,500 left in her campaign coffers.

If Chin raised $32,000 for her inauguration just to compensate her hardworking campaign staff, even if it meant breaking the rules, it would seem to be means justified by the end. However, that still doesn’t explain the $10,000 she spent at a Chinatown catering hall for a fundraising party, nor does it explain where the $10,000 she has left over is going.  Since her office refused to comment, we will have to wait for the CFB’s inevitable audit to find out.