A Buffalo City Hall agency that was raided two years ago by federal agents has given $20 million in funds over the past eight years to contributors to Mayor Byron W. Brown’s campaign.
Two former U.S. attorneys, witnesses interviewed by the FBI and a veteran defense lawyer familiar with the probes told The Buffalo News they don't expect any charges to be filed against Brown before the Nov. 2 mayoral election.
It has also sold property or awarded exclusive development rights to campaign contributors without public bidding, though the Brown administration says campaign cash has nothing to do with getting city contracts.
The Buffalo News analyzed eight years of spending by the Buffalo Urban Renewal Agency, at whose offices the FBI executed a search warrant in 2019. The agency doles out millions of dollars in anti-poverty money and economic development funds the city receives from the federal government each year.
The analysis, which covered 150 transactions during Brown’s two most recent terms in office, revealed:
• Millions of dollars in federal funds distributed by the agency went to contributors of Brown’s two most recent campaigns. BURA distributed roughly $35 million in the last eight years, with more than $20 million – 58 percent – going to campaign contributors. Most of the remaining funds went to neighborhood groups and non-profits.
• Brown campaign contributors have also benefited from the sale of prime city properties near the waterfront and the Buffalo Niagara Medical Campus. In some cases, they received exclusive development rights without public bidding.
• Many of the same developers and consultants who received city contracts gave thousands of dollars to the Brown campaign in the days before his primary defeat to challenger India B. Walton. They have contributed even more to Brown’s write-in campaign.
“The FBI is trying to determine if there was any quid pro quo relationship between the donations to the mayor and Modern’s contracts with the city,” one source told The News. “They also want to know what dealings there were between the mayor, (Steve) Pigeon and Maurice Garner.”
Campaign contributions from people who want something from government have long been a flash point in American politics. Candidates from left to right take money from people, industry groups, unions and advocacy groups that want to win government votes or business. Some givers dislike the process, but feel they must contribute to have a voice. Sometimes the contributions are more nefarious, "buying" favorable treatment.
Brown says that isn't the case with his donors.
"Donating is absolutely not a condition" of receiving public funds, Brown said in an interview. "We completely don't allow that to occur. People in office raise money – they have to raise money. That’s the system that we have. But there is no correlation to what people give, when they give or even if they don’t give at all to them being able participate in the development process in city government in Buffalo."
Steven Carmina of the architecture and engineering firm Carmina Wood Morris has worked on projects that were funded by BURA. He has contributed $14,500 to Brown since 2013, but said he was not pressured to donate.
“Absolutely not, and I’m glad you asked me," Carmina said. "The mayor has never once made me feel like there is any quid pro quo involved with donations. He’s an honest guy. He doesn’t operate that way.”
Good government groups said they can't say if Brown received a higher percentage of donations from contributors who do business with BURA than is typical for politicians.
But they said the practice doesn't look good. There is a growing movement to limit or restrict campaign donations from businesses that do business with governments, they said.
"They’re typically called 'pay to play laws,' and one factor is, you want government contracts to go to the best vendor. You don’t want it to go to someone because they’re friends with somebody or they showed up at the fundraiser and gave them money," said Ian Vandewalker, senior counsel for the Brennan Center for Justice, a non-profit law and policy institute in New York.
New York City, for instance, caps at $400 donations to the mayor from companies that do business with the city. Unlike Buffalo, it also publishes a public database of those firms.
"You don’t want government officials who have power over these lucrative contracts to shake business owners down by dangling contracts in front of them and saying, 'gosh, I sure need money for my campaign.' " Vandewalker said. "That starts to feel more like government corruption."
Brown's opponent, Walton, has accused him during the campaign of being too cozy with developers.
"A Walton administration will not operate by backroom deals and mutual backscratching with the rich and powerful, but rather open, transparent community input and ground-up, democratic decision-making," said Jesse Myerson, a Walton campaign spokesman.
This most recent search warrant appears directly tied to a subpoena the federal agency served on City Hall in 2017 for documents connected to seven different companies doing business with the
A history of controversy
BURA’s board of directors is chaired by Brown, and the agency works closely with the Mayor’s Office of Strategic Planning, which is run by Brown appointee Brendan R. Mehaffy, who also serves as BURA’s vice-chair.
How the agency spends the millions in anti-poverty funds that flow into its coffers each year drew controversy even before the FBI raid two years ago, when federal agents seized carts full of documents from its housing division.
Mehaffy’s predecessor as the city’s top development official, Timothy E. Wanamaker, in 2012 was sentenced to three years’ probation for stealing more than $27,000 in public funds by using city credit cards for personal charges.
Around that time, the U.S. Department of Housing and Urban Development determined BURA was so mismanaged that HUD temporarily froze federal funds.
“The city in general, it’s not been a great model for the stewardship of the federal funds,” said Stephen T. Banko III, the former director of HUD’s Buffalo office. “They were doing things out of bounds when I was there.”
Mehaffy took over the city's development initiatives, and both he and Brown said the agency has changed.
"We’ve done many things to reform the agency, to put checks and balances in place," Brown said. "In organizations as large as this, mistakes can be made, things can break down, unintended things can happen. You have to fix those things."
In all, 27 campaign contributors, mostly developers of recent projects downtown or on the East Side, received BURA funds or purchased properties from the agency, according to The News’ analysis.
Collectively, they have donated at least $164,000 to Brown's campaign since 2013, when he was re-elected to his third term. That total does not include donors who were subcontractors on various projects.
Brown noted that BURA awards contracts not only to big developers, but to community groups and non-profits that build affordable housing. The agency awarded roughly $11 million to community groups, The News' analysis showed.
Paladino given development rights
Brown has tried to distance himself this year from developer Carl Paladino, saying he's not close with the former GOP gubernatorial candidate.
“I’ve already made it clear that I did not ask Mr. Paladino for his support. I’ve already made it clear that I will not take Mr. Paladino’s support. And for some of you that know the record and have done the research over the years, you should know that we are not close,” Brown said June 28 when he announced his write-in effort.
But the mayor has accepted $7,700 in campaign contributions from Paladino, his son and their companies over the past eight years.
During that time, companies owned by Carl and William Paladino of Ellicott Development purchased or received exclusive development rights to five properties, including prime parcels near the Buffalo Niagara Medical Campus and the waterfront.
In February 2013, the BURA board named Ellicott the “designated developer” for three parcels near Erie Basin Marina. Carl Paladino planned to develop the plots into a 574,000-square-foot mixed-use project named “The Carlo.”
Carl Paladino denied his contributions had anything to do with BURA granting his company rights to develop the land.
“I give money to government, OK, for good government,” Paladino said.
The $75 million project stalled and was never built, but in 2015, the city sold Ellicott six properties for the company’s St. Paul Mall project, a six-story retail and medical office complex on Main Street near the Medical Campus. Paladino bought the land for the appraised value of $1.3 million. The appraisals were performed by KLW Appraisal Group, which contributed $1,000 to Brown’s campaign last month.
In October 2020, the agency also awarded Ellicott exclusive development rights for a vacant parcel at the corner of Main and Best streets.
“What is wrong with me getting development rights?” Paladino asked.
Brown said there was "absolutely no correlation whatsoever" between Paladino's campaign donations and the development rights. He said a separate review team – not the mayor – makes the final selection.
"What the review teams look at is the best proposals with the greatest community impact, capacity to do the work, ability to comply with federal regulations, and there is a very thorough underwriting process," Brown said.
Federal funds to Sinatra, Pawlik
Since 2013, developer Nick Sinatra has contributed $15,305 to Brown's campaign and developer David Pawlik has contributed $16,950, campaign records show.
In early 2014, BURA directors unanimously recommended the sale of the historic Market Arcade building to Sinatra for $1.4 million.
The deal was publicly bid and Brown said it was chosen because of Sinatra’s commitment to move his corporate office and 50 employees from Kenmore to downtown Buffalo.
In 2015, Sinatra teamed up with Pawlik, a former city housing commissioner, and proposed a $5.2 million housing project on Kensington Avenue. On April 30 of that year, Pawlik contributed $2,500 to Brown’s campaign account and Sinatra contributed $600, state election records show.
Less than two months later, BURA directors voted to allocate $1.25 million in anti-poverty funds to the project, which would have included 30 market-rate apartments and 10 low-income apartments. But the project was never built and the developers never received the public funds, BURA general counsel Scott C. Billman said.
In 2018, Sinatra and Pawlik worked with the not-for-profit People, Inc. to develop 89 mixed-income apartments on Jefferson Avenue. BURA approved $500,000 in federal housing funds for the project.
Sinatra did not respond to a message seeking comment. Pawlik in an email said his company has earned its reputation "through hard work and talent," but he declined interview requests.
Robert Galbraith is a senior research analyst at the Public Accountability Initiative, a left-leaning Buffalo nonprofit that researches power and politics, and a Walton supporter who contributed $305 to her campaign. He said the timing of the 2015 donations to Brown looked suspect.
“When it comes to how development happens in Buffalo, I don’t really believe in coincidences. That immediately makes me ask, 'were these campaign donations a condition for getting these funds?' ” Galbraith said.
Brown said he doesn't keep track of who donates or doesn't donate to his campaigns.
"I separate myself from that process," he said. "Yes, I do make fundraising calls, I do request donations, but then afterwards ... whether people donate, how much they donate, I really don’t know, and we have absolutely no ability to connect that to city work."
No pressure to donate, developers say
In the waning days of the Democratic primary campaign – as Walton was making surprising gains – many of the same developers and consultants who received public funds or purchased properties from BURA contributed to Brown’s campaign.
Carmina contributed $5,000 on the Friday before the June 22 primary. He was part of a group that received designated developer status and three vacant lots from BURA in 2019 for their $6.6 million loft project on Michigan Avenue and Broadway. He said he encountered the mayor soon after his Democratic primary loss to Walton.
“I walked up to him at an event after he lost the primary, and told him, ‘I’ll do anything I can to help you,’ ” Carmina said. “He never said, ‘Give me money.’ He’s been a partner with developers ... I want that to continue.”
Paul Lamparelli and his wife have contributed $11,000 to Brown’s campaign since 2013, including $2,600 since this June. Lamparelli Construction served as general contractor on a home rehab program administered by BURA in 2018.
“I talk to Mayor Brown at every fundraiser,” Lamparelli said. “He knows I support him, but there’s been no pressure put on me to donate.”
Since Brown announced his write-in campaign, Sinatra, Carmina and Pawlik have contributed a total of $8,600 to his campaign.
Robert Mootry Jr., chairman of the Mount Olive Development Corp., has contributed more than $1,000 since the primary. His group received $1.3 million in anti-poverty funds from BURA in 2019 to build eight apartments across from Mt. Olive Baptist Church.
Mootry said his donations to the mayor “are from me personally, not on behalf of the development corporation.”
“There has never been any pressure on me or the development corporation to donate to his campaigns,” Mootry said. “I do it because I believe in him.”
Galbraith said the parties on both sides of economic development deals “are operating in a way that is mutually beneficial.”
“At that point you don’t need to have a quid pro quo, because everybody is with the program,” he said. “These things can go on without needing to be said.”
Land not always publicly bid
New York State Public Authorities Law states that board members of state and local authorities are required to adopt policies for the procurement of goods and services.
But until the month that federal agents raided BURA offices on Nov. 6, 2019, BURA did not have a procurement policy on its books.
On Nov. 21, the first time BURA’s board met after the FBI raid, the agency adopted a procurement policy that stated, “It is the general policy of BURA to award contracts to the lowest responsible dollar offeror who meets the specifications.”
Mehaffy said the adoption of the procurement rules was “unrelated” to the FBI raid and was recommended by outside auditors the previous year. Prior to the adoption, BURA followed City of Buffalo purchasing policies, Mehaffy said.
From 2013 to 2020, records show the agency sold public land or granted exclusive development rights 14 times.
Five times, the agency solicited public bids – often called “requests for proposals” – for the right to develop the properties.
Nine times, there was no formal public bidding process before BURA selected a developer or sold the land.
Of those nine instances where land was sold or development rights were given without bidding, six involved developers who contributed money to Brown’s campaign.
Brown and Mehaffy said there were policy – not political – reasons for those decisions, like when developers have assembled multiple pieces of land for office or housing developments that benefit the public.
"This is done for strategic reasons, and at times when there is no RFP, there’s a strategic reason," Brown said.
BURA's property disposition policy states that property may be disposed of "only after publicly advertising for bids." But there are multiple exceptions if, for instance, board members decide that a direct sale would serve "a public purpose" or would "further the public health, safety or welfare or an economic development interest."
The agency did not solicit bids for the parcel known as the "Skyway loop lot" on Terrace Street. Last year, the agency awarded exclusive development rights to Douglas Jemal, who plans a $45 million apartment project.
In the last five years, Jemal and Paul Millstein, vice president of Douglas Development, have contributed $15,580 to Brown’s campaign. But the mayor said it was Jemal's work to refurbish the nearby Seneca One tower – not the developer's campaign contributions – that made the plan attractive.
"That loop lot, there has not been any demand for that," Brown said. "He demonstrated an amazing ability to bring new life to that property, and we believed through our review of what could happen at that loop, that he had the knowledge, the expertise, the financial wherewithal to pull that project off."
No public bids were solicited in 2019 when the agency sold a parking lot on Washington Street to Uniland Development for $2 million. Uniland and the Montante family, who declined to comment, have contributed $13,800 to Brown’s campaigns since 2013.
In 2015, Ciminelli Real Estate agreed to purchase one of the last remaining large parcels at Waterfront Village for $2.2 million. It planned to develop a $25 million condo project on the site.
Three years later, BURA lowered the sale price to $1.3 million – a 40 percent decrease for prime waterfront property. The land was appraised at $1.6 million, city records show.
Mehaffy said neighbors objected to the height of the project, which was then reduced from five stories to three.
“In order to get it developed, at the end of the day we had to limit the height on there,” Mehaffy said. “And when you limit the height, the value of the land goes down. That’s why the sale price is lower.”
Ciminelli, through a spokesperson, did not respond to a message seeking comment.
Banko, the former HUD official who also worked at City Hall, has said he supports Brown in this election. He said was not surprised that many of the developers who contributed to Brown’s campaign also received properties or development rights from the city.
“Buffalo’s the biggest small town in America,” Banko said. “And everybody knows everybody and all the developers ... the same guys are developing everything.”
Galbraith said letting “a small coterie of very politically wired developers and campaign donors build everything” may not be illegal, but it’s also not ideal.
“The system’s set up in a way that a lot of the worst things that get done are done legal and ostensibly above-board," he said. "But is this the best use of the people’s money and the people’s resources?”