Experts: Paladino's business ties could be an issue

ALBANY - Carl Paladino's real estate empire receives millions of dollars from state government each year and experts said he must distance himself from those businesses if he becomes governor.

Fifteen of the 22 companies the Republican candidate said he plays a role in, according to his financial disclosure form, have ties to Albany. Most rent office space to state agencies in downtown Buffalo and receive tax breaks in return for creating jobs. Others have licenses to sell alcohol at convenience stores and hotel bars.

Paladino is landlord to 17 agencies, including the social services and motor vehicle departments, according to the state Office of General Services, which procures space. The agencies pay $5.3 million in rent per year on 28 leases, which have a total value over time of $55.6 million.

Not since Nelson Rockefeller lived in the Executive Mansion, from 1959 to 1973, would a governor be so enmeshed in the business world. Experts said a Gov. Paladino would have to separate himself from his real estate holdings to comply with conflict-of-interest laws that are more stringent than in Rockefeller's day.

"Carl Paladino would have to put everything into a trust before taking office," said Susan Lerner of the good-government group Common Cause. "He and the state cannot afford to have questions about whether he's making decisions based on how they affect his business."

Paladino agreed, saying his assets would be placed in a blind trust modeled after federal ethics rules. Whether it satisfies conflict-of-interest prohibitions in the state Public Officers Law is unclear because the Public Integrity Commission declined to comment on specific circumstances.

"We do have a plan, although it won't be implemented until after Election Day," Paladino told Newsday. "My assets would go into a trust and be managed separate and apart from me."

Cuomo knocks rival's deals with state

Lucrative business deals between Paladino and Albany, particularly office leases and generous tax breaks through the discredited Empire Zones development program, have been criticized by Democratic gubernatorial nominee Andrew Cuomo. He portrays Paladino as a hypocrite, receiving millions from the state government that he vows to take a baseball bat to if elected.

"My opponent's experience and model, I think, is exactly wrong for the State of New York," Cuomo said Monday. "We just can't afford it."

Cuomo, the current state attorney general, does not appear to have similar business relationships, his disclosure form shows.

New York rents space in a dozen buildings in which Paladino has an interest; all but three are in the Buffalo area.

Many state agencies are housed in the Ellicott Square Building, a 10-story complex opened in 1896 and now headquarters to Paladino's business and campaign operations. A new tenant is the Workers' Compensation Board, which last week began a 10-year lease valued at $2.2 million.

Paladino bristled at Democrats' accusations the many leases were secured by his nearly $500,000 in political contributions. He noted the comptroller and attorney general each approved every lease.

"I have competed in an open . . . public bidding process, and I won those leases by offering the state the best space at the lowest price," he said. "I have never received anything in return for any political contribution I ever made."

Paladino: Son runs business

Paladino also said the state leases, together with those for federal and Erie County agencies, represent between 15 percent and 20 percent of all his office leases. The primary objective of Paladino's companies is now the construction of Rite Aid drugstores, hotels and upscale apartments. "That's totally private, no government leases there," he said.

Still, Albany plays a role in some of these enterprises through the Liquor Authority.

Four Paladino-owned convenience stores in the Buffalo area have licenses to sell beer and wine, according to authority records. Two hotels also were given licenses this year.

Paladino said this week his son, William, has been running the real estate empire "100 percent for some time." It manages about $500 million worth of offices, stores, apartments and hotels - with about two-thirds owned by the senior Paladino. His fortune tops $150 million.

Asked about potential conflicts of interest, Paladino pointed to his experience with Buffalo Civic Auto Ramps, a nonprofit group operating 10 parking garages and lots. He serves on the board of directors and has pushed to lower parking fees, even though it would put his parking companies at a disadvantage. This was confirmed by the group's top financial officer, Diane Grant.

Paladino said, "I've never had a problem divorcing my personal interests from my civic responsibilities."