Banks Shot: Talking Everything REBNY With Its President, John Banks
The Real Estate Board of New York President John Banks, a veteran of Mayor Ed Koch’s administration, is pretty much all business.
During a recent chat with Commercial Observer, Banks played the diplomat, giving even-tempered answers about working with the new left-leaning State Senate, last year’s recent shakes-ups of brokerages (“Whatever takes place out in the business world is not our business,”) and, most importantly, if REBNY can finally get people to zip it during the gala’s awards ceremony this week.
“This is an issue that we struggle with and part of the reason we struggle with this is because there’s a dual purpose for the gala,” he said. “One is to recognize the industry leaders who are our honorees and we really take that seriously. The other part of it, and it’s just as legitimate, but it is a networking opportunity and that is what people look to from the gala.”
“Do I think that we’ll be able to stop [people] from talking during the ceremony?” he added. “I think the answer is not under the circumstances that we have now because of the dual nature of the event.”
Banks rattles off facts about the issues REBNY members face with ease and weighed in on the association’s 2018 highs and lows and its focuses for this new year.
Commercial Observer: What are the big issues REBNY is going to be looking at in 2019?
John Banks: Clearly, rent regulation is going to be a dominant concern of ours. We’re prepared to engage fully with the elected officials on the issues to have a meaningful conversation that is based on sound analytical and empirical information to try to put forward why we think it’s important that whatever modifications may come out of the legislative session don’t do any harm to the industry’s ability to maintain the quality of the housing stock and try to address the issue of affordability—which is really where we think the focus of any dialogue should be.
Congestion pricing is another area that we will [focus on] and we anticipate that the governor and the legislature will again take this issue up and we want to participate in that dialogue. We’re also going to be looking at sustainability on a city level. We’ve been fully engaged in dialogue with other like-minded stakeholders including folks on the environmental front who share some of our concerns about the legislation [Intro. 1253 to require buildings to make energy-efficient upgrades] as proposed. And finally—this is less of a priority because it’s a longer-term process—but we have serious concerns about the state’s Scaffold Law, how it’s implemented and the impact it has on the cost of construction. It’s unsustainable for it to continue in the manner that it does. [New York State has strict laws that hold employers liable for elevation-related injuries, which Banks said drives up the cost of construction.]
Why did REBNY throw its support behind congestion pricing?
Our employees have to get to and from work in a manner that is efficient and effective. It is not good for the employee to have a stressful commute and its not good for them from a productivity standpoint when they come to work to have had a stressful commute. We understand that the infrastructure needs to be upgraded significantly and that costs a lot of money and we understand that revenue needs to be generated from several different sources. We think it’s legitimate to have a conversation about congestion pricing and we want to be engaged in that discussion.
What was REBNY’s high point of 2018?
One of the things that REBNY has been working on for many, many, many years—it predates me—is the rezoning of the Manhattan garment center.
For the first time in 30-plus years, that area will be able to take advantage of the growth in the city and the changes in the way people live and work in the city. There’s no longer a manufacturing base to the garment center, but I think the rezoning that was passed struck the right balance of providing opportunity for the garment center to continue to have a foothold in that neighborhood. It’s a great neighborhood that did not grow the same way as the surrounding communities did and that’s because of the zoning restrictions.
On the flip side, what was the low point of 2018?
I won’t call it a low point, per se, because it’s not finished yet, but a difficult and challenging fight that we’ve had to [engage in] is commercial rent control [which would require landlords to offer a minimum 10-year lease renewal to tenants in good standing]. Buildings and spaces are not left vacant simply because owners are insensitive and want the maximum amount of money. There’s a variety of reasons, that’s why the retail shopping experience in some neighborhoods is declining and in others it has expanded. So commercial rent control is an area that we are focused on and aggressively pushing back against because we think it’s the wrong policy prescription to fix what is the natural market outcome.
If you were a betting man, what would you put the odds on that commercial rent control passes?
I am 100 percent confident that if commercial rent control as proposed does get passed, it will ultimately be litigated against by us and others. It will fail because it’s very clear that the city does not have the power to implement commercial rent control.
You’ve been the head of REBNY for four years now. What have you learned in that time?
I found out a tremendous amount about the industry because I came from outside of the real estate industry [he previously was the vice president of government and community affairs at Consolidated Edison] so you know I’ve learned the basics of what it costs to build a building. The three driving factors are taxes, the cost of land and the cost of labor. And those three different components, when you look at them, give you insight into why it’s so difficult to build in New York City, and I’m speaking specifically in the multifamily rental area. There needs to be a reality check within some public policy sectors where they want developers to engage in a process that would build multifamily rental buildings at significantly decreased rents in order to try to address the admitted affordability problem, but it doesn’t it doesn’t give any credence to the factors that go into the decision on building or not building.
The types of details about what goes into the production of affordable housing were completely unknown to me. And I’ve come to know it probably more than I ever wanted to. [laughs]
What do you think Bill Rudin’s biggest achievement was last year, in his first term as chairman?
I think the biggest achievement, and it’s at its initial phases, has been his focus on diversity and inclusion within the industry. This is not a problem that is going to be solved in the short term, but Bill is absolutely committed to looking at the issue in a meaningful way and beginning to change the dialogue and provide the industry with some tools by which they can try to address the inequities and the inability to have a more diverse workforce across the spectrum.
What’s your approach on working with the new State Senate now that it leans Democratic?
The same approach that we’ve taken, certainly in the entirety of my time and I know my predecessor [Steven Spinola] did it as well, is we will engage every elected official in a dialogue about the facts behind what we think a policy should look like and why it should look the way it does. We depend upon empirical analysis and we depend upon the numbers to tell the story.
We intend to continue in that process and engage with members of the senate—new members and old members because we understand that this dynamic is changing, and we appreciate that, and we want to work within whatever framework gets provided.
[Since] the other two big tech giants [Google and Amazon] are making a stronghold in the [in the city], I would expect that others would also want to make a stronghold. I wouldn’t be shocked if Facebook looked at Amazon’s and Google’s decision to be here in New York and decided that they also wanted to have a stronger presence.
REBNY launched RLS [a syndication program for residential listing] about a year ago. How successful has it been?
I think we have 90 percent participation of REBNY members. There are hundreds of outlets that people’s listings now get to that weren’t available to REBNY members in years past. We are rolling out compliance tools to ensure data integrity which was an issue [when RLS first rolled out]. Our philosophy was the more [opportunities] you [have to] put the listing before the consumer, the better it is for the consumer and the better it is for our members to show their product to a broader spectrum of people.
How has it been competing with Zillow, or, does it even compete with Zillow?
The short answer is that there is no direct competition. We would love to partner with Zillow to have them take the RLS feed. They’ve indicated that they’re not prepared to do that at this point. We have no animus whatsoever to Zillow. We wish them luck and we hope that at some point we can come together. Whenever that happens that will be great for the consumer.
How have REBNY’s membership numbers been in your time here?
Since I got here it’s risen to 17,000. On any given month there are fluctuations—you know people come into the business they go out of the business, so I think we’ve been holding steady in that 16,000- to 17,000-range over the last three or four years. We’re confident that we’re providing a service that our members derive benefit [from] and not the least of which is the RLS system. So as people come into or leave the market we don’t worry about those types of fluctuations.