How REBNY Fights for Relevancy Amid a Progressive Movement and COVID-19

How REBNY fights for relevancy amid the pandemic, its own members’ doubts, and a progressive movement in New York that has made real estate into Public Enemy No. 1.

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It’d be easy to count out the Real Estate Board of New York’s relevancy in New York City after the powerful trade organization suffered a series of very public defeats in 2019.

As a new class of progressive Democrats took office, with many publicly shunning real estate money altogether, the city and state passed major pieces of legislation that REBNY fought tooth and nail to stop.

SEE ALSO: NYC IBO Predicts ‘Slow But Fragile Recovery’ for City Economy Post COVID-19

The largest rout came in June 2019, when Albany passed reforms to the state’s rent stabilization laws that gave tenants stronger protections but took away many of the mechanisms landlords normally used to raise rents. While REBNY made its usual economic arguments against the bill to politicians, well-organized tenant and activist groups ultimately swayed lawmakers to their side.

And 2020 didn’t start much better, with REBNY fighting to keep broker fees in place for residential brokers, while trying to sideline a push by state Sen. Brad Holyman (D-Manhattan) to implement a pied-à-terre tax. Then, the coronavirus pandemic hit hard, taking the lives of more than 26,000 New York City residents and throwing the real estate industry into upheaval.

Brokers were unable to tour spaces in person, construction paused, small and large retailers shuttered across the city, while office leasing tanked and the availability rate hit record highs. REBNY was not immune to the economic pain caused by the pandemic and, in June, cut about 10 percent of its staff, while slashing the salaries of its executives by 10 percent.

Through all this, however, REBNY retained its relevancy. Members of the real estate community told Commercial Observer that the organization has been a vital lifeline in helping it get through the COVID-19 pandemic. A spokeswoman for the group said it rushed to establish safety guidelines for the industry, called on an early eviction moratorium in the state, pushed through a fix to allow virtual closings, and started an $11 million fund aimed to keep New Yorkers in their homes.

“The Real Estate Board has done a fantastic job during the pandemic to try to promote the interest of the industry and the interest of New York,” said member Robert Knakal, chairman of New York investment sales at JLL Capital Markets and a longtime champion of the organization. “[REBNY] has been on the frontline trying to advocate for common-sense solutions to the various issues that the city is facing and they should be commended for what they’re trying to do.”

The organization has continued its lobbying efforts — though it’s changed tactics a bit — and has advocated to state and local elected officials on policies it feels will help the city recover. These include trying to kill proposals that would raise real estate taxes in the city, a move the group says would help keep people and businesses from fleeing to lower-tax places like Florida.

“People will have to look at the unintended consequences to the tax base to accomplish that goal of recovery,” said Jeffrey Levine, chairman of Douglaston Development and a member of REBNY’s executive committee. “The city and the state of New York have to address the disparity of taxes, so that it reflects the value and not the political will.”

Instead of REBNY’s usual strategy of throwing heaps of donations toward lawmakers while persuading them on its stances through an economic argument, REBNY, even before the pandemic, started to team up with other local groups to make its case. The tactic could help REBNY still push its agenda by showing a unified front on issues with occasional enemies like trade groups. 

“It makes all the sense in the world to collaborate on what needs to be done to get this private real estate market back to a state of good repair,” said Louis Coletti, head of the union-heavy Building Trades Employers’ Association, which has partnered with REBNY on several issues during the pandemic. “And I think it does make a difference to elected officials, when they see constituents that they knew have natural tensions articulating the same policy objective.”

Coletti added that while his group and REBNY previously tussled over union labor disputes around the city, they started to increase their work together on issues like securing essential status for construction workers and developing safety protocols on job sites early in the pandemic. The groups’ relationship keeps getting closer and they’re currently pushing for several measures, including a plan for the city to expedite the approval process for future developments.

“I think what COVID has done, in a sort of bizarre way, it’s brought us all together to recognize all our futures are really bound together,” Coletti said. “If the real estate community is not healthy, then my contractors have no work to compete for.”

Working closely with other groups in lobbying politicians is nothing new for REBNY — current president James Whelan increased that strategy while previously serving as executive vice president — but it has kicked into high gear in recent months as the organization scrambles to help members out amid a slowdown, said Frank Marino, CEO of Marino PR and member of REBNY’s board of governors.

“It’s really blossomed into a much larger strategy of really working side by side with organizations of every type and every size,” Marino said. “It’s about the economy. And a good, strong, growing economy is just about as important to every organization. I think you’re going to continue to see that.”

The first sign of this expanded strategy came pre-pandemic in January 2020, when REBNY announced a partnership with Gary LaBarbera, president of the Building and Construction Trades Council of Greater New York, which has also fought with REBNY before over union labor, to unite in pushing pro-development policies in the city.

“I think it was a realization on our part and the part of the Building Trades that the last few years have really been focused on the 10 percent of the issues that we might not see eye-to-eye on,” Whelan told CO at the time. “We’re missing out on the opportunity to work constructively on the 90 percent of the things that we do agree on.”

REBNY has also taken to playing a public relations game. During the battle over the sudden reversal to force landlords, not tenants, to pay for brokers’ fees on apartments early last year, REBNY got brokers to write about their financial hardships in newspapers and tell their stories on television. It also sued to allow brokers to collect the fees from renters again.

Those efforts were welcome news, after previous complaints from some brokers that REBNY showed favoritism toward the commercial side of real estate.

“I have to congratulate REBNY on that, they were on top of that [issue],” said Heather McDonough Domi, a residential broker with Compass who sits on REBNY’s residential board of directors. “REBNY has taken a firm stance.” 

And, even if REBNY’s influence took a hit among some politicians, the pandemic showed the agency still has some juice throughout City Hall and Albany. Gov. Andrew Cuomo tapped Whelan and outgoing chairman Bill Rudin to serve on the state’s reopening advisory board, while Mayor Bill de Blasio appointed them to the Construction and Real Estate Sector Advisory Council.

REBNY pointed toward the extension of the J-51 tax abatement program for building renovations, getting the deadline pushed back to file real property income and expenses, and securing a statewide electronic notarization platform to be able to close on deals online as some of its recent wins. And the organization has tried to make it clear just how vital it thinks the industry is to the city.

“We really need the government to see this,” Douglaston’s Levine said. “The only way they’re going to see this is by recognizing they’re losing revenue by punishing real estate.”

That argument might have gotten a boost earlier this month, when de Blasio announced that the city is expected to lose out on $2.5 billion in property tax revenues in the next fiscal year because of the pandemic. REBNY also said that the city and state lost an additional $1.4 billion from taxes on investment and residential sales from October 2019 to October 2020.

“That really makes you scratch your head as to why politicians don’t want to promote economic development,” JLL’s Knakal said. “We need folks advocating for our business community, we need folks advocating for our real estate industry, and we need folks advocating for rational policy.”

Knakal and others said they hope the lost tax revenue figures will highlight real estate’s key role in the city’s economic recovery. With an election cycle coming up this year to replace a heap of City Council seats along with an overcrowded mayoral race, some think the increase in voting numbers in previous elections could be a boon to REBNY.

“They’ll be a return to more middle-of-the-road Democrats coming out and voting in the primary,” Marino said. “I think you will see a more mainstream approach, a more supportive approach and a more understanding approach to the importance of the real estate industry.”

But, even if REBNY’s future lobbying efforts fall flat, Marino added it’s important to remember one thing: REBNY is a trade organization for the real estate community.

“Because of all the advocacy that REBNY does, and has to do because of its members, it’s looked upon solely as this advocacy group,” Marino said. “It’s a trade group. Somewhere lost in the shuffle [is that] people don’t tend to notice all of the day-to-day stuff that’s going on.”

Some in the real estate community have lamented REBNY’s recent public losses on issues, such as rent stabilization, but they’ve said the amount of information and virtual events the group has offered help it remain relevant to its members.

“Their lobbying may not be as influential, but when it comes to other things like education, compliance and ethics, I think they’re still the go-to organization,” said one New York City landlord, who did not want to be named.

REBNY officials said the group hosted 30 “Coronavirus Guidance” webinars and implemented a state-approved, online-learning course for continuing education requirements. It also started a support team to help members apply for unemployment benefits, small business loans and other relief programs.

The group also took steps last year to address a long-simmering complaint that REBNY left out residential agents, who make up a bulk of its membership. That issue came to a head in 2018, after Howard Lorber, chairman of residential brokerage Douglas Elliman, reportedly stormed out of a top-level REBNY meeting over it.

In March, REBNY elected Compass’ Domi and Sotheby’s International Realty’s Vanessa Kaufman to be the first agents on the residential board of directors, which is mainly made up of owners and managers, something a recently formed non-REBNY advocacy group for residential brokers, New York Residential Agent Continuum (NYRAC), lobbied for.

“Being in the room where it happens, so to speak, is really game-changing,” said Cathy Taub, a broker with Sotheby’s International and co-founder of NYRAC. “It’s a major step forward.”

Domi said the representation has especially been important during the pandemic, as she was able to interject agents’ perspectives when crafting things like showing guidelines once in-person tours were allowed again.

“We’re able to bring up things that get overlooked sometimes, because most people on the board run businesses and they aren’t boots on the ground,” Domi, who also co-founded NYRAC, said.

While Domi and Taub praised REBNY’s efforts in stepping up efforts to fight for residential brokers’ needs, there’s still more to be done. They both want to add more agents to REBNY’s residential board of directors and give them greater voting power. They also worry too many agents have already checked out of REBNY.

“A lot of agents over time have tuned out from REBNY and unsubscribed from their emails,” Domi said. “We are trying to encourage more people to be involved and engaged, because everybody’s voice does matter.”

Yet, as it makes headway with improving relationships on the residential side and changing its lobbying strategy, REBNY is still facing some tough battles.

REBNY donated less than $80,000 to candidates in the June 2020 primaries, a huge decrease from the $450,000 spent in the primary elections in 2018, according to the Gotham Gazette. Meanwhile, contributions to REBNY’s political action committee went from $1.3 million in 2018 to $200,000 in 2019.

There are some notable politicians still willing to take real estate money — including mayoral hopeful and Brooklyn Borough President Eric Adams — but, for many, it’s seen as poison.

“At this point, real estate money is toxic,” Cea Weaver, campaign coordinator for Housing Justice for All, and a key organizer behind the rent reform passed in the state who was recently nominated to the City Planning Commission, told the Gotham Gazette. “It’s a testament to the tenant movement that real estate money has become, basically, a litmus test that you can’t run in New York as a progressive if you take it, no one’s going to take you seriously.”